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MADM 760 > Ch 8 &9 > Flashcards

Ch 8 &9 Flashcards

1
Q

What tier of strategy does function strategy represent

A

Functional strategies represent the lowest strategy tier its link with business strategy isn’t always clear.

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2
Q

What does business strategy dictate

A

business strategy usually dictates what must be done within the various functions.

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3
Q

What is the key to functional and business strategy

A

The key is integration. All functional strategies must blend together to support the business strategy.

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4
Q

What are Functional Strategies of marketing

A

Functional Strategies of marketing include the 4 P’s

  1. Pricing
  2. Promotion
  3. Production/Service
  4. Place (Distribution)
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5
Q

What’s key to the Marketing Functional Strategy :

Pricing for low cost and differentiated businesses

A

For the Marketing Functional Strategy : Pricing

Low-cost businesses tend to emphasize low prices.

Differentiated businesses price is less of a concern

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6
Q

What’s key to Marketing Functional Strategy :

Promotion for low cost and differentiated businesses

A

For the Marketing Functional Strategy : Promotion:

Low-cost businesses spend less on promotion and often emphasize price.

Differentiated businesses highlight the uniqueness of their products or services

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7
Q

What’s key to the Marketing Functional Strategy :

Product/Service for low cost and differentiated businesses

A

For the Marketing Functional Strategy : Product/Service

Low-cost businesses emphasize basic, no-frills
products.

Differentiated businesses distinguish their products from the competition.

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8
Q

What’s key to Marketing Functional Strategy :

Place (Distribution) for low cost and differentiated businesses

A

For the Marketing Functional Strategy : Place (Distribution):

Low-cost businesses seek most efficient means of distribution.

Differentiated businesses may emphasize quality or speed of delivery.

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9
Q

What are important steps for case analysis step 12 the marketing strategy

A

Case Analysis Step 12: the Marketing Strategy

i. Describe 4 P’s of an org
ii. examine recent ads and company website
iii. report on success or failure of market strategy

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10
Q

What’s key to functional strategy for finance strategy for low cost and differentiated businesses

A

For Functional Strategy in Finance :
Low-cost businesses minimize financial costs and defer expansion if cost of capital is too high.

Differentiated businesses fund initiatives associated with quality improvements and expansion even when the cost of capital is high.

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11
Q

What are financial ratios use for analysis in the financial strategy process

A 
Financial Strategy Financial Ratios are 
i. Liquidity Ratios
ii Activity Ratios
iii. Leverage Ratios
iv. Performance Ratios
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12
Q

What are the Financial Strategy Financial Ratio: Liquidity Ratios

A

the Financial Strategy Financial Ratio: Liquidity ratios

i. current ratio
ii. Quick Ratio/Acid Test/Liquidity Ratio

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13
Q

What is the Financial Strategy Financial Ratio: Liquidity Ratio- Current Ratio

A

Current Ratio

assess current assets / current liabilities
indicate how much of the current liabilities the current assets can cover (2:1 or better desirable)

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14
Q

What is the Financial Strategy Financial Ratio: Liquidity Ratio- Quick Ratio/Acid Test/Liquidity Ratio

A

Quick Ratio/Acid Test/Liquidity Ratio

current assets-inventory/current liabilities
indicate how quickly a business can produce cash on short notice not relevant to firms where inventory is immediately convertible to cash (i.e.fast food)

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15
Q

What are the Financial Strategy Financial Ratio: Activity ratio

A

the Financial Strategy Financial Ratio: Activity ratios

i. Asset turnover
ii. inventory turnover
iii. sales -to-working capital

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16
Q

What is the Financial Strategy Financial Ratio: Activity Ratio- Asset turnover

A

Asset turnover

total revenues/total assets (during period)

measures efficiency of total assets use to generate sales

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17
Q

What is the Financial Strategy Financial Ratio: Activity Ratio- Inventory turnover

A

Inventory turnover

COGS/avg inventory for a period

indicates number times inventory of finished goods is sold annually

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18
Q

What is the Financial Strategy Financial Ratio: Activity Ratio- Sales-to-Working-Capital

