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CLEMSON / Business Management / MGT / What is effective strategy?

What is effective strategy?

What is effective strategy?



What is effective strategy?


MGT 2010

Chapter 6

∙ 6.1: What is Effective Strategy

o Strategic Positioning and its Principles

 Strategic positioning  attempts to achieve sustainable competitive 

advantage by preserving what is distinct/unique about a company

∙ Can be done by EITHER performing DIFFERENT ACTIVITIES 

from competitors or performing similar activities in a DIFFERENT


o 1.) Strategy is the Creation of a Unique & Valuable Position

 Few needs, many customers

 Broad needs, few customers 

 Broad needs, many customers

o Strategy Require TRADE­OFFS in Competing

What are the principles of strategic positioning?

 A company has to choose which companies to follow but also what 

strategies not to follow

o Strategy Involves Creating a “Fit” Among Activities

 “fit”: the ways a company’s activities INTERACT and REINFORCE each other

o Does Strategic Management work for small as well as large firms?

 Studies show that strategic planning had a smaller positive effect on 

smaller firms, and as the firm size increased, the positive effect increased  as well Don't forget about the age old question of What is aneuploidy?
If you want to learn more check out What is co-immunoprecipitation?

∙ 6.2: The Strategic Management Process

o 5 Steps of Strategic Management Process

 1.) Establish the Mission and Vision

 2.) Assess Current Reality


Does strategic management work for small as well as large firms?

 3.) Formulate the Grand Strategy

o Growth strategy

o Sustainability strategy

o Defensive strategy

∙ Strategy formation  process of choosing different strategies and 

tailoring them to fit the organization

 4.) Implement the Strategy

 5.) Maintain Strategic Control: Feedback Loop

∙ 6.3: Establishing the Mission and Vision

o Characteristics of a Good Mission Statement

 Does it answer: Don't forget about the age old question of What was the title of the book that charles scott sherrington wrote?
If you want to learn more check out What is the testosterone in males?

∙ What is your purpose?

∙ What is your reason for being?

∙ Who do you intend to serve?

o Characteristics of a Good Vision Statement

 Does it answer:

∙ Long­term goals?

∙ What you want to become?

∙ Is it positive and inspiring?

∙ Does it stretch the organization and the employees?

∙ Is it concise yet thorough?

∙ 6.4: Assessing the Current Reality

o Competitive Intelligence

 Giving information about a competitor’s activities so you can anticipate  their next move and plan accordingly

 Sources can include:

∙ Public prints and advertising

∙ Investor information

∙ Informal sources

o Information gossip

o Salespeople and marketers


 Environmental scanning  careful monitoring of an organizations internal  and external environment to detect early signs of opportunities and threats  that may influence firm’s plans Don't forget about the age old question of What is the additive rule of probability?

 SWOT strength, weaknesses, opportunities, threats

∙ Inside matters: S&W

o Organizational strengths: skills and capabilities that give 

the organization special competencies and competitive 

advantage in the pursuit of the vision

o Organizational weaknesses: drawbacks that hinder an 

organization in pursuit of its vision

∙ Outside matters: O&T

o Organizational opportunities: the environment factors that 

an organization may exploit for competitive advantage

o Organizational threats: environmental factors that hinder an

organization from achieving a sustainable competitive 


o Forecasting: Predicting the Future

∙ The farther into the future, the harder to predict accurately

 Trend Analysis

∙ A hypothetical extension of a past series of events into the future

∙ Subject to surprise Don't forget about the age old question of What can a newborn see most clearly before their vision develops?

