Sevi

What are the key options in determining business-level strategy? Corporate-level strategy?

(think of the fritos chips as business and fritolay as corporate) Formulating business-level strategy. • Successful firms develop bases for sustainable competitive advantage through: • Cost leadership and/or: • Differentiation, as well as: • Focusing on a narrow or industrywide market segment. Formulating corporate-level strategy. • Addresses a firm's portfolio (or group) of businesses. • What business or businesses should we compete in? • How can we manage this portfolio of businesses to create synergies?

•How do leaders make a difference for organizational performance?

- Be proactive — anticipate change. - Refine strategies continually. - Be aware of external opportunities and threats. - Understand thoroughly the firm's resources and capabilities. - Make strategic management both a process and a way of thinking throughout the organization

1. Understand how to create and maintain competitive advantage (beyond just organizational effectiveness.

- Competitive advantage = a firm's resources and capabilities that enable it to overcome the competitive forces in its industry(ies). - Successful firms develop bases for sustainable competitive advantage through: o Cost leadership and/or: o Differentiation, as well as: Focusing on a narrow or industrywide market segment

attributes of strategic management

-Directs the organization toward overall goals and objectives. -Includes multiple stakeholders in decision making. -Needs to incorporate short-term and long-term perspectives. -Recognizes trade-offs between efficiency and effectiveness.

1. What is meant by the balanced scorecard? What four perspectives are incorporated into the balanced scorecard? the balanced scorecard? What four perspectives are incorporated into the balanced scorecard?

A meaningful integration of many issues that come into evaluating performance Four key perspectives: 1. How do customers see us? (customer perspective) 2. What must we excel at? (internal perspective) 3. Can we continue to improve and create value? (innovation and learning perspective) 4. How do we look to shareholders? (financial perspective)

What are the three steps of strategic management

Analysis, Decisions, and actions

What key activities are performed at each step of the strategic management process

Analysis. -Strategic goals (vision, mission, strategic objectives). Internal and external environment. Decisions — Formulation. -What industries should we compete in? -How should we compete in those industries? Actions — Implementation of strategy. - Allocate necessary resources. - Design the organization to bring intended strategies to reality.

According to Henry Mintzberg, the realized strategies of a firm A.are a combination of deliberate and emergent strategies. B.are a combination of deliberate and differentiation strategies. C.must be based on a company's strategic plan. D.must be kept confidential for competitive reasons.

Answer: A. Henry Mintzberg, a management scholar at McGill University, argues that viewing the strategic management process as one in which analysis is followed by optimal decisions and their subsequent meticulous implementation neither describes the strategic management process accurately nor prescribes ideal practice. He sees the business environment as far from predictable, thus limiting our ability for analysis. For a variety of reasons, the intended strategy rarely survives in its original form. Unforeseen environmental developments, unanticipated resource constraints, or changes in managerial preferences may result in at least some parts of the intended strategy remaining unrealized. Thus, the final realized strategy of any firm is a combination of deliberate and emergent strategies.

Mary Stinson was required to take over a project after the entire team left the company. She was able to reconstruct what the team had accomplished through reading e-mails exchanged by the previous teams members. This is an example of A.using explicit knowledge. B.inefficient use of information management. C.using tacit knowledge. D.All of these are correct.

Answer: A. using explicit knowledge.

In assessing its primary activities, an airline would examine A.employee training programs. B.baggage handling. C.criteria for lease versus purchase decisions. the effectiveness of its lobbying activities

Answer: B - baggage handling involves transfer of service to buyer and is part of airline operations

P&G created a cleaning product that led to a change in consumer shopping habits and also a revolution in industry supply chain economics. According to the text, this is an example of A.zero-sum relationship among stakeholders. B.stakeholder symbiosis. C.rewarding stakeholders. D.emphasizing financial returns.

Answer: B. There will always be conflicting demands on organizations. However, organizations can achieve mutual benefit through stakeholder symbiosis, which recognizes that stakeholders are dependent upon each other for their success and well-being.

Gillette combines several technologies to attain unparalleled success in the wet-shaving industry. This is an example of their A.tangible resources. B.intangible resources. C.organizational capabilities. D.strong primary activities.