A

Sales-to-Working-Capital

Net Sales/Working Capital

measures efficiency of net working capital ( current assets-liabilities) use generates sales

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19
Q

What are the Financial Strategy Financial Ratio: Leverage Ratios

A

the Financial Strategy Financial Ratio: Leverage Ratios

i. Debt-to Asset ratio
ii. Debt-to-equity ratio
iii. Long-term-debt-to-equity ratio

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20
Q

What is the Financial Strategy Financial Ratio: Leverage Ratio- Debt-to Asset ratio

A

Debt-to Asset ratio

total debt/StkH equity

indicates % borrowed funds utilized to finance assets

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21
Q

What is the Financial Strategy Financial Ratio: Leverage Ratio- Debt-to-equity ratio

A

Debt-to-equity ratio

total debt/SH equity

indicates % funds prodivided by creditors compared to owners

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22
Q

What is the Financial Strategy Financial Ratio: Leverage Ratio- Long-term-debt-to-equity ratio

A

Long-term-debt-to-equity ratio

long-term debt/StckH equity

indicates % of funds provided by long-term creditors compared to owners

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23
Q

What are the Financial Strategy Financial Ratio: Performance ratio

A

the Financial Strategy for Performance ratio:

i. Gross Profit Margin
ii. Return on Assets
iii. Return on Equity
iv. Return on Sales

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24
Q

What is the Financial Strategy Financial Ratio: Performance ratio- Gross Profit Margin

A

Gross Profit Margin
gross profit/total revenue

measures efficiency during production process
variations over time suggest :
i. fraud
ii. financial difficulties

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25
Q

What is the Financial Strategy Financial Ratio: Performance ratio- Return on Assets

A

Return on Assets

net income (before taxes)/total assets

measure return on total assets employed

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26
Q

What is the Financial Strategy Financial Ratio: Performance ratio- Return on Equity

A

Return on Equity

net profit (after taxes)/StckH equity

measure firms profitability compared to total amt of SH equity

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27
Q

What is the Financial Strategy Financial Ratio: Performance ratio- Return on Sales

A

Return on Sales

operating profit before taxes/net sales

ratio of return on net sales

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28
Q

What are important steps for case analysis step 13 the financial strategy

A

step 13 the financial strategy

i. identify org financial strategy
ii. how is performance? compare financial ratios of org vs industry norms or close competitors
iii. explain substantial differences between firm and rival ratios

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29
Q

What’s key to functional strategy for production strategy

A 
for production strategy 
how a business generates goods or services consider 
I.experience curve 
ii. economies of scale
iii. capital-labor- substitution
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30
Q

What is the Production Strategy concept experience curve

A

Experience curve
the reduction in per-unit cost attributed organizational learning, economies of scale or capital-labor subs an org gains over time

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31
Q

What is the Production Strategy concept organizational learning

A

organizational learning

when employees become more efficient preforming the same takes many times

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32
Q

What is the Production Strategy concept economies of scale

A

economies of scale

the reduction in per-unit cost as volume increases

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33
Q

What is the Production Strategy concept capital-labor substitution

A

capital-labor substitution
orgs ability to sub labor for capital (or vice versa) as volume increases depending on which combo minimizes cost and or maximizes effectiveness

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34
Q

What’s key to the production Functional Strategy for low cost and differentiated businesses

A

For production strategy
low-cost businesses emphasize cost reduction via experience curve and often engage in business process engineering to eliminate unnecessary or low value operations affecting final prodcut

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35
Q

What is quality consideration ( historically)

A

quality consideration

historically was a control activity occurred at the end of production process

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36
Q

What is quality consideration ( today)

A

today quality is essential and a concern of all members of the org

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37
Q

What is total quality management

A

TQM, total quality management
(1990s)
totality of features and characteristics of products or service that bear on its to satisfy customers

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38
Q

What’s key to functional strategy for research and development strategy

A

For reasarch and Development strategy (R&D)

i. products and service R&D
ii. proccess R&D

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39
Q

What is the R&D Strategy concept of products and services

A

products and services
efforts directed towards improvements or innovations in the quality or uniqueness of a company’s outputs

Differentiators usually invest more in product/service R&D

40
Q

What is the R&D Strategy concept of process

A

process
reduce operational costs and make them more efficient.
cost leaders usually invest more in process R&D.

