What are the two perspectives of Leadership?
Romantic view and External control perspective
Leader is the key force in organization's success
Leaders can make a difference by being aware of _________ and _________ faced in the _________ environment.
Opportunities; threats; external
External control perspective
Focus is on external factors that affect an organization's success
Leaders can make a difference by having a thorough understanding of the firm's ______________ and __________.
The analyses, decisions, and actions an organization undertakes in order to create and sustain competitive advantages.
Strategic management must become both a ________ and a ___ ___ _________ throughout the organization.
process; way of thinking
Strategic management is used to compete in order to create...
competitive advantages in the market place-unique, valuable and difficult to copy.
What are the three processes of strategic management?
Analysis, strategic decisions, and actions
(1)strategic goals (vision, mission, strategic objectives) (2) Internal and external environment of the firm
What industries should we compete in? How should we compete in those industries?
Implementation; allocate necessary resources; design the organization to bring intended strategies to reality
means performing similar activities better than rivals
individuals, groups and organizations who have a stake in the success of the organization, including owners, employees, customers, suppliers, and the community at large.
Sustainable competitive advantage
is possible only by performing different activities from rivals or performing similar activities in different ways.
What is the essence of strategic management?
Study of why some firms outperform others-not operational effectiveness
What are the 4 key attributes of strategic management?
(1) Directs the organization toward overall goals and objectives; (2) Includes multiple stakeholders in decision making; (3) Needs to incorporate short-term and long-term perspectives; (4) Recognizes trade-offs between efficiency and effectiveness.
The relationship among various participants in determining the direction and performance of corporations. Ex. Shareholders, Mgmt (CEO) Board of Directors.
What are the three mechanisms to ensure effective corporate governance (internal)?
(1) An effective and engaged Board of Directors; (2) Shared activism; (3) Proper managerial rewards and incentives
What are the external controls of corporate governance?
Banks, analysts, financial press, takeovers
Firm's strategy for recognizing and responding to the interests of all its salient stakeholders.
What are the two view of stakeholder management?
Zero-sum view and stakeholder symbiosis view
Stakeholders compete for attention and resources of the organization; gain of one is a loss to the other
Stakeholder symbiosis view
Stakeholders are dependent upon each other for their success and well-being; mutual benefits
Outback Steakhouse has developed a sophisticated quantitative model and found that there were positive relationships between employee satisfaction, customer satisfaction, and financial results. This is an example of ________.
What is the responsibility of managers in a strategic management perspective?
Managers must make a major effort to effect transformational change, which involves extensive communication, incentives, training and development
Hierarchy of goals
Goals ranging from those that are less specific yet able to evoke powerful and compelling mental images to those that are more specific and measurable.
What is a representation of a destination that is driven by and evokes passion.
Disneyland's vision to be the happiest place on earth is an example of what strategic direction?
Managers must recognize opportunities and threats in their firm's external environment
What are three important processes used used to develop forecasts?
Environmental Scanning, External Monitoring, and Competitive Intelligence
Surveillance of a firm's external environment
Environmental scanning consists of...
predicting environmental changes to come, detect changes already under way, and proactive mode
Alerting the firm to critical trends before changes have been developed to a discernible pattern and before competitors recognize them relates to what environmental awareness process?
Track evolution of environmental trends, sequence of events or streams of activities.
Helps firms define and understand a firm's industry
Which one of the three processes helps identify rival's strengths and weaknesses?
True or False. Intelligence gathering is an example of Environmental Scanning?
False. it is an example of competitive intelligence
True or False. Interpretation of intelligence data is an example of competitive intelligence.
What cautions are there for competitive intelligence?
Caution to avoid unethical and illegal behavior and don't spend all time on traditional competitors that you ignore new competitors.
Porter's Five Forces Model
Potential entrants, Buyers, Industry Competitors, Substitutes, and Suppliers
Why should managers need to know the 5 forces model?
Helps determine whether to remain in an industry or exit, provides rationale for increasing or decreasing resource commitment, helps assess how to improve firm's competitive position relative to each of the 5 forces
The General Environment
Factors external to an industry, usually beyond a firm's control. Demographic, sociocultural, legal/political, technological, economic, global.
Examples of Demographic segment
Aging population, rising or declining affluence, changes in ethnic composition, geographic distribution of population, greater disparities in income levels.
Examples of sociocultural segment
more women in the workforce,dual-income families, increase in temporary workers, greater concern for healthy diets and physical fitness, greater interest in the environment, postponement of having children.
