Business Management Concepts: Strategies, Planning, and Organization

Posted on May 15, 2024 in Economy

Questionnaire

1) Does management concept and process?

Social process where people interact with a goal-oriented process that goes in stages:

  • Planning
  • Organization
  • Integration staff
  • Address, and
  • Control

2) Concept of organization, identifying differences with the concept of business?

Organization: An open social system consisting of a group of people whose relations are rationally defined, formalized, and coordinated to achieve certain objectives. It has structure (division of labor), resources (material, human, and financial), and operating systems (policies, rules, procedures).

Companies: Operators that transform inputs into goods and/or services and, in return, pursue financial gain.

3) Concept of planning, strategy, and strategic planning?

Planning: Setting goals, selecting courses of action to follow, to-do’s and don’ts.

Strategy: The establishment of goals and basic long-term objectives in the company, together with the adoption of courses of action and allocation of resources to achieve them (Chandler). The strategy of the organization is the answer to two questions: What is our business and what should it be? (Drucker).

Strategic planning: The process of rational reflection and systematic analysis and evaluation of objectives and activities. Through the design, implementation, and monitoring of various strategies, it enables the organization to reduce risk, manage uncertainty, adapt to the requirements of the environment, and leverage opportunities.

4) Name the 5 Forces of Porter and an example of each

1. Level of rivalry among competitors

  • Number of existing competitors
  • Industry growth
  • Fixed cost
  • Product differentiation
  • Switching costs

2. Threats of new entrants into the industry

  • Economies of scale
  • Product differentiation
  • Branding
  • Access to distribution channels
  • Capital requirements
  • Experience, learning
  • Government action

3. Threat of substitutes

  • Availability of close substitutes
  • Change the user cost
  • Producer profitability and aggressiveness of the substitute
  • Value/price of the substitute

4. Bargaining power of buyers

  • No major buyers
  • Cost of change for the buyer
  • Buyer threat integration

5. Bargaining power of suppliers

  • No major suppliers
  • Differentiation and cost of changing suppliers
  • Supplier integration threats

5) Explain the 2 differentiation strategies currently used

Quality Management System:

Quality characteristics of a product must meet certain requirements that the client requires and understanding of a quality product. Concepts:

  1. Quality Planning: This process establishes the “quality objectives.” It also specifies “business processes” to carry out the purposes of quality “resources to be used” to develop quality goals.
  2. Quality control: In this phase, it verifies compliance with quality requirements.
  3. Quality assurance: It has to do with the confidence that the company has to meet quality requirements. E.g., to check the quality after sales.
  4. Quality improvement: Increasing the company’s ability to meet the quality requirements of its customers.

Innovation:

The idea is that the product has an added value, a plus to have an impact on customers and society. It is the alteration of a product or process to create the product. This alteration must be original; otherwise, we cannot talk about innovation, and it should also generate a value-added product. Innovation can be in two ways:

  • Minor (a change to the product)
  • Mayor (a new product)

Types of Innovation

  1. Physical characteristics of the product: It is given in three cases.
    • Original product (new product)
    • Product reformulated (using color, design (e.g., milk bag, then in boxes and then individual tetra pak))
    • Product repositioned (perception of the customer against the product (e.g., Paris Paris now stores))
  2. Depending on the nature and source of innovation
    • The innovation will be according to “technology,” this clearly related to science.
    • Sales and Marketing: Based on distribution channels, as sold, as it did, and product advertising clearly has to do with creativity.

Innovation Failures

  • The innovations fail because they usually need is not detected properly, and the demand is not projected accurately.
  • It is also possible that the technology is not adapted to needs.
  • When conducting a product and there is no demand.
  • Identity, product design makes it fail.
  • The product is copied.

6) Explain that consist of 4 strategies for growth and an example of each.

Product (suppliers and competitors)

Market (customers)

It has to do with our product and our market. There are 4 of these strategies that can work with the current product or new product, or with the current or new market.

Def. EC: Guidelines or courses of action with respect to competing products as target markets. It has 4 goals:

  1. The first goal is to increase sales.
  2. Increase in market share (part of the cake).
  3. Growing in expected profit, relates to the goals, and is expected to be the expected profit achieved.
  4. Growing in size, e.g., micro-enterprise to small business or large enterprise.

1st CD, “market penetration,” in competition with existing products on the market today.

Ex. 1: First develop demand, encourage customers to buy permanently. Focused on customers not buying us, who buy from the competition and buy from us. Develop new business to use our product.

