Strategic Management Tentafrågor

Describe the controlling process and discuss by means of an examples when each of them is most appropriate to be used.

- "Feedforward control": Sometimes called preliminary or preventive controls, attempt to identify and prevent deviations in the standards before they occur. Feedforward controls focus on human, material, and financial resources within the organization. These controls are evident in the selection and hiring of new employees. For example, organizations attempt to improve the likelihood that employees will perform up to standards by identifying the necessary job skill and by using test and other screening devices to hire people with those skills - "Concurrent control": Monitor ongoing employee activity to ensure consistency with quality standards. These controls rely on performance standards, rule, and regulations for guiding employee tasks and behaviors. Their purpose is to ensure that work activities produce the desired results. As an example, many manufacturing operations include devices that measure: if they see that standards are not being in some area, they make a correction themselves or let a manager know that a problem is occurring. "Feedback control" involve reviewing information to determine wether performance meets established standards. For example, supposed that an organization establishes a goal of increasing its profit by 12 percent next year. To ensure that this goal is reached, the organization must monitor its profit monthly. After three months, if profit has increased by 3 percent, management might assume that plans are going according to schedule.

Describe functional-level strategy

- A day-to-day plan for organizing routine operations or activities to support an organization's business and corporate strategies. - Functional-level-strategies are concerned with tactical decisions, such as human resources, production, operations, marketing, research and development etc. - Functional-level-strategies ensure optimum resource utilization inside the department. It facilitates communication and coordination among all other functional units in the organization to support the organization's corporate and business-level objectives. - Characteristics are efficiency, product-quality, delivery at the right time etc. Support business-level-strategies.

Name three approaches to managing conflicts!

- Avoidance - Defusion - Confrontation

Name 4 reasons to do annual objectives

- Basis for resource allocation - Mechanism for management evaluation - Major instrument for monitoring progress toward achieving long-term objectives - Establish priorities (organizational, divisional and departmental)

Name Porters five forces

- Competition in the industry - Potential of new entrants into the industry - Power of suppliers - Power of customers - Threat of substitute products

Name four criteria for evaluating strategies

- Consistency, are the goals consistent? - Consonance, what are the trends? - Feasibility, did we have the resources for the process? - Advantage, do we still have competitive advantage?

Describe "business-level-strategy"

- Defines a business goals and policies to deliver value to customers and have competitive advantage over competitors. - It determines the direction of the business, establishes its brand, and defines how a business serve its customers. - Strategic business units, competitive advantage, Porters 5 forces. - Can be categorized into three strategies: 1. Cost-strategies focus on offering low price products to capture the market 2. Differentiation-strategy focus on unique and different product and particular market segmentation 3. Focus-strategy targets a limited number of niche customers.

Name 3 bonus systems

- Dual bonus system - Profit sharing - Gain sharing

Name strategi evaluations three basic activities

- Examining the underlying basis of a firm's strategy - Comparing expected results with actual results - Taking corrective action

Name four types of resources!

- Financial resources - Physical resources - Human resources - Technological resources

Name 4 basic forms of structure

- Functional structure - Divisional structure - SBU structure - Matrix structure

Annual objectives should be what?

- Objectives should be consistent across hierarchal levels - Should be measurable and challenging - Avoid maximize, minimize, ASAP, adequate - Be clear instead, for example increase revenues by 10% - Tie rewards to objective so that managers and employees see that achieving objectives is crucial - Overemphasis on objectives can result in faked numbers etc.

What are the 5 different matching matrixes?

- SWOT matrix - SPACE matrix - BCG matrix - IE matrix - Grand Strategy matrix

Describe the strategy development stages

- Strategy formulation - Strategy implementation - Strategy evaluation

There are different reasons why some firms don't do strategic planning. Describe four of them.

