Chapter 1 Flashcards
(114 cards)
1
Q
There is a growing acknowledgment that the strategic management of people within organizations affects important organizational outcomes such as:
A
> such as survival, profitability, customer satisfaction levels, and employee performance.
2
Q
What is strategy?
A
> Strategy is the formulation of organizational objectives, competitive scopes, and action plans for gaining advantage.
3
Q
What is strategic intent?
A
> A tangible corporate goal; a point of view about the competitive positions a company hopes to build over a decade
4
Q
What is strategic planning?
A
> The systematic determination of goals and the plans to achieve them
5
Q
What is strategic formulation?
A
> The entire process of conceptualizing the mission of an organization, identifying the strategy, and developing long-range performance goals
6
Q
What is strategy implementation?
A
> Those activities that employees and managers of an organization undertake to enact the strategic plan and achieve the performance goals
7
Q
What are plans?
A
> The product of strategy, the means to the end
8
Q
What are objectives?
A
> The end, the goals
9
Q
What is a strategic plan?
A
> A written statement that outlines the future goals of an organization, including long-term performance goals
10
Q
What are policies?
A
> Broad guidelines to action, which establish the parameters or rules
11
Q
The top management team determines strategy through a process of:
A
> environmental analysis and discussions
12
Q
The strategy and objectives developed by senior management are:
A
> then approved by the board, and negotiated and revised as they filter throughout the organization.
13
Q
After the strategy and objectives are approved by the board, what occurs?
A
> The organization then develops plans, which include HRM programs, to achieve those goals.
14
Q
Is strategic planning a unilateral or one-time process?
A
> Various organizational outcomes provide a feedback loop to the strategic planning process led by senior management, who will also continuously monitor the dynamic environment to make adjustments to the strategy.
15
Q
Strategic planning requires thinking about what?
A
the future
16
Q
Besides catastrophic events, there are more typical shocks to the competitive environment that trigger a change in strategy, such as:
A
> changing market conditions, new technology, emerging markets, and new moves by competitors, among others.
17
Q
How does planning for the future really go?
A
> Other experts do not perceive strategy in such a simplistic, linear fashion (just thinking to the future).
> They assert that the future is not that predictable. Planning for the long term (i.e., more than 10 years) is difficult and would be more appropriately judged as a best guess.
18
Q
How does a new CEO trigger a change in strategy within organizations?
A
> A new CEO may ask questions about the assumptions underlying the strategy and challenge the status quo.
19
Q
How does a threat of a change in ownership trigger a change in strategy within organizations?
A
> Similar to a change in CEO, new owners (or a threat of new ownership) cause a reconsideration of the effectiveness of the strategy.
20
Q
How does external intervention trigger a change in strategy within organizations?
A
> Examples are a customer who accounts for a large portion of sales defecting to another company or lodging a serious complaint about a defect.
21
Q
How does a performance gap trigger a change in strategy within organizations?
A
> When sales or profit targets are not being met, most organizations will review the strategy.
22
Q
How does a strategic inflection point trigger a change in strategy within organizations?
A
> Rapid changes in technology , customer preferences, or industry regulations will trigger a change in strategy.
23
Q
Why do planners look at a relatively shorter period of time—a more predictable term of three to five years?
A
> Because of the unpredictability of trigger events
> Because of the uncertainty, their plans are formulated to be somewhat flexible so that they can respond to changes in the environment.
24
Q
Strategic planning must be viewed as what kind of process?
A
> Strategic planning must be viewed as a dynamic process: moving, shifting, and evolving as conditions warrant changes.
25
What is logical incrementalism?
> The process of subtly redirecting strategy to accommodate these changes is called logical incrementalism
> Rather than calling for a straight path to the goal, this strategy calls for a series of actions to react to changes in competitor actions or new legislation.
> Also called emergent strategy - the plan that changes incrementally due to environmental changes
26
How can opposing firms react to the emergent strategy/logical incrementalism?
