Get ahead with a $300 test prep scholarship
| Enter to win by Tuesday 9/24
Study Guide- SM
Terms in this set (51)
The Wheel of Strategy
- Mission and Vision
- Leveraging Core Competencies
- Consumer wants, needs, desires
- Competitive Advantage
the enduring statement of purpose (why we exist)
Sustainable Competitive Advanatage
When competitors are unable to duplicate a company's value-creating strategy.
Strategic Management Process
The full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns.
An integrated and coordinated set of commitments and actions designed to exploit core competencies and gain competitive advantage.
Resources and capabilities that serve as a source of of competitive advantage for a firm over its rivals.
the leveraging of a firm's core competencies to accomplish the firm's goals in the competitive environment.
- Communicated alignment about enduring purpose for a company.
an overarching, enterprise0wide objective for the foreseeable future.
Resource-Based Model of Above Average Returns
1) Strategy dictated by the firm's unique resources and capabilities.
2) Find an environment with the best opportunities for these assets.
3) Strategy is internally driven.
Support Activities Examples
- General Environment (Firm Infrastructure)
- Human Resource Management
- Technology Development
Primary Activities Examples
- Outbound Logistics
- Marketing and Sales
- location of distribution facilities to minimize shipping times
- Warehouse layout and designs to increase efficiency of operations for incoming materials.
Examples: material handling, warehousing, inventory control, vehicle scheduling, and returns to suppliers.
- Efficient plant operations to minimize costs
- Efficient play layout and workflow design
- Incorporation of appropriate process technology
Examples: machining, packaging, assembly, testing, printing, and facility operations.
- Effective shipping processes to provide quick delivery and minimize damages
- Shipping of goods in large lot sizes to minimize transportation costs.
Example: finished goods, delivery vehicle operation, order processing, and scheduling.
Marketing and Sales
- Innovative approaches to promotion and advertising
- proper identification of customer segments and needs
- Example: advertising, promotion, salesforce, quoting, channel selection, channel relations, and pricing.
- Quick response to customer needs and emergencies
- quality of service personnel and ongoing training.
- Example: installation, repair training, parts supply, and product adjustment.
General Administration (Firm Infrastructure)
- Effective planning systems to attain overall goals and objectives.
- Excellent relationships with diverse stakeholder groups.
- Effective information technology to integrate value-creating activities
- Example: General management, planning, finance, accounting, legal and government affairs, quality management, and information systems.
Human Resource Management
- Effective recruiting, development, and retention mechanism for employees.
- Quality relations with trade unions
- Reward and incentive programs to motivate all employees
- Effective R & D activities for process and product initiatives.
- Positive collaborative relationships between R&D and other departments.
- Excellent professional qualifications of personnel.
- Procurement of raw material inputs to optimize quality and speed and to minimize the associated costs.
- Development of collaborative win-win relationships with suppliers.
- Analysis and selection of alternative sources of inputs to minimize dependence on one supplier.
I/O (External threats and opportunities) Model of Above-Average Returns
1) Strategy dictated by the external environment of the firm (what opportunities exist in these environments?)
2) Firm develops internal skills required by external environment (what can the firm do about the opportunities?)
3) Thus, strategy is externally driven.
Porter's Five Forces Parts
1) The Threat of New Entrants
2) The Bargaining Power of Buyers
3) The Bargaining Power of Suppliers
4) The Threat of substitute products and services
5) The intensity of rivalry among competitors in an industry
The Threat of New Entrants
- The possibility that the profits of established firms in the industry may be eroded by new competitors.
a) Economies of scale
b) Product differentiation
c) Capital requirements
d) Switching costs
e) Access to distribution channels
f) Cost disadvantages independent of scale
The Bargaining Power of Buyers
a) It is concentrated or purchase large volumes relative to seller sales.
b) The products it purchases from the industry are standard or undifferentiated.
c) The buyer faces few switching costs.
d) It earns low profits.
e) The buyers pose a credible threat of backward integration.
f) The industry's product is unimportant to the quality of the buyer's products or services.
The Bargaining Power of Suppliers
a) The supplier group is dominated by a few companies and is more concentrated than the industry it sells to.
b) The supplier group is not obliged to contend with substitute products for sale to the industry.
c) The industry is not an important input to the buyer's business.
The intensity of rivalry among competitors in an industry
a) Numerous or equally balanced competitors
b) Slow industry growth
c) High fixed or storage costs
d) Lack of differentiation or switching costs.
e) Capacity augmented in large increments.
f) High exit barriers.
The Three levels of the External environment
1) Macro- Environment (Political/ demographic)
2) Industry Environment (Bargaining power/Rivalry/ Rbv)
3) Micro-Environment (Competitive Advantage/ Product Differentiation)
The Three Shareholder Groups
- Capital Market Shareholders
- Product Market Shareholders
- Organizational Stakeholders
Capital Market Shareholders
- Major Suppliers of Capital
- Porter's Five Forces
Product Market Shareholders
- Primary Customers
- Host Communities
- Nonmanagers (Executives)
General Environment (Macro)
Focused on the future
Focused on factors and conditions influencing a firm's profitability within an industry.
Competitor Environment (Micro)
Focused on predicting the dynamics of competitor's actions, responses, and intentions.
The External Environment
Strategic Groups Defined
- Set of firms emphasizing similar strategic dimensions and using similar strategies.
- Internal competition between strategic group firms is greater than between firms outside that strategic group.
- There is more heterogeneity in the performance of firms within strategic group.
- Example: Kellogs and General Mills
Outcomes from External and Internal Environmental Analysis
- external environment: Firm's identify what they might choose to do (OT)
- internal environment: firm's determine what they can do (unique resources, capabilities, and competencies)
The Four Question's Asked in Strategic Management
- Can Do? (SW/Porter's Value-Chain)
- Might Do? (OT/Porter's Five Forces)
- Want to Do? (Personal Worldview)
- Should Do? (Societal Worldview)
- Shows how a product moves from raw-material state to the final customer.
- Allows the firm to understand the parts of its operations that create value and those that do not.
Primary activities involved with
- a product's physical creation, sale and distribution to guyers, and its service after the sale.
Support activities provide
the support necessary for the primary activities to take place.
An integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets.
Strategic Management Equation
Mission + Vision + Values = Bring it on!
Business-level Strategy (Competitive)
Each business unit in a diversified firm chooses a business-level strategy as a means of competing in individual product markets.
Specifies actions taken by the firm to gain a competitive advantage by selecting and managing a group of different businesses competing in several industries and product markets.
Corporate-level Strategy Values
-- The degree to which the businesses in the portfolio are worth more under the management of the company than they would be under someone else's ownership and management.
- Asks the questions: Which businesses should we own? Which businesses should we not own?
Product Diversification concerns:
- The scope of industries and markets in which the firm competes.
- How managers buy, create, and sell different businesses to match skills and strengths with opportunities presented to the firm?
Less than 70% of revenue comes from the dominant business, and all businesses share product, technological, and distribution linkages.
Two Major Reasons for International Expansion
- Penetrating new markets
- opportunities to expand the value-chain
International Strategy Benefits
- Increase Market Share
- Return on Investment
- Economies of Scale or Learning