Answer: C, organizational capabilities in combining technologies in innovative ways

A danger of forecasting discussed in the text is that A.in most cases, the expense of collecting the necessary data exceeds the benefit. B.forecasting's retrospective nature provides little information about the future. C.managers may view uncertainty as "black and white" while ignoring important "gray areas." D.it can create legal problems for the firm if regulators discover the company is making forecasts.

Answer: C. Some forecasting issues are much more specific to a particular firm and the industry in which it competes. Consider how important it is for Motel 6 to predict future indicators, such as the number of rooms available vs demand in the budget segment of the industry. If its predictions are low, it will build too many units, creating a surplus of room capacity that would drive down room rates. A danger of forecasting is that managers may view uncertainty as black and white and ignore important gray areas. The problem is that underestimating uncertainty can lead to strategies that neither defend against threats nor take advantage of opportunities.

Which of the following is NOT an advantage of electronic teams (e-teams)? A.They can facilitate communication. B.They have the potential to acquire a broader range of human capital. C.They can be effective in generating social capital. D.They're less flexible in responding to unanticipated work challenges.

Answer: D. They are less flexible in responding to unanticipated work challenges.

If you are considering opening a new pizza restaurant in your community, what would be the threat of new entrants? How would you evaluate Porter's other forces for this industry? Explain.

Answer: The threat of new entrants in the food industry is very high, which is why most new food restaurants fail within their first year. The minimum requirements to open a pizza shop are an oven and a small amount of capital. The potential number of competitors is unlimited due to these factors. Based on other forces, this industry is not very attractive: for instance there is no industry growth, and a lack of differentiation among competitor's products, so competition is based on cost or service, and the industry has low profit margins as it is.

the difference between substitutes and complements.

Complements = products or services that have an impact on the value of a firm's products or services. For instance, Apple's iTunes was software that made the iPod hardware such a popular product. See Case Apple. Substitute products and services = products and services outside the industry that serve the same customer needs as the industry's products and services. Identifying substitute products might involve searching for other products or services that can perform the same function as the industry's offerings. This may lead a manager into businesses seemingly far removed from the industry; for instance teleconferencing has become a viable substitute for business travel. Another example is ice cream - an expensive summertime treat. Frozen fruit smoothies are a substitute. See Case Dippin' Dots vs. Case Jamba Juice

Understand the key players in corporate governance, and the role of each. (Think who governs a business)

Corporate governance is the relationship among various participants in determining the direction and performance of corporations. • Primary participants are: • Shareholders. • Management (led by the Chief Executive Officer). • The Board of Directors (BOD).

1. What is the dynamic capabilities view? How might this approach lead to competitive advantage for a firm?

Dynamic capabilities involve the capacity to anticipate, shape, and adapt to a shifting competitive landscape. • Identifying, developing, and assessing technological opportunities that relate to customer needs. • Mobilizing resources to capture value. • Continuing the process of transforming, revolutionizing industries and economies.

environmental scanning

Environmental scanning involves surveillance of a firm's external environment. •Predicts environmental changes to come. •Detects changes already under way. •Allows firm to be proactive.

strategic leadership, and the difference between the romantic view versus the external control perspectives

External control= situations in which external forces - where the leader has limited influence - determine the organization's success. - External forces determine the organization's success. - Economic downturns. - Romantic view= A leader is the key force in the organization's success. - Steve Jobs.

1. Understand financial ratios, and how they can help to understand performance of the firm. What comparisons are necessary to assess firm performance?

Five types of financial ratios: Short-term solvency or liquidity. Long-term solvency measures. Asset management or turnover. Profitability. Market value. Meaningful ratio analysis must include: Analysis of how ratios change over time. Comparison with industry norms. Comparison with key competitors.

1. Understand the hierarchy of strategic goals: Vision, mission, and strategic objectives

Hierarchy of goals = organizational goals ranging from, at the top, those that are less specific yet able to evoke powerful and compelling mental images, to, at the bottom, those that are more specific and measurable. A hierarchy of strategic goals can help an organization achieve coherence in its strategic direction. Vision = organizational goal(s) that evoke(s) powerful and compelling mental images, i.e., "To be the happiest place on earth" (Disney) Mission statement = a set of organizational goals that identifies the purpose of the organization, its basis of competition, and competitive advantage. Strategic Objectives = a set of organizational goals that are used to put into practice the mission statement and that are specific and cover a well-defined time frame.

