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Study guide test 1

by: Tori Block

Study guide test 1 MGT 401

Tori Block
GPA 3.8

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About this Document

Highlighted points are things referred to as "very important to know" in class. Notes on all slides and cases that will be on test 1.
Strategic Management
George Williamson
Study Guide
Strategic, Management
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This 10 page Study Guide was uploaded by Tori Block on Wednesday September 28, 2016. The Study Guide belongs to MGT 401 at University of Miami taught by George Williamson in Fall 2016. Since its upload, it has received 35 views. For similar materials see Strategic Management in Strategic Management Department at University of Miami.


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Date Created: 09/28/16
10/9/16 6:11 PM Drucker Managing Oneself • You can rise if you have drive • Understand values • Learn and work with others • Cultivate a deep understanding of self Hedonia – things that make you FEEL happy Eudaimonia- sense of flourishing SWOT- • Strengths and weaknesses- internal • Opportunities and threats- external Formulation Vs. Implementation • Formulation- Analysis, Strategy Formation, Goal Setting o There’s a lag after assessing formula to then implement • Implementation- structure, control and feedback Jungian Psychology- • Ego self- conditioned self; separation The part of us that is always changing according to our experiences. Source of self-judgment Ego will go into irrational reaction • True Self- higher self o No separation, the part of us that is whole o Unity o Reasoned response Emotional Intelligence- ability to understand and deal with emotions • Self-awareness, self-management, social awareness, relationship management Ted talk: the happy secret to better work • Positivity lead to success Mindfulness- paying attention on purpose in the present moment with no judgments • Mindfulness meditation- health benefits- be still and witness your mind! Strategic management • 1) understanding and coping with competition • 2) compare yourself within the industry- strengths and weaknesses • 3)find ways to differentiate your value proposition • 4)formulate and implement major goals by company management – lag • 5) based on resources an assessment of internal/external environment in which the organization competes Differentiation- if it works, gives you an edge- what to do Value proposition- mission statement, what you say you’re going to do to give you an edge – adv. It can make consumers loyal to you and your brand Red queen game- constant change, continuous movement/ improvement Porter: Create valuable market proposition – differentiate/ what to do Make trade-offs- what not to do Creating fit- supporting activities 5 forces that shape industry competition • 1. Threat of new entrants • 2. Bargaining power of buyers • 3. Threat of substitute products/services • 4. bargaining power of suppliers • 5. Rivalry among existing competitors o use to position the company § economies of scale – fewer entrants , harder to get in § spectrum of commodity- same thing different player; low switching costs § exploit industry change (take advantage of change), shape industry structure Additional factors: • Government- can create policies/ regulations that make it hard/easy for competition o Banking/ pharmaceutical o patents • Switching costs- easy/hard for buyer – low /high costs o High costs for supplier/buyer with contracts • Industry growth rate • Technology and innovation • Complementary products/services – being in one industry can help you get into another one like cars and gasoline; Netflix and making own content Scale advantage: large companies will have advantage over smaller companies starting off • Adv: economies of scale- you need lot of resources to get a lot of stuff o Network effect- large companies have leverage with their big network o Bargaining power • Dis: impersonal, not nimble Competitive Equilibrium Cycle • Experimentation (R&D) • Innovation – invention and bring to market (exploit) • Advantage- form of monopoly • Imitation- commodity- economies of scale- monopoly can turn into commodity • Return – more R&D Life Cycle of a firm • 1. Introduction • 2. Growth • 3. Maturity/ stabilization • 4. Decline Tipping point aka the law of diffusion of innovation • 2.5% innovators • 13.5 % early adopter • 34% early majority • 34% late majority • 16% laggards 15% market penetration that early majority comes into the industry Levels of Strategy • 1. Corporate Strategy – how do we compete/ create synergy • 2. Business Unit Strategy • 3. Functions Strategy 3 generic strategies to differentiate • 1. Low cost- not easy, low margin, few huge players • 2. differentiation- added perceived value to customers o ex. In and out burger • 3. focused (niche) – few players, maybe big, very specialized , luxury goods Three Basic Elements of Strategy • Value Proposition (What is your promise to the customer?) • Business Model (What machinery will you use to deliver your promise?) • Competitive Advantage (What makes you different?) Judging the size of a company • In revenue and sales o Small- 0-100 million dollars o Medium- 100 million to 2 billion dollars o Large- 2 billion dollars + Porters value chain- set of activities that deliver product and services for the market • Involved primary activities and support activities Something that may pop up- 5 forces for Hilary and Trump 1. Entrants- Gary Johnson 2. Voters low switching costs- high power 3. Substitutes- no votes, protest, military takeover 4. Suppliers- $, sponsors, campaigns 5. Rivalry- Trump and Clinton What is innovation? • 1. The process of creating new ideas- invention- exploration (R&D) • 2. Putt ideas into practices- bringing to the market- exploitation History: huge boom in past 116 years- 800% growth in per capita income • Wave of gadgets and increase in purchasing power Why are some societies prone to innovation