> Firms can wait passively for these changes to occur and then react, or they can anticipate these moves and adopt a proactive stance.
27
What is intended strategy?
> The intended strategy is the one that was formulated at the beginning of the period.
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What is the realized strategy?
> The realized strategy is, of course, what actually happened.
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What is the discarded strategy?
> The discarded strategy is one that was deemed inappropriate due to changing circumstances.
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What is a key thing to note about logical incrementalism/emergent strategy?
> adjustments that do not require changing the focus of the desired result.
31
To be effective, strategic management does what?
> anticipates future problems, provides an alignment with external contingencies and internal competencies, recognizes multiple groups of participants, and is concerned with measurable performance—just like the flight plan
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These identifiable, basic strategies can be classified into:
> Corporate strategies
> Business strategies
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What are corporate strategies? What are they focused on?
> organizational-level decisions that focus on long-term survival.
> are focused on overall strategy for the company and all of its businesses or interests
> also known as: Company-wide strategies.
34
Corporate strategy includes what and what is the focus?
> A firm's corporate strategy includes the markets in which it will compete.
> The focus is on domain selection.
35
Examples of corporate strategies include:
> Restructuring: turnaround, liquidation, bankruptcy, divestiture
> Growth: incremental, international, mergers & acquisitions
> stability
36
When are restructuring strategies introduced?
> When an organization is not achieving its goals, whether these are business goals of profitability or social goals such as helping rehabilitate prisoners, corporate strategy becomes one of trying to deal with the problem.
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What is a turn around strategy?
> A turnaround strategy (sometimes called a retrenchment strategy) is one in which managers try to restore money-losing businesses to healthy profitability or government agencies to viability.
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Turnaround methods include:
> getting rid of unprofitable products, imposing layoffs, making the organization more efficient, or attempting to reposition it with new products.
39
What is divestiture?
> Divestiture refers to spinning off a business as a financially and managerially independent company or selling it outright
> the sale of a division or part of an organization
40
What is liquidation?
> the termination of a business and the sale of its assets
> plants are closed, employees released, and goods auctioned off.
> There is little return to shareholders under this option. Nevertheless, an early liquidation may allow some resources (including human resources) to be salvaged
41
What is bankruptcy?
> Bankruptcy occurs when a company can no longer pay its creditors, and, usually, one of them demands that the loan be repaid immediately.
> The company ceases to exist, and its assets are divided among its creditors.
42
Restructuring strategies, like growth strategies, have profound effects on HR issues, such as:
> managed turnover, selective layoffs, transfers, increased demands on remaining employees, and renegotiated labour contracts
43
Many organizations in the private sector target growth as their number-one strategy. By this they mean growth in:
> revenues, sales, market share, customers, orders, and so on
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Growth can be achieved in several ways:
> incrementally,
> internationally,
> or by mergers and acquisitions.
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Incremental growth can be attained by:
> expanding the client base, increasing the products or services, changing the distribution networks, or using technology.
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Quantum leaps in growth can be achieved through:
> can be achieved through acquisitions, mergers, or joint ventures.
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What is an acquisition?
> the purchase of one company by another
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What is a merger?
> typically is seen as two organizations merging to achieve economies of scale.
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Acquisitions and mergers have an obvious impact on HR:
> they eliminate the duplication of functions, meld benefits and labour relations practices, and, most importantly, create a common culture.
50
How do some people view stability strategies?
> Others see this as a temporary strategy (“pause and proceed with caution”) until environmental conditions are more favourable for growth.
> Or perhaps the organization grew very rapidly, and needs time to manage all the changes
> Executives in other companies, recognizing that a current profitable situation will not last forever, choose to milk the investment. This harvest strategy can also be seen as a retrenchment strategy, because no investment or efforts will be made to make the business grow; therefore, the goal will be restructuring.
51
What is a business strategy?