1. What is human capital? Why is it important for a firm in the context of the knowledge economy?

Human capital includes the individual capabilities, knowledge, skills, and experience of the company's employees and managers.

1. What is intellectual capital? How does intellectual capital impact market valuation for a firm?

Intellectual capital is a measure of the value of a firm's intangible assets. It is the difference between a firm's market value and book value. It includes these assets: • Reputation. • Employee loyalty and commitment. • Customer relationships. • Company values. • Brand names Experience and skills of employees

1. What is intellectual property? What are the implications of the difficulties inherent in protecting intellectual property?

Intellectual property rights are more difficult to define and protect than property rights for physical assets. Intellectual property can be easily stolen. If intellectual property rights are not reliably protected by the state, there will be no incentive to develop new products and services. Intellectual property has significant development costs but very low marginal costs. Effective protection is necessary before any investor will provide financing.

What is the difference between intended and realized strategy?

Intended strategy • Organizational decisions are determined only by analysis. • Intended strategies rarely survive in the original form. Realized strategy Decisions are determined by both analysis (deliberate) and unforeseen environmental developments, unanticipated resource constraints, and/or changes in managerial preferences (emergent).

What key factors should be analyzed in assessing the external environment of the firm?

Managers must monitor and scan the environment as well as analyze competitors. -General environment. -Industry environment.

Ambedextarity

Managers need to be ambidextrous- Ambidexterity = the challenge managers face in both aligning resources to take advantage of existing product markets and proactively exploring new opportunities.

1. What characteristics make a resource valuable? Rare? Inimitable? Non-substitutable?

Physical uniqueness: these are resources that are physically unique, therefore impossible to duplicate. Path dependency: hard to duplicate because of all that has happened along the path followed in the development and/or accumulation of resources. Causal ambiguity: impossible to explain what caused a resource to exist or how to re-create it. Social complexity: resources that result from social engineering such as interpersonal relations, culture.

Porter's Five Forces. What are the key objectives of a Five Forces analysis? What factors impact the intensity of impact of each of the five forces?

Porter's Five Forces Model of Industry Competition = a tool for examining the industry-level competitive environment, especially the ability of firms in that industry to set prices and minimize costs. Includes the threat of new entrants; the bargaining power of buyers; the bargaining power of suppliers; the threat of substitute products and services; the intensity of rivalry among competitors in an industry. Each of these forces affects a firm's ability to compete in a given market. Together they determine the profit potential for a particular industry.

1. Understand the value chain and value chain analysis. What are the primary activities in the value chain? What are support activities?

Primary= inbound logistics operations outbound logistics marketing and sales service supporting= General administration human resource management technology development procurement

1. Understand the key strategies a firm might employ to effectively manage human capital.

Redefining jobs, such as breaking high-end knowledge work into specialized pieces, helps address skill shortages Sound management of diverse workforces can improve an organization's effectiveness and competitive advantages through Lower cost. Better reputation, leading to resource acquisition. Marketing sensitivity to client cultures. Creativity through diversity of perspectives. Better problem solving. Greater organizational flexibility.

1. What are the characteristics of resources that can provide the basis for competitive advantage?

Resources that can provide a firm with the potential for a sustainable competitive advantage have four attributes. 1. Valuable in formulating and implementing strategies to improve efficiency or effectiveness. 2. Rare or uncommon; difficult to exploit. 3. Difficult to imitate or copy due to physical uniqueness, path dependency, causal ambiguity, or social complexity. 4. Difficult to substitute with strategically equivalent resources or capabilities.

What is scenario analysis? How is it used in strategy formulation?

Scenario analysis is an in-depth approach. What are some of the ways trends may affect an issue? Can we project alternative futures based on these assessments

1. Understand how information technology may be used to leverage human capital and knowledge to create value for the firm.