more than others? Societies move faster and better with the turn of capital. Four sources of innovation: • Government research agencies- department of defense • Universities- teachers and researchers • Individual inventory engineers- Steve Wosniak • Industrial laboratories in giant companies- labs, pharmaceutical Innovations large and small • Large firms R&D has most innovation funding (70%), driven by competition (red queen game), incremental improvements, routinized innovation- apart of routine • Small firms create revolutionary breakthroughs- no funds, imperfect Conflict of spreading Innovation: • Innovators has financial inventive through temporary monopoly • Growth requires fast dissemination Solution: voluntary licensing- selling • Patent pools • Intellectual property Innovators dilemma- trust implications and access to info (but you want it to be secret) Baumol’s free market innovation machine Large firms routinize innovation -> large firms share innovation information -> society benefits -> among oligopolies there’s competition which drives innovation -> • Contribution of independent innovator- productive entrepreneurship Two types of Innovation • 1. Sustaining innovation- comes from within o established firms § improve performance of established products § R&D, large • 2. Destructive innovation- comes from outside o finds new customers, new markets, new uses o underperform established product o new features that fringe customers value o cheaper, simpler, smaller, convenient What do industry-leaders do? • Pay attention/listen to customers • Invest in technology and manufacturing • Seek higher profit margins • Target larger markets Why good strategic management can lead to failure • Disruptive innovations are not immediately obvious • When first introduced new innovations are often more usable • The most important customers want to see innovations that support their business- sustaining innovations- • Customers that are interested tend to be small and price sensitive • Disruptive technologies are hard to justify on a balance sheet • Large companies are not attracted to low margin opportunities Forms of organization • Additive- independent or pooled • Sequential- assembly-line- 1 division to the next • Reciprocal- all parties work together at once- Tesla Cool invention: Bio printing Intellectual Property- ownership in ideas • Value- market proves ownership of idea by attaching value to it • Timing- maxim of property law- first in time, first in right • The incentive to create- government/ economies promote the development of intellectual works in exchange for a monopoly o But monopoly is limited in duration/scope Contribution of the US constitution • First document to incentivize creators and expand science and art in society • Article 1- the legislative branch – section 8 – powers of congress Copyright- copyright act of 1976 (100+ years) • Encourages/ rewards creative expression- expands the arts • Protect expression of the idea, not the idea itself Trademark- commerce clause/lanham act • Protects owners and public form unfair competition • Words or symbol, sound, color, logo Fair use- not infringed Patient- protect the idea (20 years) • Encourages and rewards innovation • Designs, certain plants, useful improvements • Disclosed • Cant be copied Trade Secret- protects owners from misappropriation • Protects information- formulas, customers lists, methods • Eternal • No disclosed • Can be copied- reverse engineered 10/9/16 6:11 PM Trader Joe’s Case: • Three basic elements of strategy o Low cost, differentiation, focused (low stock) § 1. Value Proposition- what you promise to customers ú enthusiasm, low pricing, wine- 2 buck chuck (loss-leader, you don’t make money ion it but people come in for it), no sales, 80% private label ú quirky, adventurous, charm, scarcity, friendly, personable ú • Business Model- what machinery will you use to deliver your promise o Employees- take you to the aisle o Private label- cheap rates o Sourcing advantage o Monopoly on product o Weekly newsletter • Competitive Advantage- artsy, prices, engagement, personal Grocery Industry- not attractive to enter • 1. Threat of entrants- capital expenses, locations • 2. Buyers have power- switching cost is low • 3. Substitutes- restaurants, CVS, fast food, famers market • 4. Suppliers are powerful only a few- Coca cola, P and Gamble, Kellogg • Value chain- infrastructure needs to be consistent Concluding thought: • Pay attention to environment • External- word of mouth marketing • Internal- systems, structure, culture all fit together and reinforce each other • Trade-offs: essential to competitive positioning- what not to do • Culture and value can be powerful source of advantage • Easier to imitate hard elements then soft elements • Continuous improvement! Southwest Airlines • Advantage of more gates means more opportunity to grow • Not attractive industry- high cost to get in Value proposition: • Efficiency, fun, high service, low cost • Customer experience, perception 3 generic strategies for differentiation • low cost • differentiation- reliable, convenient, positive atmosphere, reasonable service • focused What ways to be low cost? Fuel hedging, no snacks, all same fleet, training and maintenance Flight crew cleans the planes, no extra planes, 10 bases to get all parts for planes Tesla • In-house production • Able to build and get equipment and plant for cheap • Reused a battery instead of making own • Elon wants to build lower-end mass production EV Low-cost? Saving on gas and reduced service and repairs Differentiators? fast, sleek, cool, electric, the software Focused- niche? Luxurious, expensive Value Proposition? Speed, comfort, handling Competitive advantage? powerful, electric, unique features Business model? Sales people on salary, only show rooms, service operation independent from sales network (valet service), manufacturing all in house Eharmony is not on the test 10/9/16 6:11 PM


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