Mgnted32 Chapter 1, 2 & 4 Flashcards by Jimson Meñoza

*can be described as the
identification of the purpose of the organization
and the plans and actions to achieve
that purpose.

*is to
bring about the conditions under which the
organization can create this vita
l additional value.

*must also ensure
that the organization adapts to changing circumstances
so that it can continue to add value
in the future.

Strategic management

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The resources and capabilities of an organization
include its human resource skills, the investment
and the capital in every part of
the organization.

RESOURCES STRATEGY

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Environment encompasses every aspect external to the
organization itself: not only the economic and
political circumstances, which may vary widely around
the world, but also competitors, customers and suppliers.

ENVIRONMENTAL STRATEGY

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Add value to the supplies brought into
the organization. To ensure its long-term survival,
an organization must take the supplies it
brings in, add value to these through
its operations and then deliver its output
to the customer.

ADDING VALUE

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Customers are crucial to strategic management because they make the buying decision, not competitors. This may seem obvious, but much of the literature on strategic management has focused more heavily on competitors than on customers.

Existing and new customers

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for the long-term survival of the organization, it is important that the strategy is sustainable.

Offer sustainable competitive advantage

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to deliver the strategy Is at least partly about how to develop organization or allow them to evolve towards their chosen purpose.

Implementation processes to deliver the strategy

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links that cannot easily be duplicated and will contribute to superior performance. The strategy must exploit the many linkages that exist between the organization and its environment: suppliers, customers, competitors and often the government itself.

Exploit linkages between the organization and its environment

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the ability to move the organization forward in a
significant way beyond the current environment. This is likely to involve
innovative strategies.

Vision and purpose

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CORE AREAS OF STRATEGIC MANAGEMENT

Strategic analysis
Strategy Development
Strategy Implementation

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The organization, its mission and objectives must be examined and analyzed. Strategic management provides value for the people involved in the organization its stakeholders – but it is often the senior managers who develop the view of the organization’s overall objectives in the broadest possible terms.

Strategic analysis

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The strategy options must be developed and then selected. To be successful, the strategy is likely to be built on the skills of the organization and the special relation- ships that it has or can develop with those outside – suppliers, customers, distributors and government.

Strategy development

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The selected options now must be implemented. There may be major difficulties in terms of motivation, power relationships, government negotiations, company acquisitions and many other matters.

Strategy Implementation

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-the environment within which the strategy operates and is developed. In the IBM case during the 1t80s, the context was the fast-changing technological development in personal computers.

Context

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how the actions link together or interact with each other as the strategy unfolds against what may be a changing environment.

Process

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the main actions of the proposed strategy. The content of the IBM strategy was the decision to launch the new PC and its subsequent performance in the marketplace.

Content

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TWO MAIN APPROACHES TO STRATEGIC MANAGEMENT DEVELOPMENT:

The Prescriptive Approach
The Emergent Approach

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takes the view that the three core elements are linked together sequentially.

The Prescriptive Approach

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regards the three core areas as being essentially interrelated.

The Emergent Approach

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-means everything and everyone outside the organisation: competitors,
customers, suppliers plus other influential institutions such as local and national governments.

understanding of the competitive environment is an essential element of the development of strategic management

Competitive Environment

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– exploring the skills and resources available inside the organisation (e.g.
human resources, plant, fi nance).

Analysis of resources

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is an advantage over competitors that cannot easily be imitated.

sustainable competitive advantage

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environment can usefully be predicted for many market. (prescriptive strategists )
Prediction is inaccurate because the environment is chaotic (emergent strategists )

The prescriptive versus emergent debate .

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all strategists regard the environment as uncertain.

The uncertainty

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One solution to the problem posed by such a wide range of factors might be to produce a list of every element.

3. The range of influences

Two types of results from the analysis:

Proactive outcomes Reactive outcomes

The environmental analysis will identify positive opportunities or negative threats.

Proactive outcomes

The environmental analysis will highlight important strategic changes over which the organisation has no control but to which, if they happen, it will need to be able to react.

Reactive outcomes

Three Areas

Market definition and size Market growth Market Share

it helps in developing sustainable competitive advantage, identifies opportunities and threats and may provide opportunities for productive co-operation with other organisations.