- They have no formal training in strategic management - No understanding of or appreciation for the benefits of planning - No monetary rewards for doing planning - No punishment for not planning - Too busy "firefighting" (resolving internal crises) to plan ahead - To view planning as a waste of time, since no product/service is made - Laziness, effective planning takes time and effort and time is money - Content with current success, failure to realize the success today is no guarantee for success tomorrow - Overconfident - Prior to bad experience with strategic planning done before/somewhere

Name symptoms of an ineffective organizational structure

- Too many levels of management - Too many meetings attended by too many people - Too much attention directed toward solving interdepartmental conflicts - Too large span of control - Too many unachieved objectives - Declining corporate or business performance - Loosing ground to rival firms - Revenue and/or earnings divided by number of employees and/or number of managers is low compared to rival firms

What characterizes a well-defined goal?

- Written terms of outcomes rather than actions - Measurable and quantifiable - Clear as to a time frame - Challenging but attainable - Written down - Communicated to all organizational members

Describe all steps in the "decision making process" by means of an example and show in detail, how different alternatives can be analyzed

1. Identifying a problem: A problem is a discrepancy between an existing and a desired state. - One has to be aware of the discrepancy - One needs to have the pressure to act to enter the decision-making-process - One needs to have the resources to act 2. Identifying decision criteria: What is relevant in my case and what determines the relevant? 3. Allocating weights to the criteria: Not all criteria are necessarily weighted equally. Some might have a larger effect than others. Rate criteria e-g from 1-10 or high/medium/low. 4. Developing alternatives: Make a list of alternatives that could solve the problem, e-g, list possible suppliers for raw material. 5. Analyzing alternative: Apply the criteria from step 2 and 3 (decision criteria that were weighted) 6. Selecting an alternative: After criteria have been chosen, weighted and alternatives analyzed, that alternative that scored best should be chosen. 7. Implementing the alternative: Implement the alternative by conveying the decision to those that are affected and get their commitment. 8. Evaluating decision effectiveness: Did you solve the problem? If not, why does it still exist? Was there a mistake in the former steps in the decision-making process? Maybe the whole process needs to be re-done

Explain, by means of an own example, how the "Competitive Profile Matrix" is built and how a company can interpret that matrix. Use between 4 to 6 "critical success factors" and 3 competing companies in your example.

A CPM identifies a firm's major competitor and its strengths and weaknesses in relation to a sample firm's strategic position. You identify the firm's and the competitors critical success factors, weight them, and rate them. After this is done, you can compare the company with the competitors score and get important internal strategic information. 1. Identify the firm's and the competitors critical success factors 2. Weigh them, from 0.0 (low importance) to 1.0 (high importance). All factors weights should add up to exactly 1.0. 3. Rate them between 1 = major weakness, 2 = minor weakness, 3 = minor strength, 4 = major strength 4. Multiply each factors weight with their rating. 5. The total score for the company is each factors weight and rating multiplied and then added together. 6. Compare your firm's score with the competitors score, the company with the highest score is relatively stronger than its competitors. This matrix will give a firm valuable information on what the should improve within the company and what they should protect, and sometimes even what strategy to approach.

What can strategy be defined as?

A strategy is a serial of planned activities which are determined in advance and accomplished to reach a set-up goal

To analyze external factors in a company, it is possible to apply "The External Factor Matrix". Explain how this matrix is built. Do so by using at a maximum 5 "Key External Factors" and focus especially on explaining the difference between "ratings" an "weights"

An external factor evaluation matrix allow strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological and competitive information. 1. List key external factors as identified in the external-audit process. A total of 20 factors, including opportunities and threats, should be included that affect the firm and its industry. It is best to be as specific as possible. 2. Each factor gets assigned a weight that ranges from 0.0=not important, to 1.0=very important. The weight indicates the relative importance of that factor to being successful in the firm's industry. Opportunities often receive higher weights Thant threats, though threats can be weighed high if severe. The sum of all weights should add upp to exactly 1.0. 3. Each factor is then assigned a rating between 1 and 4, that indicate how effectively the firm's current strategies respond to the factor. 4=superior, 3=above average, 2=average, 1=poor. 4. Each factor's weight and rating are then multiplied to determine the total weighted score for each factor. 5. The sum of all the weighted total score for each variable determine the total weighted score for the organization. The highest possible total weighted score for an organization is 4.0 and the lowest is 1.0. Examples of Key external factors: Opportunities - New trade agreement - New supplier - Increased demand for products - Decreased tax rate Threats: - Expiring contract - Predicted natural disaster - New law/regulation - New competitors

Explain the barriers to an effective communication and how they could be overcome

Barriers to effective communication are: - Filtering - Emotions - Information overload - Defensiveness - Language - National culture To overcome these barriers this is needed: - Feedback - Simplify the language - Active listening - Constrain emotion - Watch non-verbal cues

What is management?