41
Q

When is R&D most important

A

R&D is most important in rapidly changing industries (growth phase) where production modifications are most often required to remain competitive.

42
Q

What’s key to functional strategy for purchasing strategy for low cost and differentiated businesses

A

For purchasing strategy
Low cost business buy supplies and raw materials at lowest possible price consistent with quality standard

differentiated businesses willing to pay more for raw materials if they help differentiate final product/service

43
Q

What’s functional strategy purchasing strategy’s JIT inventory management

A

Just-in-time (JIT) inventory management - request or purchase items as needed has grown in popularity during the past two decades

44
Q

What are important steps for case analysis step 14 Production and Purchasing Strategies

A

ase analysis step 14 Production and Purchasing Strategies

i. identify org production and purchasing strategies in two separate sections
ii. how do strategies differ from competitors

45
Q

What’s key to functional strategy for human resources strategy for low cost businesses

A

human resources strategy

Low-cost businesses attempt to minimize staffing expenses, training & development, and salaries.

46
Q

What’s the problem in functional strategy for human resources strategy for low cost businesses

A

the problem in human resources strategy its often necessary to pay “market wages” for quality people,
HR strategies may differ between low-cost and differentiated businesses.

47
Q

What is the Human Resources Strategy concept for how employees are viewed

A

when employees are viewed as expenses, organizations minimize costs.
When they are viewed as investments, organizations maximize their value

48
Q

What is the Human Resources Strategy concept knowledge management perspective

A

Human Resources Strategy concept knowledge management perspective, people and their skills and abilities represent the resource that cannot be reproduced by competitors.

49
Q

What is the Human Resources Strategy concept Human capital

A

Human Resources Strategy concept Human capital

is the sum of the capabilities of individuals in an organization, and is a source of competitive advantage

50
Q

What is the concept information systems management Strategy

A

effective information systems (IS) strategy can benefit the entire organization

51
Q

What is the concept for computer based decisions in information systems management Strategy

A

computer-based decision support system can permit each functional area to access information it needs and improve coordination by communicating electronically across functional departments.

52
Q

What can information systems management Strategy do for companies

A

Effective information systems can support all other functional strategies. Its important for all businesses,

53
Q

How does Functional Strategies and Industry Life Cycle correlate

A

Certain strategic capabilities tend to become more valuable in firms as their industries progress through different life cycle stages.
HR function is important but not dominant in all stages.

54
Q

What Functional Strategies correlate to Industry Life Cycle -Introduction

A

Introduction stage- emphasis on R&D

55
Q

What Functional Strategies correlate to Industry Life Cycle -Maturity

A

Maturity stage- emphasis on production

56
Q

What Functional Strategies correlate to Industry Life Cycle -Growth

A

Growth stage- emphasis on marketing

57
Q

What Functional Strategies correlate to Industry Life Cycle -Decline

A

Decline stage- emphasis on finance

58
Q

What are important steps for case analysis step 15 other functional strategies

A

case analysis step 15 other functional strategies

i. Identify orgs functional strategies in other areas, including HR and information systems.
ii. Emphasize differences between those of the organization and key competitors

59
Q

What is the SWOT analysis and what is its purpose

A 
SWOT analysis stands for 
Strengths (internal)
Weaknesses (internal)
Opportunities (external)
Threats (external)
Purpose of the SWOT: organize research and perspectives into a useful framework for strategic decision-making.
60
Q

What are the key concepts of Strength and Weaknesses of the SWOT Analysis

A

Key concepts of Strength and Weaknesses

i. gap analysis
ii. values chain
iii. strategic capabilities

61
Q

What is the key concept of Strength and Weaknesses: Gap Analysis

A

Gap Analysis

identifies the distance between a firm’s current position and its desired position with regard to an internal weakness.

