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by: Fabiola Bogan


Fabiola Bogan
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T. Greckhamer

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T. Greckhamer
Class Notes
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This 13 page Class Notes was uploaded by Fabiola Bogan on Tuesday October 13, 2015. The Class Notes belongs to MGT 3830 at Louisiana State University taught by T. Greckhamer in Fall. Since its upload, it has received 13 views. For similar materials see /class/223131/mgt-3830-louisiana-state-university in Business, management at Louisiana State University.

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Date Created: 10/13/15
Ketchen and Short Ch1 Strateg39c Management examines how actions and events involving top executives such as Steve Jobs rms Apple and industries the tablet market in uence a rm s success or failure 1 Strategic Plans carefully crafted set of steps that a rm intends to follow to be successful 0 Business Model describes the process through which a rm hopes to earn pro ts 0 Economies of Scale cost advantage created when a rm can produce a good or service at a lower per unit price due to producing the good or service in larger quantities 0 Pizza Hut and Dominos buying pizza ingredients for less than American Families and having a specialized kitchen to make it taste better 2 Strategic Ploy speci c move designed to outwit or trick competitors 0 Often involve using creativity to enhance success 0 Huey P Long building bridge low to ground to make Mississippi cargo unload in NO or BR 3 Strategy as a Pattern the extent to which a rm s actions over time are consistent 0 Bad Kmart shifting pattern to diversi cation as opposed to discount retailing 0 Good Apple always responds to competitive challenges by innovating o A consistent pattern can make a company predictable a possibility that Apple must guard against in the years ahead 4 Strategy as Position a rm s place in the industry relative to its competitors 0 Speci cally strategy as position refers to a rm s place in the industry relative to its competitors McDonald s for example has long been and remains the clear leader among fastfood chains One advantage of leading an industry is that many customers are familiar with and loyal to leaders Being the market leader however also makes McDonald s a target for rivals such as Burger King and Wendy s Southwest Airlines is able to position itself as a lowercost and more ef cient provider by not offering meals that are common among other airlines In addition Southwest does not assign speci c seats 5 Strategy as a Perspectiv How executives interpret the competitive landscape aroundthem Because each person is unique two different executives could look at the same eventi such as a new competitor emergingiand attach different meanings to it lb Nanmum strategies swam strategies Intended Strategy A planthat an organization intends to execute Intended strategies are usually described in detail within an organization s strategic plan 0 Frederick Smith and FedEx Emergent StrategAn unplanned strategy that arises in response to unexpected opportunities and challenges Bad FedEx and ZapMail fax machines Good Southern Bloomer making underwear for prisoners and mental patients to using scrap for gun barrel cleaners Mark Zuckerberg and FashMashFacebook Realized Strateg The plan of action that an organization actually follows Deliberate Strategy The parts of the intended plan that the rm continues to pursue over time o FedEx and fast package delivery via a centralized hub 0 Southern Bloomers and underwear and guncleaning patches Nonrealized Strategy Parts of the intended plan that are abandoned 0 David McConnell s books never took off but the success of AVON took the place ofhis desired success Strategic Management Process 1 Understanding strategy and performance 2 Environmental and internal scanning 3 Strategy Formulation 4 Strategy Implementation Ch 2 Vision What the organization hopes to become in the future 0 Wellconstructed visions clearly articulate an organization s aspirations 0 One key tool available to executives to inspire the people in an organization lVIission Statement The reasons for an organization s existence 0 Wellwritten mission statements effectively capture an organization s identity and provide answers to the fundamental question Who are we 0 Mission captures the key elements of the organization s past and present 0 Google s mission for example is to organize the world s information and make it universally accessible and useful Goals Narrower aims that organizations pursue to serve their visions and missions o Narrower aims that should provide clear and tangible guidance to employees as they perform their work on a daily basis 0 The most effective goals are those that are speci c measurable aggressive realistic and timebound o A goal is speci c if it is explicit rather than vague o A goal is measurable to the extent that whether the goal is achieved can be quantified o A goal is aggressive if achieving it presents a significant challenge to the organization 0 Goals must also be realistic meaning that their achievement is feasible 0 Goals should be time bound through the creation of deadlines Organizational Performance How well an organization is doing to reach its vision mission and goals 0 Executives must know how well their organizations are performing to figure out what strategic changes if any to make Performance Measure A metric such as profit stock price and sales along which organizations can be gauged Performance Referent A benchmark such as the industry average that is used to make sense of an organization s standing along a performance measure 0 Using a variety of performance measures and referents is valuable because different measures and referents provide different