Coordinating and overseeing the work activities of others so that their activities are completed efficiently and effectively.

Describe "corporate-level-strategy"

Corporate-level strategy is a multi-tiered company plan that leaders use to define, outline and achieve specific business goals, like growth, stability and renewal. - Long term: corporate strategies are formulated for the long term. - Uncertain: being long term and broad by nature, corporate strategy is uncertain - Dynamic: corporate strategies are dynamic and adapted to market conditions - Far-reaching: corporate strategies are broad, far-reaching and affect the whole organization - Divided at the top-level: corporate level strategies are created at the top level of the organization

In the Internal Assessment Organizational culture is a crucial factor. Describe the reason why this is! What is the definition of culture in this aspect? Give 4 examples of cultural products.

Culture determines the values, beliefs and behaviors that shapes how an organization operates, a good and positive culture can increase collaboration, innovation, and sense of purpose among employees, which lead to improved performance and success. Ignoring the effect that culture can have can result in barrier to communication, lack of coordination, and an inability to adapt to change. Cultural products are for example values, beliefs, rites, rituals, ceremonies etc.

Describe strategy implementation and organizing/leading

Determining what needs to be done, how it will be done and who is to do it. Directing and motivating all involved parties and resolving conflicts.

Explain Herzberg's "motivation-hygiene theory". How could employees be motivated according to this theory?

Employees are not motivated by being kicked (figuratively speaking), or by being given more money or benefits, a comfortable environment or reducing time spent at work. These elements were called "hygiene factors" by Herzberg because they concern the context or environment in which a person works. Hygiene factors also include company policy, administration-supervision-working relationships, status, and security. These factors do not in themselves promote job satisfaction, but serve primarily to prevent job dissatisfaction, just as good hygiene does not in itself produce good health, but lack of it will cause disease. Herzberg also speaks of them as dissatisfiers. In other words, those factors decrease job-dissatisfaction. "Motivators" (also referred to as satisfiers) relate to what a person does at work, rather than to the context in which it is done. Those factors, in other words, increase job satisfaction. The theory proposes that most factors which contribute to job satisfaction are motivators and most factors which contribute to job dissatisfaction are hygiene element. - Job satisfaction are motivators ( achievement, recognition, the satisfaction of the work itself, responsibility and opportunities for advancement and growth ) - Job dissatisfaction are hygiene elements ( company policy, general management, the individual relationship with their manager and working conditions )

Describe competitive advantage

Everything a firm does very well in comparison to rival firms.

What are the benefits of strategic management?

Financial - more sales, higher profits, higher productivity Non-financial - enhanced awareness of threats, better understanding of competitors, reduced resistance to change, order and discipline among employees.

Describe 3 different integration strategies

Forward Integration - Gaining ownership or increased control over distributors or retailers. Backward Integration - Seeking ownership or increased control of a firm's suppliers. Horizontal Integration - Seeking ownership or increased control over competitors

Discuss the advantages and disadvantages with "group-decision-making" and "individual decision-making"

Individual decision-making saves time, money, and energy, as individuals make fast and logical decisions generally. While group-decision-making involves a lot of time, money, energy and minority domination. Individual decisions are more focused and rational as compared to groups. Group decision-making provides complete information, generate more alternatives, increased acceptance of a solution, increase legitimacy, generates more favorable outcomes, and provides a broader perspective.