> Business strategy focuses on one line of business (in a diversified company or public organization)
> Business strategy is the determination of the basic long-term goals and objectives of an organization and the adoption of courses of action and the allocation of resources necessary to achieve the goals
52
Business strategy focuses on what?
> focuses on domain navigation.
53
As Thompson and colleagues note, business strategy is the action plan for what?
> the action plan for a single line of business to gain competitive advantage
54
Corporate strategies and business strategies are differentiated in the following ways:
> Corporate strategies are concerned with questions such as these:
- Should we be in business?
- What business should we be in?
> Business strategies are concerned with questions such as these:
- How should we compete?
- Should we compete by offering products at prices lower than those of the competition or by offering the best service?
- Business strategy is concerned with how to build a competitive position, and with the best way to compete in that line of business.
55
A strategic plan describes what about an organization?
> A strategic plan describes the organization’s future direction, performance targets, and approaches to achieve the targets
56
What are the steps involved in strategic planning?
1) Step 1: Establish the mission, vision, and values.
- Who are we?
2) Step 2: Develop objectives.
- Where do we want to be?
3) Step 3: Analyze the external environment.
- What may change?
4) Step 4: Identify the competitive advantage.
- What is our advantage?
5) Step 5: Determine the competitive position.
- How can we compete?
6) Step 6: Implement the strategy.
- What programs will result in success?
7) Step 7: Evaluate the performance.
How will we measure success?
57
What is a mission statement?
An articulation of the purpose of the organization and the value it creates for customers
58
What do people believe about a mission statement in relation to the CEO?
> Many believe that conveying a strong sense of mission is the most important role for the CEO
59
A test of a good mission statement is its ability to pass what test?
> A test of a good mission statement is its ability to pass the “person on a bus test.”
> In other words, could an average person correctly identify the company after reading its mission statement? Can you guess which companies are attached to these mission statements?
60
What is a vision statement?
A statement that defines the organization’s long-term goals and unites the organization's efforts
61
What is the distinction between a mission statement and a vision statement?
> distinction between a mission statement and a vision statement is the mission statement answers the questions “Who are we?/What do we do?/Why are we here? whereas the vision statement answers the question “Where are we going?”
62
What makes a good vision statement?
> A good vision statement sets a clear and compelling goal that serves to unite an organization’s effort
63
What are values?
> Values are the basic beliefs that govern individual and group behaviour in an organization
64
While vision and mission statements answer the questions about what must be accomplished, values answer what kind of question?
> answer the question “How must we behave?
65
Sometimes values reflect what?
> Sometimes values reflect the founders’ ethics; sometimes they are just words on a poster on the wall.
66
The articulation of values serves these important purposes:
> Conveys a sense of identity for employees
> Generates employee commitment to something greater than themselves
> Adds to the stability of the organization as a social system
> Serves as a frame of reference for employees to use to make sense of organizational activities and as a guide for appropriate behaviour
67
How to have employees' buy in for organizational values?
1. Invite all employees to offer ideas about the current and the desired values for the organization.
2. Record these without judgments, criticisms, or comments.
3. Have the group identify common themes.
4. Discuss and debate these themes, until there is consensus on a short list of core values.
5. Have subgroups take one value, and develop a definition of the value and the employee behaviours related to that value.
6. Have groups present their definitions and behaviours, which may be adopted or revised.
7. Appoint one person from each team to incorporate the revisions into a value statement, which is then combined with all the value statements. These then become the company values.
68
What are objectives in relation to measurement?
> Objectives are an expression, in measurable terms, of what an organization intends to achieve
69
How can goals be classified?
> Goals can be classified as hard or soft.
70
What are hard goals? What's an example?
> Hard goals always include numbers, usually relative to performance in the previous year, or to competition
> i.e.: to increase profitability in 2024 by 7 percent over 2023.
71
What are soft goals? What's an example?
> Soft goals usually define the targets for the social conduct of the business, and may not always be quantifiable.
> Soft goals may include being ethical and environmentally responsible, and providing a working environment free of discrimination with opportunities for professional development.