62
Q

What should firms do regarding gap analysis

A

a firm should take action to close the gap, especially when it leaves it vulnerable to external threats.

63
Q

What is the key concept of Strength and Weaknesses: value chain

A

value chain helps a firm analyze its strengths and weaknesses, and understand how they might translate into competitive advantage or disadvantage.

64
Q

What is the key concept of Strength and Weaknesses: strategic capabilities

A

Strategic capabilities are how resources are translated into strengths or weaknesses, the mechanism through which individuals in the org coordinate efforts alone one or more resources to solve a particular problem

65
Q

What are sources of Organizational Strength and Weaknesses

A

sources of Organizational Strength and Weaknesses are

i. Human Resources
ii. Organizational Resources
iii. Physical Sources

66
Q

What’s Human Resources as a source of Organizational Strength and Weaknesses

A

Human Resources: The experience, capabilities, knowledge, skills, and judgment of all the firm’s employees.

67
Q

What’s Organizational Resources as a source of Organizational Strength and Weaknesses

A

Organizational Resources: The firm’s systems and processes, including its strategies at various levels, structure, and culture.

68
Q

What’s Physical Resources as a source of Organizational Strength and Weaknesses

A

Physical Resources: Plant and equipment, geographic locations, access to raw materials, distribution network, and technology.

69
Q

What are some issues to consider with Human Resources as a source of Organizational Strength and Weaknesses

A

Issues to consider with Human Resources as a source of Organizational Strength and Weaknesses are:

i. BOD- tenure, experience, present level of investment
ii. Top managers( including CEO)- background capabilities, experience

iii.Other managers & employees: Effective HR planning, training & development, turnover, effective performance appraisal (PA)

70
Q

What are some issues to consider with Organizational Resources as a source of Organizational Strength and Weaknesses

A

issues to consider with Organizational Resources as a source of Organizational Strength and Weaknesses
i. consistency among corporate, business and functional strategies
ii. consistence between organizational strategies and firm’s mission and goals
iii. consistency between firm’s strategies and its structure
iv consistency between firm strategy and its structure
iv. relative position in industry

71
Q

What are some issues to consider with Physical Resources as a source of Organizational Strength and Weaknesses

A

Issues to consider with Physical Resources

i. currency of tech
ii. quality and sophistication of distrib network
iii. Production capacity
iv. reliable access to cost effective sources
iv. favorable locations.

72
Q

what makes up the VRIO Framework

A

VRIO Framework describe resource characteristics

i. valuable
ii. rare
iii. inimitable
iv. organization

73
Q

what is VRIO Framework resource characteristic of valuable

A

VRIO Framework resource characteristic of valuable

can be employed to exploit an opportunity or neutralize a threat

74
Q

what’s the implication of VRIO Framework resource characteristic of valuable

A

implication of VRIO Framework resource characteristic of valuable
if only valuable hen there is only parity rivals , no competitive advantage

75
Q

what is VRIO Framework resource characteristic of rare

A

VRIO Framework resource characteristic of rare

controlled by one or a few entities

76
Q

what’s the implication of VRIO Framework resource characteristic of rare

A

implication of VRIO Framework resource characteristic of rare
if only valuable and rare competitive advantage exist but is likely temporary

77
Q

what is VRIO Framework resource characteristic of inimitable

A

VRIO Framework resource characteristic of inimitable

costly for rivals to duplicate

78
Q

what’s the implication of VRIO Framework resource characteristic of inimitable

A

implication of VRIO Framework resource characteristic of inimitable
if valuable, rare and inimitable the firm has potential for long-term competitive advantage

79
Q

what is VRIO Framework resource characteristic of organization

A

VRIO Framework resource characteristic of organization

firm posses appropriate capabilities to leverage the resource

80
Q

what’s the implication of VRIO Framework resource characteristic of organization

A

the implication of VRIO Framework resource characteristic organization
if valuable, rare and inimitable and if firm has appropriate capabilities then sustainable competitive advantage can be achieved