Name 3 intensive strategies

Market penetration Market development Product development

A firm can segment the market in different ways. What advantages does a successful segmentation have? Show by means of an own example, how a market can be segmented

Market segmentation is a marketing term that refers to aggregating prospective buyers into groups or segments with common need and who respond similarly to a marketing action. Market segmentation enables companies to target different categories of consumers who percieve the full value of certain products and services differently from another. For example, an athletic footwear company might have market segments for basketballplayers and long-distance runners. As distinct groups, basketball-players and long-distance runners respond to very different advertisements. Understanding these different market segments enables the athletic footwear company to market its branding appropriately. A successful market segmentation could mean increased resource efficiency, stronger brand image, greater potential for brand loyalty, stronger market differentiation and better targeted digital advertising.

Explain the difference between "mission statement" and "vision statement" and describe, by means of an example, three different components of a mission statement.

Mission statement are enduring statements of purpose that distinguish one business from other similar firms. A mission statement identifies the scope of. firms operations in product and market term. It addresses the basic question that faces all strategist, "What is our business?". Components: - Customers - Products or services - Technology - Concern for survival - Philosophy - Self-Concept - Concern for public image - Concern for employees A vision statement answers the question "What do we want to become?". Developing a vision statement is often considered to be the first step in strategic planning. Many vision statements are a single sentence.

Describe strategy evaluation/controlling

Monitoring activités to ensure that they are accomplished as planned

Describe the purpose of the management function "planning"! Explain how managers can or maybe should plan in today's dynamic environment

Planning is the function of management that involves setting objectives and determining a course of action for achieving those objectives. Planning provides direction, reduces uncertainty, minimizes waste and redundancy and sets controlling standards. There is informal planning and formal planning. Approaches to planning: - Top-down planning (management) - Bottom-up planning (management) - Middle-up-down planning (management) The managers can effectively plan in today's dynamic environment by the following means: - By focusing on the ends, not the means - Clarifying on how the outcome can be measured and how much is to be expected. - After how long the accomplishment can be measured - Putting everyone on the same page - Focusing and determining the goals - Making sure low goals do not demotivate - Communication is key - Re-work the company's goals to fit circumstances. Stay in-touch with changes and be flexible.

What are policies?

Policies are specific guidelines, methods, procedures, rules, forms and administrative practices established to support and encourage work toward stated goals.

Name 2 Diversification-Strategies and explain them

Related Diversification - Adding new but related products or services Unrelated Diversification - Adding new, unrelated products or services

Resistance to change is a serious issue that managers must face in their working life. Describe two typical ways of how employees can react when changes are implemented. Further describe three commonly used ways of how managers can implement changes.

Resistance to change is a natural human tendency to be wary of new policies/strategies, due to potential negative consequences; if not managed then this could result in sabotaging production machines, absenteeism, filing unfounded grievances, and an unwillingness to cooperate. Employees often resist strategy implementation because they do not understand what is happening or why changes are takin place. In that case, employees may simply need accurate information. It is natural for employees to view change first from the perspective of their own job security, and second from the needs of the organization. Employees wonder what will happen to their jobs if technological advances are introduced or if downsizing creates organizational restructuring. Will the changes result in less work for them, or even do away with their job altogether? Employees are also concerned about what financial impact the change will have on them. The three commonly used strategies: - A forced change strategy, involves giving orders and enforcing those orders. This strategy has the advantage of being fast, but it is plagued by low commitment and high resistance. - Educative-Change-Strategy, this one presents information to convince people of the need for change; the disadvantages of this is that implementation becomes slow and difficult. However this type of strategy evokes greater commitment and less resistance than the force-change-strategy. - Rational-change-strategy, this one attempts to convince individuals that the change is to their personal advantage. When this appeal is successful, strategy implementation can be relatively easy. However, implementation-changes are seldom to everyones advantage.

Explain the aim of "restructuring" and "reengineering" and discuss their advantages and disadvantages, especially for employees, by using own examples.