72
typical hard goals for corporations include a focus on"
1) Profitability
2) Growth (increase in sales, assets)
3) Shareholder wealth (dividends plus stock-price appreciation)
4) Market leadership (market share)
5) Utilization of resources (return on investment [ROI] or return on equity [ROE])
6) Efficiency (cost per unit produced)
7) Quality (percentage of waste; percentage defective)
73
One of the most widely applied frameworks for categorizing objectives is what model?
> One of the most widely applied frameworks for categorizing objectives is the balanced score card model, which divides organizational strategy into four comprehensive perspectives: financial, customer, learning and growth, and internal business process
74
What is one advantage of the balanced score card model?
> is that it forces each organizational member to think about how his or her actions can contribute to organizational strategy implementation.
75
To achieve the company objectives, managers must be aware of:
> must be aware of threats and opportunities in the external environment.
> By scanning and monitoring technology, laws and regulations, the economy, sociocultural factors, and changing demographics, managers can make reactive and proactive changes to the strategic plan.
76
Besides the external environment, managers also need to consider what when achieving company objectives?
> also need to consider what competitive advantage the organization possesses
77
What is competitive advantage?
> that is, what characteristics enable it to generate more value for customers at a lower cost, thereby earning higher rates of profit than its competitors
78
Competitive advantage normally derives from what?
> Competitive advantage normally derives from those resources that allow the organization to perform more effectively or efficiently than competitors, which fall into three categories: tangible assets, intangible assets, capabilities.
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What are tangible assets?
> These are future economic resources that have substance and form from which an organization will benefit. Examples are land, inventory, building, location, cash, and technology.
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What are Intangible Assests?
> These are future economic resources that have been generated from past organizational events. These assets lack substance and form. Examples are human capital, reputation, goodwill, trust, and copyright.
81
What are capabilities?
> These are a complex combination of people and processes that represent the firm’s capacity to exploit resources to achieve the firm’s objectives
> What is the organization good at doing? Examples are managerial capabilities, innovative capabilities, marketing capabilities, and organizational cultures. These capabilities
> —the collective skills, abilities, and expertise of an organization—are the outcome of investments in staffing, training, and other HR areas. They are stable over time and are not easy to measure or benchmark; therefore, competitors cannot copy them
82
In both academic research and the practical world of business, an emerging capability is what?
> agility
83
What is agility?
> defined as the organization's capacity to respond, adapt quickly, and thrive in changing environments, and the ability of organizations to build and reconfigure resources and integrate cultures in order to be able to adapt to rapidly changing environments.
84
The corollary of agility is:
> persistence – the ability to bounce back from difficulty and absorb, learn, and even re-invent.
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The resource-based view suggests that for these resources and capabilities to provide a sustained competitive advantage, they must meet four criteria:
1) They are valuable to the firm’s strategy (they help generate value/reduce cost).
2) They are rare (competitors don’t have them).
3) They are inimitable (they cannot easily be copied by competitors).
4) They can be organized by the firm (the firm can exploit the resources).
(VRIO)
86
Resources and capabilities become core competencies when what occurs?
> when they serve as a firm’s competitive advantage.
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Core competencies distinguish a company in what way?
> Core competencies distinguish a company competitively and reflect its personality
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What are dynamic capabilities?
> Dynamic capabilities— the ability to adapt and renew competencies in accordance with changing business environment
89
Describe the components of the SWOT analysis:
> A strength is something that a company does well or an attribute that makes it more competitive.
> A weakness is something that an organization does poorly, or a condition, such as location, that puts it at a disadvantage relative to competitors (Thompson et al. 2010).
> Opportunities and threats are environmental conditions external to the firm that may be beneficial or harmful.
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Can an organizational strength be used to combat an external threat?
> Yes, an organizational strength can be used to combat an external threat.
91
On the basis of the external environment and internal competence, managers then decide the competitive position the company wants to achieve - through a value proposition. what is that?