information about an organization s functioning Balance Scorecard An approach to assessing performance that targets managers attention on four areas 1 Financial 2customer 3 internal business process 4 learning and growth 0 Using the scorecard helps managers resist the temptation to xate on nancial measures and instead monitor a diverse set of important measures 0 The idea behind the framework is to provide a balance between financial measures and other measures that are important for understanding organizational activities that lead to sustained longterm performance Financial measures of performance relate to organizational effectiveness and pro ts Examples include nancial ratios such as return on assets return on equity and return on investment Other common financial measures include profits and stock price Such measures help answer the key question How do we look to shareholders Customer measures of performance relate to customer attraction satisfaction and retention These measures provide insight to the key question How do customers see us Examples might include the number of new customers and the percentage of repeat customers Internal business process measures of performance relate to organizational efficiency These measures help answer the key question What must we excel at Examples include the time it takes to manufacture the organization s good or deliver a service The time it takes to create a new product and bring it to market is another example of this type of measure Learning and growth measures of performance relate to the future Such measures provide insight to tell the organization Can we continue to improve and create value Learning and growth measures focus on innovation and proceed with an understanding that strategies change over time An example of a learning and growth measure is the number of new skills learned by employees every year Triple Bottom Line An approach to assessing performance that emphasizes the concerns of people social responsibility and the planet environmental sustainability in addition to pro t The three Ps of people making sure that the actions of the organization are socially responsible the planet making sure organizations act in a way that promotes environmental sustainability and traditional organization pro ts Social Environmental Economic Ch 3 Environment set of external conditions and forces that have the potential to in uence the organization General Environment or macroenvironment includes overall trends and events in society such as social trends technological trends demographics and economic conditions The Industgy or competitive environmentlconsists of multiple organizations that collectively compete with one another by providing similar goods services or both Opportunities are events and trends that create chances to improve an organization s performance level Why Does the Environment Matter Threats are events and trends that may undermine an organization s performance First the environment provides resources that an organization needs in order to create goods and services Second the environment is a source of opportunities and threats for an organization Third the environment shapes the various strategic decisions that executives make as they attempt to lead their organizations to success PESTEL analysis is one important tool that executives can rely on to organize factors within the general environment and to identify how these factors in uence industries and the firms within them PESTEL re ects the names of the six segments of the general environment 1 political 2 economic 3 social 4 technological 5 environmental and 6 legal The political segment centers on the role of governments in shaping business This segment includes elements such as tax policies changes in trade restrictions and tariffs and the stability of governments The economic segment centers on the economic conditions within which organizations operate It includes elements such as interest rates in ation rates gross domestic product unemployment rates levels of disposable income and the general growth or decline of the economy Social Segmen Social factors include trends in demographics such as population size age and ethnic mix as well as cultural trends such as attitudes toward obesity and consumer activism The technological segment centers on improvements in products and services that are provided by science Relevant factors include for example changes in the rate of new product development increases in automation and advancements in service industry delivery The environmental segment involves the physical conditions within which organizations operate It includes factors such as natural disasters pollution levels and weather patterns The legal segment centers on how the courts in uence business activity Examples of important legal factors include employment laws health and safety regulations discrimination laws and antitrust laws Intellectual property rights are a particularly daunting aspect of the legal segment for many organizations 1 139 Five Forces Analysis A 39 39 1 for an industry by examining interactions among competitors in an industry Competitors in an indust Firms that produce similar products or servicesCompetitors use a variety of moves such as advertising new offerings and price cuts to try to outmaneuver one another to retain existing buyers and to attract new ones Exit Barriers Factors that make it difficult to for a firm to stop competing in an industry Exit barriers can include emotional barriers such as the bad publicity associated with massive layoffs or more objective reasons to stay in an industry such as a desire to recoup considerable costs that might have been previously spent to enter and compete Potential new entrants to the industry Firms that do not currently compete in the industry but may in the future 0 New entrants tend to