∙ Time­series 

 Contingency Planning: Planning Alternative Futures

∙ Scenario planning and analysis

∙ Creation of hypothetical equally like future outcomes

o Benchmarking: Comparing with the Best

 Process by which a company compares its performance to high

preforming organizations in the same industry

∙ Professional sports teams and non­profits will do this a lot

o Porter’s Five Competitive Forces

 Threat of New Entrants

∙ can drive away existing customers/consumers

 Bargaining Power of Suppliers

∙ Some companies are readily able to switch suppliers 

 Bargaining Power of Buyers

∙ Customers who buy a lot of products or services 

 Threat of Substitutive Products or Services

∙ An organization is in a better position to switch to other 

products/services when circumstances threaten usual channels

 Rivalry among competitors

∙ Internet has increased rivalries

Chapter 7

 .1: Two Kinds of Decision Making: Rational and Non­rational 

 Decision: choice made from among available alternatives

 Decision making: process of identifying and choosing alternative courses of action        Decision Making in the Real World 

 Two Systems of Decision Making

∙    1.) System 1: Intuitive and Largely Conscious

∙    2.) System 2: Analytical and Conscious

∙     “The Curse of Knowledge”

♦   People who excel at an area/ experts in a field are “cursed” by their  knowledge and can’t see from the perspective of what it’s like to not have  knowledge/ be an outsider

       Rational Decision Making: Managers Should Make Logical and Optimal Decisions  Assumes managers will make logical decisions that will be the optimum with  furthering the organization’s best interests

∙    1.) Identify the Problem/Opportunity

♦   Determine Actual vs. Desirable

∙    2.) Think Up Alternative Solutions: Both Obvious and Creative

♦   “employees burning with bright ideas are an employer’s greatest competitive  resource” 

∙    3.) Evaluate Alternatives and Select a Solution: Ethics, Feasibility, Effectiveness ♦   NOT ONLY ACCORDING TO COST AND QUALITY

 Is it ethical?

 Is it feasible?

 Is it effective?

∙    Implement and Evaluate Solution Chosen

♦   Successful Implementation

 plan carefully

 be sensitive to those that are affected

♦   Successful Evaluation

 What should you do if your action is not working?

 Give it more time

 Change it slightly

 Try another alternative

 Start over

       What’s wrong with the Rational Model? 

 It’s perspective doesn’t describe how managers ACTUALLY act

♦   makes some HIGHLY DESIRABLE assumptions


 are able to make UNEMOTIONAL DECISIONS

 are able to make best decisions for organizations

       Non­rational Decision Making: Managers Find it Difficult to Make Optimal Decisions  Explains how managers make decisions

 They assume that decision making is nearly always uncertain and risky  How they do vs. How they should

∙    Bounded Rationality & the Satisficing Model: “Satisfactory Good Enough”  Managers could not act truly logically b/c their rationality was bounded by  so many restrictions

♦   Bounded rationality

 Limited by numerous constraints

♦   Managers don’t make an exhaustive search for the best alternative

 Will follow the satisficing model

∙    Intuition Model: “It Just Feels Right”

♦   May make decisions based on hunches

♦   Intuition: making a choice without the use of conscious effort or logical  inference

 Holistic hunch

 Automated experience

 7.2: Making Ethical Decisions

        The Dismal Record of Business Ethics 

 Ethics officer: someone trained about matters of ethics in the workplace, particularly  about resolving ethical dilemmas

        Road Map to Ethical Decision Making: A Decision Tree 

 Decision tree: group of decisions and their possible consequences; used to create a  plan and reach a goal

∙   Is the proposed action legal?

♦   If yes, does the proposed action maximize shareholder value?

 If yes, is the proposed action ethical?

 If no, would it be ethical not to do prosed action?

 7.3: Evidence­Based Decision Making & Analytics

 Evidence­Based Decision Making

 7 Implementation Principles

∙   Treat your organization as an unfinished prototype

∙   No brag, just facts

∙   See yourself and your organizations as outsiders do

∙   Evidence based management is not just for senior executives

∙   You need to sell it

∙   Slow the spread of bad practices

∙   “What happens when people fail?”

 What makes it Hard to be Evidenced­Based?