Ex. 2: Increasing market share can be done as follows:

  • Through improvements in our product or service
  • Repositioning the brand
  • We reduce px
  • Tighten up our distribution channels or make deals. Ex 2×1

Ex. 3: Acquisition of market:

  • Creating a new business
  • Mergers
  • Absorptions
  • Purchase of competitors

Ex. 4: Defending market position

  • Step up distribution network
  • Tighten up the promotions
  • Make minor improvements to the product or play with the px

Ex. 5: Rationalization of market

  • Reorganize our company is looking to reduce costs and improve marketing.
  • You can search for effective distribution.
  • Having fewer orders for thinking to do.

Ex. 6: Market organization, refers to every public to help us improve our profitability. Create a number of professionals, creating a competition law. It is intended that through laws and regulations has a market organization.

2nd CD, “Market Development,” seeks to compete through existing products but in new markets.

Ex. 1: New segments:

  • Switch from industrial market to a consumer market (business people)
  • Selling the product to other buyers, putting it differently. Ex. college book for children.
  • New distribution channels, out of tradition and seek new channels to sell direct to hotel chains.
  • Geographical expansion, seek other regions and even abroad, buying foreign companies the same industry.

3rd EC “Product development, new products in the same or current market, this strategy is focused on changing our product:

Ex. 1: Adding features, change physical attributes of the product, adding new features to the product, such as cellular (radio, camera, Bluetooth, etc.). It is given a value-added product. The value can also be a social value. I.e., products that help certain foundations.

Ex. 2: Extending the range of products, e.g., margarine: the pot that serves as a container for microwave, new packaging, colors, flavors, etc.

Ex. 3: To rejuvenate the product line that adapts the product to the times.

Ex. 4: Improving the quality of the product, implement quality standards and implement quality controls.

Ex. 5: Acquire product range, e.g., milk Nestum nest, now Nesquik. Product base with complementary product, shampoo conditioner.

Ex. 6: Rationalize the product range, the company determines that a product is not profitable, cost v/s benefit, and to exhaust the stock, they can do promotions, change the way people have of the product, advertising and promotions.

4th EC “Diversification” is the most risky growth strategy as it goes with a new product to a new market, this strategy can be used when the current market is not providing opportunities for growth. There are two types of diversification:

  • Concentric diversification: Is to create new activities to complement the activities that the company is already taken, such as football and basketball school, was added to swimming and tennis to be a new market.
  • Pure diversification: Creating new activities without taking into account that those currently using, e.g., Falabella Falabella became a bank, insurance, travel, grocery, etc.

7) Which is the horizontal strategy, point out shapes and types of examples.

Horizontal integration strategy (EH)

The strategy or course of action can exploit synergies between different UEN. We can identify 3 types:

  1. EH between UEN of the same company.
  2. Among various companies UEN.
  3. Among individual companies, which are not segmented UEN (for their size, SMEs in general).

Examples:

  • Common infrastructure
  • Common Technology
  • Supply joint (joint purchase)
  • Joint administration
  • Human resources shared

Advantages: Lower costs, higher efficiency, less need for staff, etc.

Disadvantages: More complex the organization can not always be possible to share production process where there is too much variety of products, or that they do not use the same technology.

Examples

HORIZONTAL INTEGRATION

Songal Project (National Soc Booksellers) developed a partnership project with the aim of forming a purchasing joint. Currently, the plant collects orders for these small bookstores and negotiates joint purchase of volumes of products at great prices, allowing these libraries to compete with large and known companies in the category (these firms made up the procurement section in their respective value chains).

8) Which is the vertical strategy, point out shapes and types of examples.

Strategy of vertical integration (EV)

Define the boundaries of the enterprise value chain, answered the question of purchase or manufacture, integration or contracting.

Company establishes relationships outside their boundaries with suppliers or distributors.

Identifies the circumstances under which such limits and relations should be changed to enhance and protect the company’s competitive advantage.

Dimensions EV

  1. The EV can be forward or progressive (to dealers) or backward or regressive (towards suppliers).
  2. Full integration: A fully integrated company is back on a given input if it is able to fill internally or self-existence or generation of this input in particular. The companies are fully integrated back complete control of the input.
  3. Quasi integration: The one case in which the company does not have complete control of all inputs required for its production process and to access it comes to mechanisms such as long-term contracts with suppliers, alliances, exclusive contracts.