reduce the profit potential of an industry by increasing its competitiveness Substitutes for the industpy s offerings offerings that differ from the goods and services provided by the competitors in an industry but that fill similar needs to what the industry offers 0 Taking a plane instead of car Suppliers t0 the indust provide inputs that the firms in an industry need to create the goods and services that they in turn sell to their buyers A variety of supplies are important to companies including raw materials financial resources and labor Ford buying out Hertz Forward Vertical Integration A strategy that involves a supplier entering the industry that it supplies inputs to Industry s buyers Purchasers of the goods and services that the competitors in an industry create 0 Wal mart threatening to stop selling compact discs if prices weren t lowered Strateg39c Groups Set of rms that follow similar strategies Mobility Barriers Factors that make it unlikely or illogical for a rm to change strategic groups over time First emphasizing the members of a rm s group is helpful because these rms are usually its closest rivals Second the strategies pursued by rms within other strategic groups highlight alternative paths to success Third the analysis of strategic groups can reveal gaps in the industry that represent untapped opportunities Ch 4 Resource based theory contends that the possession of strategic resources provides an organization with a golden opportunity to develop competitive advantages over its rivals Four Fhamcte qtics of Strategic l A resource is valuable to the extent that it helps a rm create strategies that capitalize on opportunities and ward off threats 2 This culture is also rare in that strikes layoffs and poor morale are common within the airline industry Unique Resources 3 Competitors have a hard time duplicating resources that are dif cult to imitate Some difficult to imitate resources are protected by various legal means including trademarks patents and copyrights 4 A resource is nonsubstitutable when competitors cannot nd alternative ways to gain the bene ts that a resource provides sustained competitive advantageione that will endure over time and help the rm stay successful far into the future Tang39ble resources are resources that can be readily seen touched and quanti ed 0 Physical assets such as a firm s property plant and equipment as well as cash are considered to be tangible resources Intangible resources are quite difficult to see to touch or to quantify o Intangible resources include for example the knowledge and skills of employees a firm s reputation and a firm s culture In comparing the two types of resources intangible resources are more likely to meet the criteria for strategic resources ie valuable rare difficult to imitate and nonsubstitutable than are tangible resources Capabilities What the organization can do based on the resources it possess 0 resources refer to what an organization owns capabilities refer to what the organization can do Dynamic Capability A unique capability to create new capabilities by continually updating a firm s array of capabilities to keep pace with changes in its environment 0 General Electric for example buys and sells firms to maintain its market leadership over time while CocaCola has an uncanny knack for building new brands and products as the softdrink market evolves Distinctive Competence A set of activities that an organization performs very well The Marketing Mix The four P s Product Price Place Promotion that firms use to offer customers a coherent and persuasive message Product the productservice a firm sells to customers Price the amount firms charge for their goods or services Place A physical purchase point and a distribution channel Promotion the communications used to market a product including advertising public relations and other forms of direct and indirect selling Intellectual property Creations of the mind such as inventions artistic products and symbols 0 The four main types of intellectual property are patents trademarks copyrights and trade secrets 0 If a piece of intellectual property is also valuable rare and nonsubstitutable it constitutes a strategic resource Patenm are legal decrees that protect inventions from direct imitation for alimited period of time Trademarks are phrases pictures names or symbols used to identifyaparticular organization 0 McDonald s golden arches the Nike swoole and Apple s outline of an apple Copyrights provide exclusive rights to the creators of original artistic Works such as books movies songs and screenplays Pirag The of tmdemark or copyrighted material Trade secrem formulas practices and designs that are central to a rrn s business and that remain unknown to competitors 0 Trade secrets are protected by laws on the but once a secret is revealed it cannot be a secret any longer 0 This leads rms to rely mainly on silence and privacy rather than the legal systemto protect tmde secrets Value Chain A tool that charts the path by which products and services are created and eventually sold to customers 0 The term value chain re ects the fact that as each step of this path is completed the product becomes more valuable than it Was at the previous step The Value Chain Porter 1985 D Gross Sales I Support Activities I Primary Activities Primary activities are actions that are directly involvedin creating and distributing goods and services Doughnut shops transform basic commodity products such as our sugar butter and grease into delectable treats Value is added through this process because consumers are willing to pay much more for doughnuts than they would be willing to pay for the underlying ingredients There are 5 primary activities Inbound logistics refers to the arrival of raw materials Operations refers to the actual production process while outbound logistics