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Mgmt 4300 Final rvw
Chapters 1-9
| Question | Answer |
|---|---|
| Strategic Management | – formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives |
| Strategy formulation | – The What; vision, mission, SWOT, LT objectives, alternative strategies, and strategy selection |
| Strategy Implementation | – The How; annual objectives, policies, employee motivation, and resource allocation |
| Intuition | Basis is past experiences, judgement, feelings;Useful in great uncertainty or hard situations, but must be aware of cognitive biases |
| Prospect Theory | – Tversky & Kahneman; concluded that people avoid risks when gains are in question (want to lock in gains with certainty) Yet people prefer risk when alternative is a certain loss |
| Goal of strategic management | – superior economic performance compared to rivals |
| Vision statement vs. Mission statement | What do we want to become vs. what is our business |
| Effective mission statement | anticipates customer needs, identifies customer needs, provides product/service to satisfy needs; identifies the utility of a firm’s products to its customer |
| Declaration of attitude | broad in scope, generates strategic alternatives; a fine balance between specificity and generality |
| Major impact of external forces | products, services, markets, and customers |
| Resource similarity | – extent to which the type and amount of a firm’s internal resources are comparable to a rival |
| Factors that raise entry barriers | Lower prices by firms in the industry, high barriers to imitation, and high customer switching costs |
| Five-forces model of competition | Potential entry for new competitors, bargaining power of suppliers, potential development of substitute products, bargaining power of consumers, and rivalry among competing firms |
| • Rivalry | most central of the five forces, focus on competitive advantage of strategies over other firms |
| o Conditions for high rivalry | high number of competing firms, similar size, capability, falling demand for the industry’s products, barriers to leave the market are high, while consumers can switch brands easily, fixed costs, and barriers to entering the market are low |
| o Perfect competition | strong rivalry among similar firms; no firm makes profit above its cost of capital |
| o Monopoly | absence of rivalry; produce less and charge more |
| o Oligopolistic competition | competition occurs among a few similar firms |
| • Potential Entry of new competitors | quality, pricing, different tech, and marketing overcome barriers |
| • Potential development of substitute products | increase of pressure when sub prices and consumer switching costs decrease |
| • Bargaining power of suppliers | increased when there are low number of suppliers, few subs, and high switching costs. |
| • Bargaining power of buyers is raised when | .Increased when supplier concentration does not occurs, loss in demand for the firm’s product, high percentage of supplier volume bought by customer, low strategic importance of supplier to buyer, low strategic importance of buyer to supplier |
| power of suppliers is raised when | .Increased when supplier concentration occurs, growth in demand for the firm’s product, low percentage of supplier volume bough by customer, high strategic importance of supplier to buyer, low strategic importance of buyer to supplier |
| EFE | External factor evaluation matrix |
| CPM | competitive profile matrix (Looks at major competitors, S&W in relation to sample firms strategic position) critical success factors include internal and external issues |
| Internal audit | identifies strengths and weaknesses across the firm and the coordination among them |
| Basis | SWOT analysis |
| Key internal forces | Distinctive competencies (not easily matched or imitated), a resource based view approached to competitive advantage, |
| Resource Based View pieces | Physical resources, human resources, organizational resources |
| • Resources | observable, tradable, contribute to market position, and produce economic advantage if difficult to imitate or neutralize |
| • When does a resource create a competitive advantage | cost reducing/revenue enhancing; rare, imitable, non substitute |
| Characteristics of a capability | routines or processes, cannot be readily observed or traded that contributes together value, lower cost or both, less easily traded than resources |
| Management Functions | planning, organizing, motivating, staffing, controlling |
| Marketing – customer needs or wants | defining, anticipating, creating, and fulfilling |
| Finance/Accounting | – investment, financing, and dividend decisions |
| Research and Development | – development of new products and improving processes |
