Strategic Management Quiz 1
Terms
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copy deck
- Four parts to creating an environmentally aware organization?
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environmental scanning
Environmental monitoring
Competitive intelligence
Environmental forecasting - Parts of the general environment
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demographic
sociocultural
political/legal
technological
economic
global - Porter's Five Forces
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Threat of New entrants
Bargaining power of buyers
Bargaining power of suppliers
Threat of substitutes
Intensity of rivarlry within industry - Six sources of entry barriers
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Economies of scale
Switching costs
Product Differentiation
Capital requirements
Access to Distribution Channels
Cost Disadvnatages independent of sale - Substitution
- getting the same function in a different way
- What value is the strategic group concept as an analytical tool?
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Helps a firm identify barriers to mobility that protect a group from attacks by other groups
Help a firm identify groups whose competitive positionmay be marginal or tenuous
Helps chart the future directions of firms' strategies
Strategic groups are helpful in thinking through the implications of each industry trend for the strategic group as a whole - Primary activities
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inbound logistics
operations
outbound logistics
marketing and sales
service - Value
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Measured by total revenue
Firm is profitable if the value that it receives is greater than the total costs involved in creating its product or service - Support activities
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procurement- function of purchasing inputs
Technology development
Human resource management
General Administration - Types of firm resources
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Tangible
Intangible
Organizational capabilities- core competencies - Four questions about sustainable competitive advantage?
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Is the resource valuable?
Is the resource rare?
Can the resource be imitated easily?
Are there substitutes available? - Costly to imitate: 4 factors
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Physical uniqueness
Path Dependency- unique and scarce because of all that has happened along the path
casual ambiguity- impossible to disentangle the causes of either what the valuable resource is or how it can be re-created
Social complexity- interpersonal relations - Four factors in determining whether employees and managers will maintain a high proportion of the profits they earn
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Employee bargaining power
Manager bargaining power
Employee replacement costs
Employee exit costs - Balanced Scoredcard
- Meaningful integration of the many issues that come into evaluating a firm's performance
- BS- 4 perspectives
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Customer
Internal Business
Innovation and Learning
Financial - 4 areas of customer perspective
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time
quality
performance/service
costs - 3 parts of intellectual capital
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Human capital
Social capital
knowledge - Pied piper effect
- recruit job candidates who have cast social networks
- Overall Cost Leadership Characteristics
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Efficiency
Standardized products
lowest competitive price
features acceptable to many customers - Differentiation Charcteristics
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prestige or brand image
technology
innovation
features
customer service
dealer network - Focus Strategy
- A firm selects a segment or group to target its product
- Cost focus
- firm strives to create a cost advantage in its target segment
- Differnetiation focus
- firm seeks to differntiate in its target market
- Profit Pool
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Total profits in an industry at all points along the industry's value chain
Potential profit pool will be deeper in some segments of the value chain than in others - Two issues addressed by diversification
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What businesses should a corporation compete in
How can these businesses be managed so they create "synergy" - Why a firm would diversify into related businesses
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Economies of scope
Market power
Parenting - Why a firm would diversify into unrelated businesses
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Efficicent Internal Capital Market Allocation
Portoflio Management - Economies of Scope
- Cost savings from leveraging core competencies or sharing related activities among businesses in the corporation
- Three criteria for core competencies
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Core competence must enhance CA by creating customer value
Different businesses in the corporation must be similar in at least one important way related to the core competence
The core competencies must be difficult for competitors to imitate or find substitutes - Three types of Diversification
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Related Diversification: Market Power
Related Diversification: Economies of scope and revenue enhancement
Unrelated Diversification: Financial Synergies and Parenting - Market power
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similar businesses working together (Tribune Company, McDonalds)
Vertical Integration - Transaction Cost perspective of vertical integration
- every market transaction involves some transaction cost
- Unrelated Diversification: Financial Synergies and Parenting
- add value to companies and restructure
- The Means to achieve Diversification
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Merger- Marriage
Acquisition- one company buys a controlling interest in another firm
Takeover- Target does not want to be acquired - Real Options Analysis
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An investment analysis tool from the field of finance
REAL OPTIONS- options used on physical things; used to continue, delay or abandon a project - Poison pills
- can give shareholders certain rights in the event of a takeover by another firm
- Strategic Management
- Consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain CA
- Four key attributes to Strategic Management
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Directed toward overall organizational goals and objectives
Includes multiple stakeholders in decision making
Requires incorporating both short-term and long-term perspectives
Involves the recognition of trade-offs between effectiveness and efficiency - effectiveness vs. efficiency
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effectiveness- doing the right thing
efficiecny- doing things right - Strategic Management Process (3 parts)
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Strategy Analysis
Strategy Formulation
Strategy Implementation - Zero sum or Symbiosis (Stakeholer managment)
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zero sum- no winners
Symbiosis- growth in interpersonal relationships - Three key driving forces in business
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globalization
technology
intellectual capital - Three types of leaders needed in strategic management process
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local line leaders
executive leaders
internal networkers - Meaningful strategic objectives
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measurable
specific
appropriate
realistic
timely