81
Q

What are the key concepts of Opportunities and threats of the SWOT Analysis

A

Opportunities and threats of the SWOT Analysis
are external and have two sources of application
1. application of maroevnironmental forces
2. application of industry analysis (Porter’s 5 force model) to the org

82
Q

What are the pitfalls

to avocado in Opportunities and threats of the SWOT Analysis

A

itfalls
to avocado in Opportunities and threats of the SWOT Analysis

  1. Don’t confuse external opportunities with internal strengths and weaknesses
  2. Distinguish between opportunities and alternatives
83
Q

what’s Opportunities and Threats:Pitfall #1 to Avoid

A

Opportunities and Threats: pitfall #1 to Avoid
Don’t confuse external opportunities with internal strengths and weaknesses.
Factors associated with the firm internally classified as strength or weakness (poor financial position, ineffective marketing strategy, strong brand image)
factors outside the firm are external and must classified s oppp and threats
(demographic changes, competitive threats, recent legislation)

84
Q

What’s Opportunities and Threats:Pitfall #2 to Avoid

A

Opportunities and Threats:Pitfall #2 to Avoid
Distinguish between opportunities and alternatives.
opps and alts are not synonymous
Opportunities represent application of macroenvironmental forces to a specific organization.
Alternatives emanate from the SW/OT matrix and represent specific courses of action that the organization can choose to pursue

85
Q

what is involved in Case Analysis Steps 16–19:SWOT Analysis

A

Case Analysis Steps 16–19:SWOT Analysis

i. Strength and weaknesses come for analysis of a firm’s resources
ii. opps and threats are rooted in earlier macorevnironmental or industry analysis
iii. don’t confuse internal (S&W) with external (O&T) factors
iv. don’t confuse opps - external factors applied to a firm with alts specific course of action a firm can take, are developed in next step of analysis

86
Q

What is the SW/OT Matrix

A

What is the SW/OT Matrix
utilizes SWOT to develop strategic alternatives by observing combinations of external and internal factors that can lead to alternatives which are evaluated in another step

87
Q

what are 4 categories of SW/OT Matrix

A

what are 4 categories of SW/OT Matrix

  1. Strength-Opp
  2. Weakness-Threat
  3. Strength-Threat
  4. Weakness-Opp
88
Q

what is the SW/OT Matrix category : Strength-Opp

A

Strength-Opp

“Offensive” alternatives, utilize a strength to address an opportunity

89
Q

what is the SW/OT Matrix category : Weakness-Threat

A

Weakness-Threat

“Defensive” alternatives, eliminate or minimize a weakness in order to minimize the effect of a threat.

90
Q

what is the SW/OT Matrix category : Strength-Threat

A

Strength-Threat

Utilize a strength to minimize the effect of a threat.

91
Q

what is the SW/OT Matrix category : Weakness–Opp

A

Weakness–Opp

Shore up a weakness to enable the organization to take advantage of an opportunity.

92
Q

What are some Issues in Strategy Formulation

A

Issues in Strategy Formulation include :

i. strategic change- do benefits out weight cots
ii. social responsibility and ethics- is strategy companionable
iii. what effect dos change in strategy have on existing resources
iv. how will competitors respond to implementation of change

93
Q

What is Blue Ocean Strategy

A

Blue Ocean Strategy

growth strategy contingent upon inventing or discovering a new industry or industry segment that creates new demand

94
Q

What is are examples of What is Blue Ocean Strategy

A

Examples include Starbucks, eBay, and Cirque Du Soleil in the coffee house, auction, and circus industries.

95
Q

What determines success What is Blue Ocean Strategy

A

Success is not highly dependent on competitive responses, but effective blue ocean strategies require research, creativity, and a lot of savvy.

96
Q

what is Case Analysis Steps 20–22:Strategic Alternatives

A

Case Analysis Steps 20–22:Strategic Alternatives

i. use SW/OT matrix to develop alts and keep in mind the specific combo of internal and internal factors assoc with each alt
ii. use SLSC matrix to eval alts
iii. eval pros and cons of each alt
iv. select more than one alt to implement and provide rationale in detail including why others were rejected

MADM 760 (4 decks)

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