Environmental Analysis

What is the size of the market? , how to define the ‘market’. The answer will depend on the customers and the extent to which other products are a real substitute.

Market definition and size

To estimate how much the market has grown over the previous period – usually the previous year.

Market growth

Large share may make it possible to influence prices and may also reduce costs through scope for economies of scale, thereby increasing profitability.

Market Share

it is important to consider the basic conditions surrounding the organisation. if the forces are exceptionally turbulent, they may make it difficult to use some of the analytical techniques.

Degree of Turbulence in the Environment

Two Main Measures:

Changeability Predictability

the degree to which the environment is likely to change.

Changeability

the degree to which such changes can be predicted.

Predictability

Changeability comprises:

Complexity Novelty

the degree to which the organisation’s environment is affected by factors such as internationalisation and technological, social and political complications.

Complexity

the degree to which the environment presents the organisation with new situations.

Novelty

Predictability comprises:

rate of change of the environment (from slow to fast); Visibility of the future in terms of the availability and usefulness of the information used to predict the future.

scenario is a model of a possible future environment for the organisation, whose strategic implications can then be investigated. Scenarios are concerned with peering into the future, not predicting the future. The aim is not to predict but to explore a set of possibilities;

Scenario-based Analysis

is a model of a possible future environment for the organisation, whose strategic implications can then be investigated.

Scenario

are concerned with peering into the future, not predicting the future.

Scenarios

Key Factors For Success In The Industry

Customers Competition Corporation

five basic forces :

The bargaining power of suppliers; The bargaining power of buyers; The threat of potential new entrants; The threat of substitutes; The extent of competitive rivalry.

Porter argued that there were seven major sources of barriers to entry:

Economies of scale . Product differentiation . Capital requirements . Switching costs . Access to distribution channels . Cost disadvantages independent of scale . Government policy .

co - operation between the organisation and others in its environment is also important as:

CO-OPERATIVE ENVIRONMENT

are those companies whose products add more value to the products of the base organisation than they would derive from their own products by themselves.

Complementors

is an advantage over competitors that cannot easily be imitated.

Sustainable competitive advantage

is time-consuming but vital to the development of strategic management.

Competitor profiling

Aspects Of The Competitor’s Organisation Need To Be Explored:

Objectives . Resources . Past record of performance Current products and services Links with other organisations Present strategies

is the identification of specific groups (or segments) of customers who respond to competitive strategies differently from other groups.

Market segmentation

The three prescriptive stages are:

Identify market segment(s) . Evaluate segment(s) . Position within market segment

There are four important characteristics of any segment in strategic customer analysis:

Distinguishable . Relevant to purchasing . Sufficiently large Reachable

is the choice of differential advantage possessed by an organisation that allows it to compete and survive in a market place or in a segment of a market place.

Competitive positioning

explores how the organization takes goods from its suppliers and turns them into finished goods and services that are then sold to its customers

VALUE-ADDED

attempts to find the special resources that enable the organization to compete

Competitive advantage

are those assets that deliver value added to the organization.

RESOURCES

are those management skills, routines, and leadership that deploy, share, and generate value from the resources of the organization

CAPABILITIES

are the physical resources of the organization that contribute to its value added.

TANGIBLE RESOURCES

are those resources that have no physical presence but represent real benefits to the organization, like brand names, service levels, and technology.

INTANGIBLE RESOURCES

are the skills, routines, management, and leadership of the organization.

ORGANIZATIONAL CAPABILITIES

KEY FACTORS FOR SUCCESS

▪ RESEARCH AND DEVELOPMENT ▪ MARKETING AND SALES ▪ HUMAN RESOURCES ▪ MANUFACTURING ▪ DISTRIBUTION AND LOGISTICS

the ‘centres for excellence

Research and Development

the ability to develop effective advertising campaigns

Marketing and Sales

the skills and knowledge to motivate and retain employees

Human resources

the skills required to operate large and complex manufacturing facilities

Manufacturing

the capability of coordinating, stocking, and transporting

Distribution and Logistics

concerns the choice that every organization has of either making its own products or services or buying them from outside

MAKE-OR-BUY DECISION

identifies where the value is added to an organization and links the process with the main functional parts of the organization.