Benefits of EV

Cost reductions and efficiency in resource use.

Avoid imitation prevents poor services, creates barriers to entry, allows compliance with traceability requirements (history of the product).

It promotes the differentiation, will gain market share, expanding business areas, gives autonomy to the company.

Administrative and management advantages: Increased information exchange, facilitates control of the business.

Disadvantages of IV

In some businesses may increase fixed costs, increased business risk, higher capital requirements, implies higher administrative costs.

Loss of flexibility: Reduces the flexibility to diversify restricts the possibility of different distributors and suppliers, the more difficult to compete when the context becomes negative (difficult to change their business), market exit barriers higher, more difficult to get rid of processes and outdated technology.

Loss of balance: The EV requires the company to maintain a balance between various stages of the value chain. This can cause imbalances in excess supply or unmet needs (when the input is not available).

Improved management and administrative burdens: It increases the size of the organization, can affect the flow of communication and administration.

Considerations in time for a EV.

Assess the risk associated with the incorporation of the supply chain to the company or contracting suppliers.

Designing systems supplier qualification.

Assess the risk of spreading unwanted when hiring a vendor.

Evaluate delivery times, price and quality provided by the suppliers.

To assess the availability of assets or market input (input low or specialized) to evaluate how critical it is for the production process.

Recommendation for the selection of an EV

The recommendations suggest, say “not to pursue vertical integration unless absolutely necessary, as it implies, costs, risks, and little flexibility in cases that required changing the course of business.

It is more benefits and lower cost of strategies such as supply contracts, strategic alliances, concessions, etc.

Backward vertical integration (suppliers)

EmuLine is a producer of an exclusive line of creams based on emu (animal relative of the ostrich). The company has its own emu farm and processed product from the rendered fat of this animal (its value chain therefore ranges from basic input generation, emu fat, to the production of cream.

Progressive vertical integration

EmuLine does not market directly through fasa. If anything, decided to establish their own shops, say that the company has progressively integrated vertically or forward (in this case its value chain would be extended to distribution and marketing of the product).

9) Name two considerations to take into account before adopting an integration strategy.

Assess the risk associated with the incorporation of the supply chain to the company or contracting suppliers.

Designing systems supplier qualification.

Assess the risk of spreading unwanted when hiring a vendor.

Evaluate delivery times, price and quality provided by the suppliers.

To assess the availability of assets or market input (input low or specialized) to evaluate how critical it is for the production process.

10) Point out a strategy that consists of a functional, bring two types of the

Definition: A set of guidelines, courses of action regarding the functions performed by the company and that relate to the following:

  • Financial Strategy
  • HR Strategy
  • Technological Strategy
  • Supply strategy
  • Manufacturing strategy
  • Marketing strategy

These functions correspond to the same processes derived from the value chain.

11) Point out that companies are expanding to foreign markets

  1. To gain access to new customers. Expansion into foreign markets offers the possibility of higher revenues, profits, and growth.
  2. To reduce costs, and improve the competitiveness of businesses in their countries sales are not sufficient to fully exploit their potential for economies of scale. The fact expand to other markets increases the chance of cost advantages (small markets like ours).
  3. To distribute the business risk based on a broader market, operating in many foreign markets at a time.

12) Explain which is the global strategy, international and differentiation

GLOBAL STRATEGY: Is the expansion into other markets based on the generation of standardized and globally accepted and which it is possible to distribute worldwide or global.

INTERNATIONAL STRATEGY (cluster or MULTINATIONAL) consists in expanding into other markets based on products developed for each particular market, according to local tastes and preferences of each target market.

13) Explain that include licensing and franchising, list advantages and disadvantages

LICENSES:

Is an agreement whereby a foreign license rights to manufacture buy a given product for a negotiated fee (usually based on payments by units sold) with the company granting the license. In these cases, the lawyer provides the most of the capital needed to start the business operation. It is applied to technology or production rights.

Advantages: The company owns the license must not afford the costs and risks associated with opening for business in foreign markets.

Disadvantages: You can lose some control of the manufacturing function and product marketing, and control know-how (imitation).

14) Indicate which constitutes the strategic alliances and an example

Strategic alliances are cooperative agreements between companies that go beyond normal dealings between a company and another but that do not amount to a merger or joint venture, in the strict sense, formal ownership ties.

Some examples of partnerships between business: business associations, supply agreements, joint technology acquisition, responses to government pressure, global standardization agreements products.

