Management 301 Chapter 4 Book Notes
Management 301 Chapter 4 Book Notes Management 301
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This 5 page Study Guide was uploaded by Stephanie Marie on Sunday February 8, 2015. The Study Guide belongs to Management 301 at a university taught by Professor Mangaliso in Fall. Since its upload, it has received 239 views.
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Date Created: 02/08/15
Management 301 Chapter 4 Strategic Management What is a Competitive Advantage The ability of a rm to win consistently over the long term in a competitive situation Created by having and managing resources to provide goods and services that meet these requirements 0 They provide superior value 0 They are rare competitors don t have similar products 0 They are dif cult to imitate 0 They are nonsubstitutible Superior Value 0 Products and services that produce value for customers that is superior to the value provided by competitors 0 Sometimes referred to as comparative advantage because compared to others the rm provides superior value 0 also sometimes referred to as distinctive competence because the product or service is the result of competence that is distinctive Rar y o No other rms can have the capabilities needed to provide the quality and quantity of the product it produces Dif cult to Imitate o The qualities named so far only provide temporary competitive advantage 0 Firms must try to make a product or service that cannot be imitated 0 Example Disney and Disney World Substitution o The ability to ful ll a customer s need by alternative means 0 Example Godiva now sells their chocolate in supermarkets so it will not be substituted Turing a Competitive Advantage into Pro ts 0 Above average returns pro ts that are above the average for a comparable set of rms The Strategic Management Process Setting Direction Formulating the Firm s Mission Statement 0 Articulates the fundamental purpose of the organization and often contains several components among them Common philosophy Common identity and self concept Principal products or services Customers and markets Geographic focus Obligations to shareholders Commitment to employees 0 Conducting an External Environment Analysis Must look at industry and competitors to make a strategy 0 The General Environment General environment sociocultural technological economic politicallegal and global forces that can in uence the effectiveness of an organization s strategy Sociocultural forces forces consisting primarily of the demographics or cultural characteristics of the societies in which an organization operates Demographics such as race age etc Societal values such as impact of SUVs on environment Technological Forces 0 Product technological change new features and capabilities Process technological changealterations in how to make products or how to manage enterprises Economic Forces 0 Demand and cost of producing products Political and Legal Forces 0 Laws frame what organizations can and cannot do Global Forces 0 Global environment foreign countries 0 Institutional forces 0 The country s rules policies and enforcement processes that in uence individuals and organizations behavior that operate within a country s borders 0 Physical forces involve infrastructure that can affect existing and potential business operations in a country such as roads deepwater harbor etc The Firm s Industry and Competitor Environment Porter s Five Forces 0 Industry and competitor forces 0 Five environmental forces that can signi cantly in uence the performance of organizations in an industry Rivalry among competitors Know the competitors weakness 0 Amount of dif culty entering the industry Creates more competition 0 Entry barriers obstacles that make it difficult for rms to enter a particular type of business 0 Potential for substitutes 0 Customers Organizations exist largely to please customers and therefore managers focus their efforts on satisfying customer needs 0 Suppliers managers need to nd a power balance with the suppliers 00 Internal Analysis 0 An analysis of an organization s internal capabilities is just as important as its external environment 0 Value chain set of key activities that directly produce or support the production of a rm s products and service offered to customers 0 Primary activities activities that are directly involved in the creation of a product or service and distributing it to the customer 0 Support activities activities that facilitate the creation of a product or service and its transfer to the customer 0 9 Activities in the chain 0 Inbound logistics Activities that are designed to receive store and then disseminate various inputs related to the rm s products or services Include raw materials inventory receiving transportation 0 Operations Transports inputs into products and services Activities that keep machines in working order 0 Outbound logistics Activities that move the product or service from the rm to the customers 0 Marketing and Sales Inform potential customers about the products and services that rm has available and entice them to purchase them 0 Service Ensure the product satis es the customer after purchase and increase the probability of a repeat purchase Repair product adjustments etc o 4 Support Activities 0 Procurement Procuring purchasing useful assets 0 Technology Development 0 Human Resource Management Acquiring training evaluating compensating and developing human resources 0 Firm Infrastructure Brick and mortar Administrative functions Planning nance accounting legal government relations Core competence interrelated set of activities that can deliver competitive advantage both short term and long term 0 They are core when they 0 Provide access to a wide variety of markets 0 Signi cantly contribute to perceived customer bene ts of the end products or services 0 Are dif cult for competitors to imitate SWOT analysis an analysis of the rm s strengths weaknesses opportunities and threats to its continued operation Setting Strategic Objectives 0 Objectives that turn the strategic intent and mission of a rm into concrete and measureable goals 0 Longer term in nature The Strategic Management Process 0 Generic Strategies for Obtaining the Competitive Advantage 0 Cost leadership strategy a strategy that involves being the lowest cost producer of a product or provider of a service while charging only slightly less than industry average pdces o Differentiation Strategy 0 Managers seek to make their product or service different from those of competitors on dimensions their customers value 0 Firms need to be bold and innovative Strategic Scope 0 The scope of a firm s strategy or breadth of focus 0 Focus strategy a strategy that targets a particular market segment the strategy may be focused cost leadership strategy or a focused differentiation strategy 0 Customer segment a group of customers who have similar preferences or place similar value on product features Other Generic Strategies 0 Integrated Differentiation Cost Leadership Strategy 0 A set of actions designed to differentiate the firm s product in the marketplace while simultaneously maintaining a low cost position relative to its competitors 0 Multipoint Competition Strategy 0 A strategy that involves competing with rms across markets by using strengths in one market to overcome weaknesses in another market Strategy Implementation very important
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