Examples of political/legal segment
Health care reform, Americans with Disabilities Act, Increased regulation of banking, Deregulation of utility and other industries, increases in federally mandated minimum wages, taxation at local, state, federal levels, legislation on corporate governanc
Examples of Technological segment
genetic engineering, emergence of internet technology, computer-aided design/computer-aided mftg, wireless communication, nanotechnology
Examples of Economic segment
Interest rates, unemployment, consumer price index, trends in GNP, Changes in stock market valuations.
Examples of Global Segment
Increasing global trade, currency exchange rates, emergence of the Indian and Chinese economics, trade agreements, and creation of WTO
Five forces analysis is essentially a __________ analysis, meaning it gives a point in time, but doesn't show changes over time
Economies of scale
Spreading costs of production over number of units-costs decline as volume increases
What are the sources of entry barriers?
Economies of scale, product differentiation, and capital requirements, switching costs, access to distribution channels, and cost disadvantages independent of scale
need to invest large financial resources is barrier.
How do buyers threaten an industry?
(1) Forcing down prices, (2) Bargaining for higher quality or more services, (3) Playing competitors against each other
In what ways is a buyer group powerful?
(1) It is concentrated or purchases large volumes relative to seller sales, (2) The products it purchases from the industry are standard or undifferentiated, (3) The buyer faces few switching costs, (4) It earns low profits
The bargaining power of suppliers
Suppliers can exert power by threatening to raise prices or reduce the quality of purchased goods and services.
When is a supplier group powerful?
(1) The supplier group is dominated by a few companies and is more concentrated than the industry it sells to, (2) The supplier group is not obligated to contend with substitute products for sale to the industry, (3) The industry is not an important custo
How is a supplier group powerful?
(1) The supplier's product is an important input to the buyer's business, (2) The suppler group's products are differentiated or it has built up switching costs for the buyer, (3) The supplier group poses a credible threat of forward integration.
What are 4 limitations of SWOT analysis?
Strengths may not lead to an advantage, SWOT's focus on the external environment is too narrow, SWOT gives a one-shot view of a moving target, and SWOT overemphasizes a single dimension of strategy.
what is the amount that buyers are willing to pay for what a firm provides them and is measured by total revenue?
what is the key concept used in analyzing a firm's competitive position?
creating value for buyers that exceeds the cost of production
What is a strategic analysis of an organization that uses value creating activities?
The value-chain analysis has two different categories of activities...what are they?
Primary and secondary activities
What contributes to the physical creation of the product or service, its sale and transfer to the buyer, and its service after the sale?
The primary activities
What do the primary activities consist of?
Inbound logistics, operations, outbound logistics, marketing and sales, and service
What are activities of the value chain that either add value by themselves or add value through important relationships with both primary activities and other support activities?
What do the secondary activities consist of?
procurement, technology development, humane resource management, and general administration
Which primary activity is associated with collecting, storing, and distributing the product or service to buyers?
Machining, packaging, assembly, testing, printing and facility operations are all associate with which primary activity?
True or False. Inbound Logistics is associated with purchases of products and services by end users and the inducements used to get them to make purchases?
False. Inbound Logistics is associated with receiving, storing, and distributing inputs to the product.`
What does procurement refer to?
It is the function of purchasing inputs used in the firm's value chain, not to the purchased inputs themselves.
Tangible resources are...
organizational assets that are relatively easy to identify, including physical assets, financial resources, organizational resources, and technological resources.
What are the three types of intangible resources?
Human, Innovation and creativity, and Reputation
Organizational capabilities combines _______ and __________ resources, using __________ processes to attain desired end.
tangible; intangible; and organizational
The balanced scorecard
A method of evaluating a firm's performance using performance measures from the customer's, internal, innovation, and learning and financial perspectives.
What are 4 key perspectives associated with the balance scorecard?
(1) How do customers see us? (cust perspective); (2) What must we excel at? (internal biz perspective); (3)Can we continue to improve and create value?; (4) How do we look to shareholders? (financial perspective)
What is the customer perspective in relation to the balance scorecard?
How a company is performing from customer's perspective; Time, Quality, Performance and service, and Cost
What is the internal business perspective in relation to the balance scorecard?
What must the firm do internally to meet customer's expectations. Processes, decisions, actions, coordination, and resources and capabilities
Documented and widely distributed
in the minds of the employees
Relationships among individuals
Porter's three generic strategy
Cost leadership, Differentiation, Focus
Overall cost leadership
Low-cost position, managing relationships through the value chain
Unique products and services, non-price attributes
narrow product lines, targeted demographic
Productions is more efficient and costs less over time
on par with competitors but with low costs
Pitfalls of Cost leadership
lack of parity, focus too much on one step in the value chain
Pitfalls of Differentiation
No value in uniqueness, too high of price, differentiation can be imitated
Pitfalls of focus
Focus too much on buyer needs
Create value for shareholders through:
Mergers, Joint Ventures, internal development