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3 Basic Parts of Strategy: Analysis, Formulation, and Implementation

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3 Basic Parts of Strategy: Analysis, Formulation, and Implementation

MGT 409 – Exam 1 Review

  • 3 basic parts of strategy: Analysis, formulation, and implementation
  • Strategy: anything you can do to gain advantage over competition
  • Romantic view of leadership: CEO is responsible for success/failure (Steve Jobs)
  • External control leadership: Co’s are controlled by mkt forces, best CEO can do is anticipate and prepare for them
  • Strategic management: analyses, decisions, and actions taken to create/sustain a competitive advantage
  • Biggest problem is sustaining competitive advantage. Things care copied/imitated and eventually all ground breaking tech is industry standand.
  • Ambidextrous behaviors: balance between getting most out of current product/services and developing new ones  doing current tasks and looking for new opportunities simultaneously
  • Strategic Planning  from VISION to TASK
  • Key to effective management is to MANAGE – requires managers who are able to think, plan, analyze, and decide
  • Efficiency vs. effectiveness: interest of management and owners aren’t always the same; the more closely you supervise management team, the more it costs and less efficient they will be.
  • Strategic direction: (Hierarchy of Goals – Top down)
  • Vision: inspiring, overarching, long-term, passion driven, statement of co’s values, aspirations, and goals.’
  • Mission: more specific than vision, purpose of co., basis of competition and competitive advantages, focuses on means by which firm will compete
  • Strategic Objectives: most specific, operationalize mission statement, guidance on how org will move to higher goals (mission/vision), cover more defined time frame
  • NEED TO BE SMART: Specific, Measurable, Appropriate, Realistic, Timely

Corporate Governance: relationship between

  • Stockholders: Owners
  • Management: headed by CEO
  • Board of directors: elected by shareholders (representatives of owners)
  • ensure interest/motives of mgt are aligned with the owners

Stakeholders: anyone who will be affected by the success, failure, or continued operation of the firm

  • Not just management, owners, employees  suppliers, custo’s, competitors, neighbors, community, politicians etc.  crowdsourcing can effect even more people (kickstarter)
  • Views of stakeholder management:
  • Zero sum: stakeholders compete for attention and resources of org./ gain of one is loss to another
  • Symbiosis: stakeholders dependent on one another (mutually beneficial)

Chapter 2:

  • Forecasting  3 Functions:
  • External Scanning: predicting changes in firms environment, changes already underway, then working out possible responses
  • External Monitoring: tracking trends, sequences of related activities, and organized programs
  • Competitive Intelligence: tracking/understand industry, monitoring competition, identify emerging threats/opportunities
  • Collected through public industry sources. Alerts management of threats
  • Not always successful: managers can be overwhelmed with amount of info/miss something critical
  • General Environment:
  • Demographics
  • Sociocultural measures
  • Legal/political issues
  • Technological
  • Economic
  • International

Models for analyzing eternal environment:

  • SWOT Analysis: sum up general environment, industry conditions, and firm resources/needs
  • Strengths: what are we good at
  • Weaknesses: where do we need help
  • Opportunities: where can we expand
  • Threats: where are we vunerable
  • Porters 5 Forces: Michael Porter, Harvard. Zero-sum condition
  • Threat of new entrants
  • Threat of substitutes
  • Power of suppliers
  • Power of buyers
  • Rivalry amongst existing firms
  • Strategic Groups: Cluster of firms that share similar strategies and activities
  • No 2 firms exactly alike/completely different
  • In industry firms will utilize similar strategies  results in same actions (direct competition) Ex. Mercedes, Audi, BMW  or  Meijer, WalMart, Super Target
  • Forward Integration: Firm buys something closer to customer (Hammer manufacturer buys hardware store that sells hammers)
  • Backward Integration: Firm buys something closer to supplier (Hammer manufacturer buys steel mill that supplies steel)

Chapter 3:

Internal Analysis:

Value Chain: All add value or reduce costs → all work collaboratively to do so → 2 activities, 9 category

  • Primary activities:
  • Inbound Logistics, operations, outbound logistics, marketing & sales, Service
  • Support activities:
  • General admin, HR management, technology development (R&D), procurement (purchasing/supply chain relations/vendor relations)

Resource Based View (RBV):

  • Tangible Asset: all physical and financial assets used to create value for custo (includes patent)
  • Intangible Assets: routines, practices, knowledge, experience, reputation, and HR accumulated over time  employee skills/abilities, reputations, brand name etc.
  • Organizational Capabilities: skills the firm can use to provide superior product/service value (customer service)
  • Firm resources:
  • Valuable: does the resource add value?
  • Rare: does everybody have?
  • Difficult to imitate: unique or hard to make?
  • Difficult to substitute: is there an equivalent?

4 Balanced Scorecard Analysis:

  • Customer perspective: quality, service, performance
  • Internal business perspective: capabilities, skills, issues
  • Innovation and learning perspective: increasing efficiency, adding value, etc
  • Financial perspective:  profitability, growth, asset turnover
  • Limitations: lack of clear strategy, limited executive sponsorship, too much emphasis on financial measures, poor data on actual performance, inconsistent terminology

Chapter 4:

  • Knowledge economy:
  • Knowledge based labor makes 50% of GDP in industrialized countries
  • 3 Intellectual Assets:
  • Human Capital: individual knowledge/capabilities, experience of employees
  • Social Captial: network of relationships that people have throughout firm
  • Knowledge: Tactic: can’t be recorded or spread (shared only with consent and participation of the individual) / Explicit: write down, record, and transmit to someone else (reusable, replicated, widely distributed)
  • 3 major aspects of human capital: Attracting, developing, retaining - all required for success
  • Attracting HC: hire for attitude, train for skill – scan pools for candidates, referrals
  • Developing HC: train and develop on all levels, encourage widespread involvement, monitor progress/development, *employee buy-in is critical – 360 degree relationship
  • Retaining HC: avoid transfer of valuable/sensitive info outside of firm (promote firms values, loyalty strategies. Challenging/stimulating work environment, financial/non-financial rewards
  • Diversity: enhances human capital. Adds viewpoints, different opinions and expertise to firm
  • Social Capital:
  • Benefit: Workers often more loyal to colleagues and profession than employer. can help attract and retain talent, help connect firm to social networks
  • Downside: people in groups/cliques tend to go with opinions of groups. Cost of financial resources (time employees spend networking). Management has to be committed too social networking too
  • Leveraging Human Capital with Technology
  • Sharing info allows us to: conserve resources, develop new products/services, new opportunities
  • We can use tech to record & share info: email etc.
  • Improves speed, efficiency, connections with customers and suppliers

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