Sharing knowledge and information throughout the organization. • Conserves resources. • Develops products and services. • Creates new opportunities. Technology can leverage human capital and knowledge. • Within the organization. • With customers. • With suppliers.

1. What is social capital? What steps might a firm make to effectively manage and leverage social capital? What are the downsides of social capital?

Social capital. • Are the friendships and working relationships among talented individuals. • It helps to tie knowledge workers to a given firm. • Interaction, sharing, and collaboration will help develop firm specificities, with a higher probability of retaining key knowledge workers. Hiring via personal (social) networks: • Some job candidates may bring other talent with them. • Pied Piper effect. • Talent can emigrate from an organization to form startup ventures. Social networks can provide a mechanism for obtaining resources and information from outside the organization

1. What are social networks? Understand the difference between closure relationships and bridging relationships. What information does social network analysis provide?

Social network analysis depicts the pattern of interactions among individuals and helps to diagnose effective and ineffective patterns. • Who links to whom within the network or cluster? • Who communicates to whom and how effective is this communication? Social ties can link individuals so they can • Convey needed resources. • Exchange information and support. • Treat each other in positive ways. • Develop trusting relationships to improve the groups' effectiveness. CR The degree to which all members of the social network have relationships with other group members BR Relationships in a social network that connect otherwise disconnected people.

What are strategic groups? How are they useful in understanding competitive dynamics in an industry?

Strategic groups = clusters of firms that share similar strategies. Dimensions should be considered that reflect the variety of strategic combinations in an industry

1. What is meant by perceptual acuity? Why is this important?

Successful managers are always aware of what's going on outside their company. Their perceptual acuity allows them to sense what's coming. Detecting early warning signals, keeping pace with changes in the external environment can sustain a competitive advantage.

1. What is a SWOT analysis? How is it used?

Swot analysis is a basic technique for analyzing firm and industry conditions.

1. Understand the difference between tacit knowledge and explicit knowledge.

Tacit knowledge • Embedded in personal experience. • Shared only with the consent and participation of the individual. • Has the organization effectively used technology to codify knowledge for competitive advantage? • Explicit (codified) knowledge • Can be documented. • Can be widely distributed. • Can be easily replicated. • Can be reused many times at very low cost.

1. Understand the difference between tangible resources, intangible resources, and capabilities.

Tangible resources are assets that are relatively easy to identify. Intangible resources are difficult for competitors to account for or imitate. They are embedded in unique routines and practices. Organizational capabilities are competencies or skills that a firm employs to transform inputs into outputs. Capacity to combine tangible and intangible resources, using organizational processes to attain desired ends.

What are the six areas of the general environment that should be analyzed in an external assessment? Be able to identify examples from each of these six areas that might impact the strategy of a firm.

The general environment is composed of factors that are both hard to predict and difficult to control. • Demographic. • Sociocultural. • Political/Legal. • Technological. • Economic.

1. the concept of value and how value id created within an organization.

Value is the amount that buyers are willing to pay for what a firm provides them and is measured by total revenue, a reflection of the price a firm's product commands, and the quantity it can sell. A firm is profitable when the value it receives exceeds the total costs involved in creating its product or service. Creating value for buyers that exceeds the costs of production (i.e. margin) is a key concept used in analyzing a firm's competitive position.

What are strategic leaders? What is their role?

a. Leadership ensures organizational commitment to excellence and ethical behavior.

Demographics

are easily understandable & quantifiable. • Aging population. • Rising affluence. • Changes in ethnic composition. • Geographic distribution of population. • Greater disparities in income levels.

Inbound logistics

are primarily associated with receiving, storing and distributing inputs to the product. • Material handling. • Warehousing. • Inventory control. • Vehicle scheduling. • Returns to suppliers. Factors to consider include: • Location of distribution facilities. • Warehouse layout.

What is the triple bottom line? What factors does it assess in terms of firm performance?

assessment of a firm's financial, social, and environmental performance - accounting for the environmental and social costs of doing business. The case for sustainability projects needs to be made based on a more holistic and comprehensive understanding of all the tangible and intangible benefits, rather than on the possibility for traditional returns. The alternative of not making these investments is often no longer feasible.