| Value Chain Analysis | – identify distinctive competencies and benchmarking |
| Support Activities | – activities that enable the primary activities; may enable multiple primary activities |
| Types of strategies | Business level (Ex: Porter’s generic Strategies) and Corporate level (Vertical and horizontal diversification, and international expansion) |
| Porter’s 4 Generic Strategies | Cost leadership, focused cost leadership (niche), differentiation, and focused differentiation (niche) |
| First mover advantages rival firms | – benefits a firm may achieve by entering a new market or developing a new product or service prior to |
| • Disadvantages | pioneering costs, costly mistakes, risk of wrong building, and investment in inferior or obsolete technology |
| Vertical Integration strategies | Forward or backward |
| Diversification Strategies | Related or unrelated |
| Defensive strategies | retrenchment, divestiture, and liquidation |
| Matching Stage | Match between orgs internal resources and the opportunities and risks created by the external factors |
| Stage 1 - Input Stage | EFE Matrix, IFE matrix, CPM |
| Stage 2 - Matching Stage | SWOT (SO, WO, ST, WT), SPACE matrix, BCG matrix, IE Matrix and Grand strategy matrix |
| • BCG matrix | (Boston consulting group; focuses on relative market-share position and industry growth rate) |
| Stage 3 - Decision Stage | QSPM |
| • QSPM | technique designed to determine the relative attractiveness of feasible alternative actions |
| Strategy formulation | Positioning forces before the action; effectiveness, intellectual and analytical skills, coordination among a few people |
| Strategy implementation | managing forces during the action; efficiently, operational skills, motivation, leadership, and coordination among many people |
| Purpose of annual objectives | resource allocation, management evaluation; monitoring processes and priorities |
| Policies | set boundaries, constraints, and limits on the kinds of administrative actions that can be taken to reward and sanction behavior |
| Changes in strategy often lead to | Changes in organizational structure |
| Forms of structure | functional, divisional, strategic business unit, and matrix structure |
| Strategic business unit structure | group similar divisions into strategic business units and delegates authority and responsibility for each unit |
| Matrix Structure | – most complex, cuz it depends on both vertical and horizontal flows of authority and communication |
| 3 ways to manage resistance to change | – force change strategy, educative change strategy, rational or self-interest change strategy |
| Strategy supportive culture | Formal statement of org philosophy, physical design, role modeling, teaching, and coaching, clear reward and status, strong leaders reacting to critical incidents, org design, structure, systems and procedures, and clear criteria |
| • Marketing segmentation | – subdividing of a market into distinct subsets of customers according to needs and buying habits |
| • 4 Market segment basis | – geographic, demographic, psychographic, and behavioral |
| • Marketing mix | – product, place, promotion, and price |
| • Product positioning | representations that reflect how products/services compare to competitors on dimensions most important to success in the industry; New products and improvement of existing products that allow for effective strategy implementation and process innovation |
| • 3 Major R&D approaches to implementing strategies | First firm to market new technological products; Innovative imitator of successful products; Low-cost producer of similar but less expensive products |
| Finance/Accounting Issues | Debt vs. Equity decisions, EPS/EBIT analysis |
| • EPS/EBIT analysis | earnings per share/earnings before interest and taxes |
| • Projected Financial Statement Analysis | – allows an organization to examine the expected results of various actions and approaches |
| • Financial budget | – details how funds will be obtained and spent for a specified period of time |
| Evaluating worth of a business | ownership, earnings, and complexity |
| 3 basic activities | Examine the underlying bases of a firm’s strategy,Compare expected to actual results,Take corrective actions to ensure that performance conforms to plans |
| Rumelt’s 4 criteria | – consistence, consonance, feasibility, and advantage |
| Strategy evaluation | – initiates questioning, triggers a review, and stimulates creativity and problem solving; allows for monitoring SWOT elements |
| Return on Equity (Net income/Shareholders equity) | Return on assets x financial leverage |
| Qualitative evaluation of strategy | - Human resource factors, marketing, finance/accoutning, R&D, and MIS |
Created by:
hopekn