∙   There’s too much evidence

∙   There’s not enough good evidence

∙   The evidence doesn’t quite apply

∙   People are trying to mislead you

∙   You are trying to mislead you

∙   The side effects outweigh the cure

∙   Stories are more persuasive

 In Praise of Analytics

 Purest application of evidenced­based management

♦   Predictive modeling: data­mining technique used to predict future behavior  and anticipate the consequences of change

∙   Having Multiple Applications, not just one

∙   Support from the top

 The Uses of “Big Data”

 Big Data: includes not only data in corporate databases, but also web­browsing data  trails, social­network communications, sensor data, and surveillance data  Big Data Analytics: the process of examining large amounts of data of a variety of  types to uncover hidden patterns, unknown correlations, and other useful information ∙   also interested in analyzing entire behavior

 7.5: How to Overcome Barriers to Decision Making

 Decision Making and Expectations about Happiness

 People expect certain life events to have a much greater effect than it really does but  people are correct when it comes to making them happy or sad

 How do individuals respond to a decision situation? Ineffective/Effective Responses  4 ineffective responses 

♦   Relaxed Avoidance 

♦   Relaxed Change 

♦   Defensive Avoidance­ 

♦   Panic 

∙   Three Effective Reactions: Deciding to Decide

♦   A manager agrees that s/he must decide what to do about a 

problem/opportunity and take effective­decision making steps

 1.) importance

 2.) credibility 

 3.) Urgency

 Nine Biases

 Availability bias  using only the information available

 Representative Bias faulty generalizing for small sample/single outcomes  Confirmation Bias

∙ Seeking out information to support one’s point of view

 Sunk­cost bias

∙ Money already spent seems to justify continuing

 Anchoring and Adjustment Bias

∙ Being influenced by an initial figure

 Overconfidence bias

∙ Blind to one’s blindness

∙ Subjective decision making > objective accuracy

 Hindsight bias

∙ People view events as more predictable than they really are

 Framing bias

∙ Shaping how a problem is presented

 Escalation of commitment bias

∙ Feeling overly invested in a decision

∙ Prospect theory

 7.6: Group Decision Making: How to Work well with Others

 Advantages and Disadvantages of Group Decision Making

 Advantages

∙ Greater pool of knowledge

∙ Different perspectives

∙ Intellectual stimulation

∙ Better understanding of decision rationale

∙ Deeper commitment of decision

 Disadvantages

∙ A few people dominate/intimidate

∙ Groupthink

∙ Satisficing

∙ Goal displacement

 What Managers Need to Know about Groups and decision making

 They are less efficient

 Size affects decision quality 

 They may be too confident

 Knowledge counts

 ***Individual decisions are not necessarily better than group ones***  Minority dissent: dissent that occurs when a minority in a group publically opposes the  beliefs etc. assured by the majority of the group 

 associated with increased innovation

 Group Problem­Solving Techniques: Reaching for Consensus

 Do’s: active listening skills, involve as many members as possible, seek out reasons  behind arguments, dig for the facts

 Don’ts: log rolling and horse trading, making arguments just to rock the boat, don’t  put everything to a vote

∙ Brainstorming

∙ Delphi Technique

∙ Computer­aided decision making

Chapter 8

 8.1 Aligning Strategy, Culture, and Structure

 What does it mean to “fit”?” Anticipating a Job Interview

 Person­organized fit: reflects the extent to which your personality and values match  the climate and culture in an organization

 How an Organization’s Culture and Structure are used to Implement Strategy  Organizational culture (aka corporate culture)

∙ Set of shared, implicit assumptions that a group holds and that determines how it  perceives, thinks about, and reacts to various environments

 Organizational Structure

∙ Formal system of task and reporting relationships that coordinate and motivates  an organization’s members so that they can work together and achieve the goals  8.2 What Kind of Organizational Culture will you be operating in?