Technological

developments lead to new products and services. They can create new industries and alter existing ones. • Genetic engineering. • Three-dimensional (3D) printing. • Research in synthetic & exotic materials. • Miniaturization of computing technologies. • Wireless communications. • Nanotechnology. • Big Data Analytics

Economic

forces affect all industries. • Interest rates. • Unemployment. • Consumer Price Index. • Trends in GDP. • Changes in stock market valuations. • National debt.

Sociocultural

forces influence the values, beliefs, and lifestyles of a society. • More women in the workforce. • Increase in temporary workers. • Greater concern for fitness. • Greater concern for the environment. • Postponement of family formation.

Global

forces offer both opportunities & risks. • Changes in global trade. • Currency exchange rates. • Emergence of the Indian and Chinese economies. • Trade agreements among regional blocs (NAFTA, EU, ASEAN). • Creation of the WTO (leading to decreasing tariffs/free trade in services). • Increased risks associated with terrorism.

Operations

include all activities associated with transforming inputs into the final product form. • Machining. • Packaging and Assembly. • Testing or quality control. • Printing. • Facility operations. Factors to consider include: • Efficient plant operations and layout. Incorporation of appropriate process technology

Service

includes all actions associated with providing service to enhance or maintain the value of the product. • Installation and repair. • Training. • Parts supply. • Product adjustment. Factors to consider include: • Quick response to customer needs. • Quality of service personnel, ongoing training.

Outbound logistics

includes collecting, storing, and distributing the product or service to buyers. • Finished goods and warehousing. • Material handling. • Delivery vehicle operation. • Order processing, scheduling and distribution. Factors to consider include: • Effective shipping processes. • Minimizing shipping costs by grouping goods into large lot sizes.

enviormental Forcasting

includes: evniromental scanning, monitoring, competitive intelligence Environmental forecasting predicts change. • Plausible projections about • Direction of environmental change? • Scope of environmental change? • Speed of environmental change? • Intensity of environmental change?

Marketing and sales activities

involve purchases of products and services by end users, and how to get buyers to make those purchases. • Advertising and promotion. • Sales force management. • Pricing and price quoting. • Channel selection and channel relations. Factors to consider include: • Innovative approaches to promotion and advertising. • Identification of customer segments and needs.

Understand the role of social responsibility in the strategy of a firm.

is the expectation that businesses or individuals will strive to improve the overall welfare of society.

Political/Legal

processes & legislation influence environmental regulations with which industries must comply. • Tort reform. • Americans with Disabilities Act (ADA) of 1990. • Deregulation of utilities & other industries. • Increases in federally mandated minimum wages. • Taxation at local, state, federal levels. • Legislation on corporate governance reforms in bookkeeping, sock options, and so forth (Sarbanes-Oxley act of 2002).

1. What is the difference between shareholders and stakeholders? Who are the key stakeholders of the firm - and what are their claims/interests?

shareholders= people who hold shares Key stakeholders=everyone.... Shareholder,employees, suppliers, creditors, customers, government, community Stakeholder Group= Nature of Claim Stockholders=Dividends, capital appreciation Employees=Wages, benefits, safe working environment, job security Suppliers=Payment on time, assurance of continued relationship Creditors=Payment of interest, repayment of principal Customers= Value , warranties Government=Taxes, compliance with regulations Community= Good citizenship behavior such as charities, employment, not polluting the environment

1. What is strategy and what are its characteristics?

the ideas, decisions, and actions that enable a firm to succeed.

Environmental monitoring

tracks evolution of environmental trends. •Sequences of measurable facts/events. •Streams of activities or trends from outside the organization.

Understand the difference between corporate-level strategy and business-level strategy.

• Business-level strategy: How to compete in a given business to attain competitive advantage. • Corporate-level strategy: What businesses to compete in; how businesses can be managed to achieve synergy.

Competitive intelligence

•Helps firms define and understand their industry. •Identifies rivals' strengths & weaknesses. •Collect data on competitors. •Interpret intelligence data. •Helps firms avoid surprises. •Anticipate competitors' moves. •Decrease response time. •Potential for unethical behavior while gathering intelligence.