> a statement of the fundamental benefits it has chosen to offer in the marketplace.
> A value proposition tells prospects why they should do business with you rather than your competitors, and makes the benefits of your products or services crystal clear from the outset.
92
What is a low cost provider strategy? Who uses it most exclusively?
> The goal here is to provide a product or service at a price lower than that of competitors while appealing to a broad range of customers.
> Fast-food businesses use this strategy almost exclusively.
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What is broad differentiation strategy?
> An organization employing this strategy seeks to differentiate its products from competitors’ products in ways that will appeal to a broad range of buyers.
> It searches for features that will make its product or service different from that of competitors and that will encourage customers to pay a premium
> The goal is to provide a unique or superior value to the buyer in terms of product quality, product features, or service.
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What is the best cost provider strategy?
> The goal here is to give customers more value for their money by emphasizing a low-cost product or service and an upscale differentiation.
> The product has excellent features, including several upscale features that are offered at low cost.
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What is the strategy that is Focused or market niche strategy based on lower cost?
> The goal here is to offer a low-cost product to a select group of customers. Red Lobster uses this approach, selling fish and seafood at reasonable prices to a narrow market segment.
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What is the strategy focused on market niche strategy based on differentiation?
> the organization tries to offer a niche product or service customized to the tastes and requirements of a very narrow market segment.
97
Under Porter’s schema, business strategy concerns itself with?
> Under Porter’s schema, business strategy concerns itself with the product and market scope
98
Under Porter's schema, what are typical products characteristics?
> Typical product characteristics are cost, quality, optional features, durability, and reliability.
> Market dimensions refer to the characteristics of the target market—size, diversity, buying patterns, and geographic regions.
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What has Porter's schema been criticized for?
> The model has been criticized for its overlapping categories.
100
Most textbooks on strategy suggest that there are really only three competitive positions
> cost, differentiation, and focus.
101
Strategy implementation is the process of:
> is the process by which the strategy is put into action. This process is sometimes called operational planning. It consists of programs, budgets, and procedures, such as those for HR.
102
Under strategy implementation, what is the program?
> The program outlines the steps or activities necessary to accomplish the goal.
103
Most organizations establish a hurdle rate - what is that?
> establish a hurdle rate, the percentage of return on investment necessary before a program is implemented.
104
How do HR professionals use procedures:
> Most HR professionals use procedures—for example, the procedure to recruit a university student—based on experience.
> But other functional areas would have these procedures established as standard operating practice; these would be applied uniformly across the company, in every site.
105
The successful implementation of a strategy is judged by the ability to do what?
> is judged by the ability to meet financial targets such as profits, and the ability to meet benchmarked ratios of efficiency and effectiveness such as research and development (R&D) expenses to sales, or sales to assets.
106
Working through the strategic planning process has many benefits: name 6.
1) Clarity
2) Coordination
3) Efficiency
4) Incentives
5) Adjustments to change
6) career development
107
What is the clarity process?
There is focused and guided decision-making about resource allocations.
108
What is coordination?
Everyone is working toward the same goals.
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What is the Efficiency process?
Daily decision-making is guided by the question, “Does it fit with our strategy?”
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What are the incentives processes?
Employees understand the behaviours and performance that will be rewarded.
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What is the adjustment to change processes?
If a major change is under consideration, understanding the current strategy is essential.
112
What is the Career development process?
Helps potential employees decide if they want to work for the company, if there is a skills fit, and what training and development they will need to undergo.
113
Organizations that do not see the benefits of strategic planning have succumbed to these errors:
> Relegating the process to official planners, and not involving executives and managers (and even employees), resulting in no buy-in.
> Failing to use the plan as the guide to making decisions and evaluating performance.
> Failing to align incentives and other HR policies to the achievement of the strategy.
114
Strategic HR planning complements the traditional approach to HR planning (forecasting supply and demand) but adds what?
> but adds more strategic choices.