 4 types of organizational culture

 Clan  Flexibility and Discretion, Internal Focus

 Adhocracy flexibility and discretion, external focus 

 Hierarchy stability and control and internal focus

 Market stability and control, external focus

 3 Levels of Organizational Culture

 Level 1: observable artifacts

 Level 2: Espoused Values

 Level 3: Basic Assumptions

 How Employees Learn Culture

 Symbols

 Stories

 Heroes

 Rites and rituals

 The Importance of Culture

 Employees are happier w/ clan cultures

 Changing the organization’s culture won’t necessary guarantee better financial  performance­ but it could help

 Market cultures tend to produce better results

 8.4 Organizational structure

 Three Types

 For profit

 Nonprofit

 Mutual­benefit

 Organization Chart

∙ Vertical  chain of command, who reports to whom

∙ Horizontal who specializes in what work

 8.5: The Major Elements of an Organization

 Common Elements

 Common Purpose

 Coordinated effort 

 Division of labor

 Hierarchy of Authority

∙ Chain of command

∙ Flat organization:

∙ Unity of command

 Span of Control

∙ The number of people reporting directly to a given manager

♦ Narrow 

♦ Wide

 Authority, Responsibility, and Delegation

∙ Accountability 

∙ Responsibility 

∙ Delegation

∙ Line position 

∙ Staff position 

 Centralization/Decentralization

∙ Centralized

♦ Important decisions are made by higher level managers

♦ Less duplication

♦ Easier to control and procedures are easier to control

∙ Decentralized

♦ Important decisions are made by middle­level managers and supervisory  managers

♦ Managers encouraged to solve their own problems

♦ Decisions made more quickly 

 8.7 Contingency Design

 3 Factors to be Consulted 

 Contingency design

∙ The process of fitting the organization to the environment

∙ mechanistic vs organic

∙ Differentiation vs. Integration

∙ Linking strategy and culture

Chapter 9

 Strategic HR Management

 HR Management

 The activities managers perform to plan for, attract, develop, and retain an effective  workforce

 Importance of staffing

 HR as part of Strategic Planning

 1.) Establish mission and vision

 2.) Establish grand strategy

 3.) formulate strategic plans

 4.) plan HR as needed

 5.) recruit and select

 6.) orient, train, and develop

 7.) preform appraisals

∙ Human Capital

∙ Knowledgeable Workers

∙ Social Capital

 Planning HR Needed

 Strategic human resource planning: developing a systematic, comprehensive strategy  for 

∙ Understanding current employee needs

♦ Job analysis

♦ Job description

♦ Job specification

∙ Predicting future employee needs

♦ Staffing of an organization might need…

 Assuming the organization will change

 Understand the organization’s vision as strategic plan so the proper people get hired

♦ Likely sources for staffing

 Human resource inventory

 Recruitment and Selection

 Recruiting

 Internal

∙ Job postings on bulletin, emails

 External

∙ Social media, LinkedIn

 Both have advantages and disadvantages

 Realistic Job Previews

 Selection

 Background information

∙ Applications and resumes

∙ References

 Interviews

∙ Unstructured 

∙ structured: situational

∙ structured: behavioral

 Employment Tests

∙ Ability tests

∙ Performance test

∙ Personality tests

∙ Integrity tests

∙ Other tests

 Reliability and Validity

 Managing an Effective Workplace

 Wages/salaries

 Incentives

 Benefits

 Legal Requirements of HR

 Labor Relations


 Collective bargaining

 Compensation or Benefits

 FLSA of ‘83

 Health and Safety



 Workplace discrimination

 When people are hired/promoted or denied for reasons not related to job

 Adverse impact

∙ Practices that result in unfavorable outcomes to a protected class  Disparate impact

∙ Employees from protected classes are treated intentionally differently  Affirmative action

∙ Focuses on achieving equality of opportunity within an organization  Sexual harassment

∙ Quid pro quo

∙ Hostile environment

 Bullying

∙ Negative effects on workplace environment

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