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September 13th-15th Notes

by: Callisa Ruschmeyer

September 13th-15th Notes MNGT 3100- 004

Marketplace > Auburn University > Business > MNGT 3100- 004 > September 13th 15th Notes
Callisa Ruschmeyer
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Chapter 4- Mission and Vision Chapter 5- Strategy (Competitive Advantage)
Principles of Management
Joel Carnevale
Class Notes
Management, Carnevale, Auburn University
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This 6 page Class Notes was uploaded by Callisa Ruschmeyer on Thursday September 15, 2016. The Class Notes belongs to MNGT 3100- 004 at Auburn University taught by Joel Carnevale in Fall 2016. Since its upload, it has received 4 views. For similar materials see Principles of Management in Business at Auburn University.


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Date Created: 09/15/16
Chapter 4 Missionand Vision as POLC Components  Planning 1. Vision and mission 2. Strategizing 3. Goals and objectives  Organizing 1. Organization design 2. Culture 3. Social networks  Leading 1. Leadership 2. Decision making 3. Communications 4. Groups/teams 5. Motivation  Controlling 1. Systems/processes 2. Strategic human resources 1. Mission,Vision, and Values  Mission and vision are statements from the organization that answer questions about: o Who they are o What they value o Why they exist o Where they're going What is the difference? Mission statements Vision Statements   Communicates the organization's reason A future-orienteddeclaration of for being and how it aims to serve its key the organization's purpose and stakeholders aspirations  Often integrates a summation of the firm's  Addresses what a firm wants to values become  Mission statements tend to be longer than  Vision statements tend to be vision statements relatively brief Side Note: Generic Strategy  Cost leadership strategy  Differentiating strategy o Beat out on price or service o Make product very different than others  Focused strategy o Whether you are focusing on a customer segment or a geographic region  Four Main Types of Strategy o Broad Cost Leader (Walmart) o Broad Differentiating Leader (Apple) o Focused Cost Leader (Dollar General) o Focus Differentiation Leader (Curves Gym)  Diversification is different than differentiation o Diversification- being in multiple different businesses What makes a MissionStatement Effective?  Length: should be an appropriate length o Short, sweet, but all encompassing o Core values! A company that claims to value everything really values nothing  One to two key values  Generic/vague: should clearly communicate the nature of your business o You mission statement should mention your core product o Barnes & Noble's statement is contradictory- mission statements should not be contradictory  Inconsistencies: should reflect the actual principles by which you guide your company Vision Statement  Intended to bring tension to where we are at and where we want to be  Roles Played by Mission and Vision 1. Communicate the purpose of the organization to stakeholders  Stakeholders; employees, customers, investors, suppliers, etc.  Provides a vehicle to communicating the organization's purpose and direction 2. Inform strategy development and establish metrics for success  Mission a division create a target for strategy development  The best vision statements create a tension and relatedness with regard to the status quo  "People don't buy what you do, they buy why you do it." 3. Develop the measurable goals and objectives by which to gauge the success of the organization's strategy  Communicate an organization's values in order to attract stakeholder's who also hold those values Chapter 5 2. Strategizing Strategic Management Process  Definition- the process by which a firm manages the formulation and implementation of its strategy o The coordinated means by which an organization achieves its goals and objectives  Strategy formulation- the set of processes involved in creating or determining the strategies of the organization  Strategy Implementation- the methods by which strategies are operationalized or executed within the organization Corporate and Business Strategy: Two Aspects of Strategizing  Corporate strategy o What business or businesses should we be in? o How does being in one business help us compete in our other businesses?  Business strategy o How should we compete? o Business strategy include: cost leadership, differentiation, and focused generic strategies What's the Difference?  Business-level strategies deal with a specific business unit; corporate strategies, in contrast, deal with the entire corporation, which may include several business units  Business strategies deal with things like: o Pricing products o Sales forecasting o New product introduction  Corporate strategies deal with things such as: o Creating a competitive advantage in the marketplace o Development of unique firm competencies o *corporate strategies tend to be broad Business Strategy and the Development of Generic Strategies  One of the main responsibility of business strategy is to develop a generic strategy for the business unit  The objective of a generic strategy is to generate a competitiveadvantage,increase the loyalty of customers and beat competitors  Three main generic strategies are o Low-cost leadership strategy o Differentiation strategy o Focused strategy Low-Cost Leadership Strategies  *Strive to be the overall low-cost provider in an industry  How to achieve overall low-cost leadership o Scrutinize each cost activity o Cut some cost activities out of the value chain  Competitive strengths of an overall low-cost strategy o Organization in a better position to compete offensively on price o Works best in environments where customers are price sensitive o Organization is able jot use price as a defense against substitutes o Low cost is a significant barrier to entry- why? Differentiation Strategies  Striving to build customer loyalty by differentiating an organization's products from competitors' products  Keys to success include o Finding ways to differentiate to create value for customers that are not easily copied  Example- Tom's Shoes create value but can be easily copied o Not spending more to differentiate than the price premium that can be charged  A successful differentiation strategy allows an organization to o Set a premium price o Build brand loyalty o A strong brand may be a deterrent for new entrants Quick Review  Difference between corporate strategy and business strategy o Business strategy- how am I going to compete o Corporate strategy Generic Business Strategies Examples  Different generic strategies can lead to competitive advantage in the same industry  Answers the question- how am I going to compete?  Differentiation o A firm seeks to be unique in its industry along some dimensions that are widely valued by buyers o Higher value; unique features o What is the firm doing to reduce its costs? o Focused-Differentiation: what is the firm's focus? Is the firm targeting a specific customer or market? o Example- Role  Cost-Leadership o A firm sets out to become the low cost producer in the industry o Similar value; lower cost o What is the firm doing to differentiate itself from its competitors? o Example- Timex  Scope of the Strategy o Narrow (Focused)  The choice of a narrow competitive scope within an industry; the focuser selects a segment of group of segments in the industry and tailors its strategy to serving them to the exclusion of others  Example- Rolex o Broad  Example- Timex Straddling Positions or Stuck in the Middle?  Strategy is about tradeoffs  You cannot meet every customers' needs Corporate Strategy  Synergy o The interaction of two or more activities, creating a combined effect greater than the sum of the individual efforts  "the whole is greater than the sum of its parts"  Examples  chips-on-sandwich  YUM! Brands' foods being all combined into one building  Disney and Pixar- Disney's marketing and promoting savviness + Pixar's animation and character assets  Disney buying Marvel- added Marvel's animation and character assets to Disney's Theme Parks, Cruise ships, etc.  Diversification o The number of different businesses that an organization is engaged in and the extent to which these businesses are related to each other  The purpose of diversification is to spread out risk and opportunities over a larger set of businesses o Related vs. Unrelated Diversification  Related diversification- occurs when a firm operates multiple business within the same industry  Examples- Disney (all focused on entertainment)  Unrelated diversification- occurs when a firm engages in businesses in different industries that lack similarity between each other  Examples- Nestle; GE Strategies for Entering New Businesses  Diversifying into new businesses includes one of the following 1. Merger and acquisitions 2. Internal new venture (start-up) 3. Joint venture (share costs, risks, and profits, but still be independent


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