Restructuring(long-term, affecting all business functions) - also called downsizing, rightsizing, or delayering, involves reducing size of the firm in terms of number of employees, number of divisions or units, and number of hierarchical levels in the firm's organizational structure. This reduction in size is intended to improve both efficiency and effectiveness. Restructuring is concerned primarily with shareholder well-being rather than employee well-being. Advantages: - The primary benefit sought from restructuring is cost reduction. For some highly bureaucratic firms, restructuring can rescue the firm from global competition and demise. Disadvantages: - Reduced employee-comittment, creativity, and innovation that accompanies the uncertainty and trauma associated with pending and actual employee layoffs. Reengineering(short-term, business-function-specific) is concerned more with employee and customer well-being than shareholder well-being. Reengineering is also called process-management, process-innovation, or process-redesign. It involves reconfiguring or redesigning work, jobs, and processes for the purpose of improving cost, quality, service and speed. Reengineering does not usually affect the organizational structure with eliminating or establishing, shrinking, or enlarging, and moving organizational departments and divisions. Advantages: - There are countless, example increased revenue, improved customer service, reduced cost, higher employee retention, faster processing time etc. Disadvantages: - Firms can face resistance to change, it doesn't suit every business as it depends on factors like size and availability of resources. It usually benefits large organizations. It can replace humans when it comes to getting the job done error-free hence using a real threat to jobs.

Name 3 Defensive-Strategies and describe them

Retrenchment - Regrouping through cost and asset reduction to reverse declining sales and profit Diverstiture - Selling a division or part of an organization Liquidation - Selling all of a company's assets in parts, for their tangible worth

Name and describe 3 stages in strategy analysis and choice

Stage 1 - Input stage, summarizes the basic input information needed to formulate strategies. Stage 2 - Matching stage, focuses on generating feasible alternative strategies by aligning key external and internal factors Stage 3 - Decision stage, objectively evaluating feasible alternative strategies identified in stage 2

What is strategic management?

Strategic management is an objective, logical and systematic that organizes quantitative data information in a way that allows for making major decisions under conditions of uncertainty OR Formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives.

Describe the relation between structure and strategy

Structure largely dictates how objectives and policies are established. Structure also dictates how resources will be allocated. Their structure should be designed to facilitate the strategic intend of a firm and therefore structure follows strategy.

What is the difference between "structured" and "unstructured" problems and what kind of decisions are needed to handle them? At what level in the organization are the decisions taken?

Structured problems are routine in nature. The commonly occur in a similar or recognizable way within the organization. In this way, structured problems are easily understood by the organization. Unstructured problems are novel and infrequent in nature. These types of problems may be difficult to recognize upon initial occurrence. Further, they may require specific analysis and research to fully understand. Decisions Support System (DSS) usually aid executives in solving unstructured problems that exist at the top level of management. Programmed decisions, are routine decisions or structured decisions. The reason is that these types of decisions are taken frequently, and they are repetitive in nature. Those decisions are executed in the lower-level (functional level).

Explain and discuss "The Blue Ocean Strategy" and focus on the term "competitive advantage" and "value innovation". How can blue oceans be created and what should a company do to avoid that the ocean turn red?

The Blue Ocean strategy encourages tweaking your products to push them into their own market with low prices and no competition. Many household-name business have reached their current stature through the blue ocean strategy although the approach can be risky. The strategy is about making the company gain uncontested market space separate from other, similar businesses. These spaces are described as "blue oceans" - a term meant to contrast with the struggle for survival in bloody "red oceans", that describes spaces with a lot of competition. Red Oceans are existing industries, boundaries are defined, accepted and the rule of the game are known. Companies try to be better than their rivals to get more marketshare, profit, and growth chances are limited. The blue oceans strategy represent the simultaneous pursuit of high product differentiation and low cost, making the competition irrelevant. In unknown markets, industries often don't exist yet, you can create a totally new demand outside the existing industry boundaries and the potential for very profitable growth is high. Competition does not matter since the rules of the game are not determined. By implementing a Blue Ocean strategy, you will avoid saturated markets, introduce growth potential in your company and meet costumers at their level. There is no exact known way of creating a Blue Ocean, although there is a common pattern for strategies to create and keep Blue Oceans and that is to create value innovation. Value without innovation often means focusing on stepwise value creation. Something that improves value but nothing that is excellent or really distinguishing on the market, but customers are not ready for that product or do not accept it or want to pay for it. Value innovation occurs when a company matches innovation with needs, price, and costs. Most important is to break with one of the most accepted dogmas (red ocean) within the school of competitive strategy: the linkage between value and costs. In red oceans, you can either create a higher customers value for higher costs (differentiation strategy) or we can create a sufficient value for lower costs (low-cost-strategy) In Blue Oceans we differentiate and have low costs simultaneously.