All these forms share the common goal of eliminating or significantly reducing confrontation between competitors, or with suppliers and customers, and promote joint cooperation.

In that sense, alliances outweigh any competitive disadvantage, and/or create competitive advantages.

Examples of strategic alliances

  1. IBM and Dell Computer: Formed an alliance in which Dell agreed to buy about 16,000 million dollars in parts and components for use in IBM personal computers and servers.
  2. Airlines United, American, Continental, Delta created a partnership to develop a website to provide customers with airline tickets, rental cars, lodging, cruises and travel packages at low cost.
  3. A group of entrepreneurs from the Chamber of Tourism of the Cajon del Maipo challenge has emerged as the design and implementation of a tour operator for the commercial management of services and package tours in the area, thereby allowing increased sales, generate a factor of differentiation from the existing tourism offer, spread and attract more tourists to the area and strengthen strategic alliances with other businesses in the community.
  4. Investment Carmencita, exporter of honey on a large scale, formed an alliance with a select group of suppliers to improve the quality of honey is going other markets. The idea is to transfer knowledge about the proper handling of the hives and bring in the whole chain implement the use of quality standards such as GAP (good beekeeping practices).

As you can appreciate the partnerships can go in different directions, between competitors in an industry, including manufacturers and their suppliers and between manufacturers and their distributors to strengthen the competitive advantages of the complete product chain.

15) Indicate that some alliances fail

Why alliances may become unstable or fail:

  1. Existence of objectives and competing priorities among stakeholders.
  2. Inability to work well together.
  3. Emergence of more attractive technological opportunities and rivalry between actors who are overcome friction as competitors.

16) Explain that include mergers and acquisitions and what are their most common difficulties

MERGERS AND ACQUISITIONS

A merger is a combination or grouping of equals, in which the newly created company often takes a new name.

An acquisition, however, is when a company, the buyer, purchasing and accounts for other operations, the acquiree.

The difference between a merger and an acquisition is more about the details of ownership, management control and financial agreements with the strategy and competitive advantage. The resources, skills and competitive capabilities of the newly formed company end up being virtually the same whether the combination is a result of an acquisition or merger.

Examples of acquisitions:

  • Nestle, Kraft
  • Unilever and Procter & Gamble
  • Intel has made over 300 acquisitions in the last 5 years to expand its technology base and to become one of the largest providers of Internet technology.

Examples of Mergers:

Daimler-Benz merged with Chrysler to create a broader product line and have stronger global presence in the global motor vehicle industry which improved the ability of the combined companies to compete with Toyota, Ford and General Motors.

Difficulties in this type of strategy

Mergers and acquisitions do not always produce the expected results at times by excessive expectations and others because it is much more difficult than expected to capture the desired benefits.

The combined operations of two companies especially if they are large and complex, often generates tremendous resistance in members of the organizations. Difficult to resolve conflicts in management styles and corporate culture in cost savings, better exchange of expertise and competitive capabilities can take much longer to complete than expected.

17) Which is the outsourcing strategy, indicate advantages and disadvantages

Strategy breakdown, disintegration, or better known as outsourcing

In recent decades, this type of strategy has gained wide use by businesses. The disintegration or outsourcing is “to withdraw from certain phases or activities of the value chain and rely on outside suppliers to supply the required inputs for manufacturing.” Thus the disintegrating firm, concentrates its energies no more limited part of the value chain.

When should this type of strategy:

  1. When an outside specialist may perform better or activity that is outsourced can do so at lower cost. Many PC makers, for example, are no longer join now used internally and contract assemblers to assemble computers, because these companies are capable of generating external economies of scale in assembly and specialize in it.
  2. When the activity is not crucial to the company achieve a sustainable competitive advantage. The outsourcing of maintenance services, data processing, accounting and other administrative support activities with companies that specialize in it, has become very common.

Advantages to this type of strategy:

  1. Reduces the risk of exposing the company to changing technology.
  2. Streamlines operations by allowing the company to focus on that part of the value chain does best.
  3. Provides greater flexibility to the organization.

Risks of outsourcing



The biggest danger of the company is otusourcing handle too many activities to other companies or mistake in choosing the types of activities outsourced. To overcome these difficulties it is vital that the outsource company, build a strong link with the outside firm providing a clear and accurate service characteristics that are expected to fulfill it (example choosing certified companies in quality management standards)