VALUE CHAIN

shows the wider routes in an industry that add value to incoming supplies and outgoing distributors and customers. It links the industry value chain to that of other industries.

VALUE SYSTEM

stresses the importance of the individual resources of the organization in delivering the competitive advantage and value-added to the organization.

RESOURCE-BASED VIEW (RBV)

is an advantage over competitors that cannot easily be imitated

SUSTAINABLE COMPETITIVE ADVANTAGE

This is the development of unique features or attributes in a product or service

DIFFERENTIATION

The development of low cost production enables the firm to compete against other

LOW COSTS

A company may select a small market segment and concentrate all it’s efforts on achieving advantages in this

NICHE MARKETING

Special levels of performance or service can be developed that simply cannot be matched by other companies

HIGH PERFORMANCE OR TECHNOLOGY

Some companies offer a level of quality that others are unable to match.

QUALITY

Some companies have deliberately sought to provide superior levels of service that others have been unable or unwilling to match.

SERVICE

The backward acquisition of raw material suppliers and/or the forward purchase of distributors may provide advantages that others cannot match.

VERTICAL INTEGRATION

combination of parts of a business such that the sum of them is worth more than the individual parts

SYNERGY

The way that an organization leads, trains, and supports its members may be a source of advantage that others cannot match.

CULTURE, LEADERSHIP, AND STYLE OF AN ORGANIZATION

The seven elements of resource-based sustainable competitive advantage

Prior or Acquired Resources Innovative Capability Being Truly Competitive Substitutability Appropriability Durability Imitability

Value creation is more likely to be successful if it builds on the strengths that are already available to the organization

Prior or Acquired Resources

It is particularly likely to deliver a real breakthrough in competitive advantage

INNOVATIVE CAPABILITY

It is essential that any resource delivers a true advantage over the competition.

BEING TRULY COMPETITIVE

Resources are more likely to be competitive if they cannot be substituted.

SUBSTITUTABILITY

Resources must deliver the results of their advantage to the individual company and not be forced to distribute at least part of it to others

APPROPRIABILITY

Useful resources must have some longevity

DURABILITY

Resources must not be easy to imitate if they are to have a competitive advantage.

IMITABILITY

Some form of specific differentiation

TANGIBLE UNIQUENESS

It may not be obvious to competitors what gives a resource its competitive edge.

CASUAL AMBIGUITY

when the market has limited or unknown growth prospects and it is diff cult to make a small initial investment

INVESTMENT DETERRENCE

a mechanism for testing competitive resources

The VRIO Framework

allow a firm to choose strategies that exploit environmental opportunities or neutralize a competitive threat.

VALUABLE

An organization’s resource needs to be rare.

Rare

An organization’s resource needs to be costly to imitate.

CANNOT BE IMITATED

An organization needs to be able to organize itself to exploit its valuable, rare, and inimitable resources.

ORGANIZING CAPABILITY

the physical resources of the organization.

TANGIBLE RESOURCES

the many other resources that are important but are not physically present.

INTANGIBLE RESOURCES

the skills, structures, and leadership of the organization that bind all its assets together and allow them to interact efficiently.

ORGANIZATIONAL CAPABILITIES

are a group of production skills and technologies that enable an organization to provide a particular benefit to customers

CORE COMPETENCIES

Competencies must make a real impact on how the customer perceives the organization and its products or services.

CUSTOMER VALUE

This must be competitively unique.

COMPETITOR DIFFERENTIATION

Core skills need to be capable of providing the basis of products or services that go beyond those currently available.

EXTENDABLE

There are at least three ways to improve sustainable competitive advantage (SCA):

benchmarking, exploiting existing resources, and upgrading resources.

the comparison of practice with that of other organizations in order to identify areas for improvement.

Benchmarking

there are three main methods: developing new resources, enhancing those threatened by competitors, and adding complementary resources.

UPGRADING RESOURCES

Mgnted32 Chapter 1, 2 & 4 Flashcards

(109 cards)