What is the difference between "The Resource Based View" and "The Industrial Organization View"? Discuss both approaches by using two internal and two external factors that should be analyzed more in detail by a firm!

The Resource Based View (RBV) approach to competitive advantage contends that internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage. In contrast to the Industrial Organization View, the RBV contend that organizational performance will primarily be determined by internal resources that can be grouped into three all-encompassing categories: physical resources, Human Resources, and organizational resources. Physical resources include all plant and equipment, location, technology, raw materials, machines. Human Resources include all employees, training, experience, intelligence, knowledge, skills, abilities. Organizational resources include firm-structure, planning process, information systems, patents, trademarks, copyrights, databases, and so on. RBV asserts that resources are what helps a firm exploit opportunity and neutralize threats. The basic premise of the RBV is that the mix, type, amount, and nature of a firms internal resources should be considered first and foremost in devising strategies that can lead to sustainable competitive advantage. Managing strategically according to the RBV involves developing and exploiting a firms unique resources and capabilities, and continually maintaining and strengthening those resources. The Industrial Organization View of strategy assumes that the external environment determines the actions a firm can deploy. The implication of the I/O model for strategic management is that firms identify and seek to operate in environments that provide the best opportunities for competitiveness and profitability.

Strategy review, evaluation and control are essential. Describe the control process and analyze each step of that process.

The controlling process assures that the right things are done in the right manner, at the right time. By controlling, a manager checks the progress and compares it to what was planned. If the planned events are not done the same, corrective actions can be taken. The proper performance of the management-control function is critical to the success of an organization. After plans are set in place, management must execute a series of steps to ensure that the plans are carried out. The steps in the basic control-process can be followed for almost any application, such as improving product quality, reducing waste, and increasing sales. The basic control process includes the following steps: 1. Measuring actual performance by doing personal observation, statistical reports, oral reports, written reports. What should be measured is employee satisfaction, turnover, absenteeism rate, budget etc Diverse control measurements are produced units per day, scrap rate, customer complaints etc. 2. Comparing performance against standards, determining the degree of variation between actual performance and the prespecified standard. 3. Taking managerial action, managers can choose among three possible courses of action. Do nothing, correct the actual performance, or revise the standards.

Name Porter's Five Generic Strategies

Type 1 - Cost leadership, low cost Type 2 - Cost leadership, best value Conditions for type 1 and 2 - Vigorous price competition - Plentiful supply of identical products - Little product differentiation - Products used in same ways - Low cost to switch - Large beers with power - Industry newcomers use low prices to attract buyers. Type 3 - Differentiation Conditions for type 3 - Many ways to differentiate and buyers perceive the differences as having value - Few rival firms following similar differentiation approach - Fast paced technological change and evolving product features. Type 4 - Focus, low cost Type 5 - Focus, best value Conditions for type 4 and 5 - Large, profitable and growing target market niche - Industry leaders do not consider the niche crucial to their success - Industry leaders consider it costly or difficult to meet the needs of this niche - Industry has many niches and segments - Few rivals are specializing on this target segment

Describe the "control" process and discuss the following issues: a) What is more important: "How" to measure or "What" to measure? b) What is of particular interest for managers when they compare performance against standard? c) What possibilities does a manager have to take "managerial action"?

a) How to measure what you are measuring won't do much good if you don't do it in a proper way and get valuable data. b) Observing the range of variation, and what's important is the size and direction of this variation. c) - Do nothing - Correct actual performance - Revise the standard (are they realistic and good or should they be changed)

Show the difference in decision-making to : a) "assumption of rationality" b) "bounded reality" c) "role of intuition"

a) Objective and logical decision-making that maximizes payoff b) Rational decision-making, yet, since it is not possible to analyze all information on all alternatives, managers satisfied (good enough) rather than maximize. c) Decision-making based on experience, feelings, and accumulated judgement.