tracks the movement of a finished product to customers Attracting potential customers and convincing them to make purchases is the domain of marketing and sales Service refers to the extent to which a firm provides assistance to their customers Secondagy activities are not directly involved in the evolution of a product but instead provide important underlying support for primary activities Firm infrastructure refers to how the firm is organized and led by executives human resource management which involves the recruitment training and compensation of employees Technology refers to the use of computerization and telecommunications to support primary activities Procurementis the process of negotiating for and purchasing raw materials 0 Large doughnut chains such as Dunkin Donuts and Krispy Kreme can gain cost advantages over their smaller rivals by purchasing our sugar and other ingredients in bulk A supply chain is a system of people activities information and resources involved in creating a product and moving it to the customer Best Value Supply Chains Supply chains that focus on the total value added to the customer as opposed to individual outcomes such as speed or costs Stmteoil Supple Chain 39 the use of supply chains as a means to create competitive advantages and enhance firm performance Speed or cycle time is the time duration from initiation to completion of the production and distribution process Quality refers to the relative reliability of supply chain activities Supply chains efforts at managing cost involve enhancing value by either reducing expenses or increasing customer benefits for the same cost level Flexibility refers to a supply chain s responsiveness to changes in customers needs Through balancing these four metrics best value supply chains attempt to provide the highest level of total value added Agility the supply chain s relative capacity to act rapidly in response to dramatic changes in supply and demand 0 Guilty can be achieved using buffers 0 Excess capacity inventory and management information systems all provide buffers that better enable a best value supply chain to service and to be more responsive to its customers Adaptability refers to a willingness and capacity to reshape supply chains when necessary 0 Generally creating one supply chain for a customer is desired because this helps minimize costs 0 Adaptable firms realize that this is not always a best value solution however Aligment refers to creating consistency in the interests of all participants in a supply chain 0 In many situations this can be accomplished through carefully writing incentives into contracts 0 Collaborative forecasting with suppliers and customers can also help build alignment Enactment Enactment contends that an organization can at least in part create an environment for itself that is beneficial to the organization 0 This is accomplished by putting strategies in place that reshape competitive conditions in a favorable way Environmental Determinism views organizations much like biological theories view animalsiorganizations and animals are very limited in their ability to adapt to the conditions around them 0 offers a completely opposite view from enactment on why some firms succeed and others fail Institutional theog The extent to which firms copy one another strategies o Innovations such as dollar menus and drivethrough windows tend to be introduced by one rm and then duplicated by the others Transaction cost economics is a theory that centers on just one element of business activity whether it is cheaper for a rm to make or to buy the products that it needs 0 Ford and General Motors face a wide variety of makeorbuy decisions because so many different parts are needed to build cars and trucks Backward integration strategy When a rm enters the business of one of its suppliers 0 In contrast airlines always buy or rent their airplanes Large planes are generally bought from Boeing or Airbus while modestsized airliners are purchased from companies such as Brazil s Embraer SWOT analysis is a tool that considers a rm s strengths and weaknesses along with the opportunities and threats that exist in the lm s environment Richard and Whittington Ch1 Four basic concepts of strategy rational fatalistic pragmatic relativist Classical Strategy a rational process that includes rational analysis and objective decision making in order to maximize longterm value Good business planning is required to control internal and external environment Outcome Pro t maximization andProcess Deliberate Porter amp Ansoff Evolutionary Strategy daytoday management for surviving external circumstances Classical rational and futureorientedplanning is irrelevant The dynamichostile and competitivenature of markets makes itdif cult to plan for long term survival Hannan and Freeman amp Williamson Outcome Pro t Maximization and Process Emergent The market makes important choices not mgmt Processual Stategy apragmatic process ofmistakes leamingand compromises Futureoriented businessplanning is irrelevant Neither markets nor organisational processes are perfect enough for classical orevolutionary strategies to beadopted People are too differentwhen it comes to interestknowledge attention rationality andcan therefore not agree on anoptimal plan Outcome Plural and Process Emergent Cyert and March amp Mintzberg Systemic 0 Strategic objectives dependson the speci c social system inwhich the strategy is created 0 Other rational goalsbesides pro tmaximisationprofessional pride in uencepatriotism culture religion 0 De nition ofstategy dependson contextualfactors o Competitiondoes not imply e iciencymarkets can be manipulated society has other criterias forcorporations than just pro tmaximisation 0 Outcome Plural and Process Deliberate o Whitley amp Granovetter


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