Strategic Business Concepts and Frameworks
Achieving Strategic Fit
Accomplished by achieving alignment between business capabilities and strategy, and strategy and the external environment: Achieving Fit
Today and tomorrow: Assessing Performance
“Subjective” environment (socially constructed), Firm can influence and even create environmental conditions, consistent with an “inside out” approach: Blue Ocean (Alternative)
Resources, management preferences, organization: Business Capabilities
Relative concentration of buyers and sellers, volume of purchases, relative switching costs of buyers and sellers, ability of buyers to backward integrate, buyers price sensitivity: Buyer Power
(1) Settles some fundamental questions about the purpose of the business (2) prompt and reinforce the day-to-day actions that are consistent with their meaning (3) provide direction in the formulations of the more specific strategy of the firm. The Collins and Porras Framework
Defines the reason for being and may never be fully realized: Core Purpose
Takes a broader level view when there are multiple businesses in the company. Addresses questions such as: What businesses are we in, are the business related, are we looking for synergies, etc.: Corporate Strategy
Determining the way forward: Creating Strategy
Have power and urgency but no legitimacy. Often desperate moves such as wildcat strikes, employee sabotage, and political terrorism are characteristics of their position: Dangerous Stakeholders
Possess all three attributes: Definitive Stakeholders
Present a sense of urgency through their demands but have no legitimacy or power: Demanding Stakeholders
Model used for learning, understanding, and applying “fit”: Diamond E-Model
Can be both tangible (properties, quality, performance, etc.) and intangible (design, status, etc.). Can also become aspects of execution, such as ease of availability and reliability: Differentiation
Red Ocean (traditional), Blue Ocean (alternative), New Economy models: Different Views of the Environment
Beneficiaries of corporate philanthropy. They have neither power nor urgency, but invoke legitimacy: Discretionary Stakeholders
Gives priority to those actions that prepare and initiate the sale of a business: Divest Strategy
Have both legitimacy and power and tend to have formal mechanisms to exercise them such as corporate board of directors and public affairs: Dominate Stakeholders
Possesses only power as an attribute, have low salience but considerable potential to add to it with either legitimacy or urgency: Dormant Stakeholder
Profitability, market position, growth, risk, mortality rate, re-infection rate; focus on the aims and performance of the business as a classic economic entity, whether it be for profit or not for profit, revealing measurable targets and time frames: Examples of Hard Goals
Management, employees, community, society, patient satisfaction, perceptions of community health and well being; sets out targets for the social conduct of the business. They focus on intentions of the business with respect to its managers, employees, and in the community at large: Examples of Soft Goals
Environmental dynamics, environmental scope and munificence, environmental uncertainty and risk: External Drivers; Feasibility, flexibility, and stretch: Final Vision Check
Sales, COGS, gross profit, etc.: Financial Performance
An approach for dealing with some aspects of competitive analysis: Game Theory
Assessing performance, implementing change, creating strategy, setting direction: General Manager Responsibilities
Differentiation and Cost leader. Having a lower price as a visible lure for the customer. This may also come from finance or credit terms, delivery, or operating implications, training, etc.: Generic Value Propositions
What does the business propose to achieve in the foreseeable future? 3-5yrs./ What are its aims, for example, with respect to growth, profitability, and risk?: Goals
Formulated specifically to be achievable: Goals and Objectives
Implies a priority on market, plant, and personnel investments to grow the business, if necessary at the expense of current profitability: Growth Strategy
Implies a stingy approach to investment and spending as priority is given to milking cash and profits from a business: Harvest Strategy
Ensuring that the firm is offering something that the market wants and that the firm is capable of consistently producing as a result of the way it operates. Aligning the demands of the external with the production of the internal, and doing it in a way that is better than what others are able to do: Having a Fit
Making it happen: Implementing Change
Inside Out approach to strategy: Business Capabilities, Strategy, External Environment
Mission, vision, and goals, strategy of the firm, organizational capabilities: Internal Drivers
Things that firms in the industry have to be aware of and must address if they want to competitive/survive in the industry: Key Success Factors (KSF)
Who are we selling to? Consider both customers and geographic regions (e.g. electronic fields in DFW)
Market share, growth, benchmarking (performance vs. competitors): Market Performance
Clear and compelling goal that serves to unify an organization’s efforts. Must stretch and challenge the organization, yet be achievable: Mission Statement
Disruptive technologies, economics of information, unbundling, the long tail: New Economy Models
Includes the “hard” or more quantitative measures of financial and market performance: Operating Performance
Generally “softer” and more qualitative than those of operating performance, includes employee enthusiasm and identity/satisfaction, management training & development, communication, and problem solving, learning and sustainability, organizational culture: Organizational Health
Outside in approach to strategy: External Environment, Strategy, Business Capabilities
Overall industry attractiveness: The Five Forces is Meant to Determine
Political, Economic, social, and technological factors: PEST Analysis
Potential entrants, buyers, suppliers, substitute products, and rivalry: Porter’s Five Forces
Economies of scale, product differentiation, capital requirements, switching costs, cost disadvantages independent of scale, govt. policy: Primary Entry Barriers
What are we selling? Broad definition vs. specific goods/service (E.g. Home electronics vs. TVs, monitors, etc): Product (or Service)
What are the products and/or services that the business plans to sell, and to what specific markets: Product Market Focus
“Objective” environment, firm mostly reacts to environmental conditions, works best with an “Outside In” approach: Red Ocean
Vision, mission, values: Setting Direction
Top managers must focus on truly STRATEGIC issues, because is too easy to get overwhelmed by detail
A process for achieving consistency between a firm and its environment: Strategic Business Integration Process (SBI)
A concrete expression of how an organization intends to compete in the marketplace: Strategy
The relative price and performance of substitutes, switching costs, buyers propensity to substitute: Substitute Products
Relative concentration, presence of substitutes, relative switching costs, relative threat of integration, importance of the supplies, differentiation of the supplies: Supplier Power
Urgency, power, legitimacy: Three Attributes of a Stakeholder
Data collection, organization and analysis of data, conclusions and recommendations: Three Components of Analysis
Analyze the environment, Assess overall fit, implement changes to improve alignment: Three Parts of SBI
PEST takes a macro approach (True/false): True
For a strategy to be successful, all components need to be working in concert. (T/F): True
There should be a clear logical flow from general information, through PEST and 5 forces, to the identification of the KSF (T/F): True
Soft Goals may be overlooked in strategic analysis that focus to narrowly on a faceless economic conception of business (T/F): True
Soft Goals are also more difficult to state in measurable terms, which may be another reason why they are often overlooked (t/F): True
How does the business intend to attract customers? What benefits constitute its “offer” or “value proposition” in the marketplace: Value Proposition
Represent the basic beliefs that govern individual and group behavior in an organization: Values
Collective skills accumulated by a management or professional team as they worked together over time in a common pursuit: Core Skills
Skills possessed by corporations that underlie a whole range of products Corps. That underlies a whole range of products & units: Core Competencies
Valuable, rare, Inimitable, organization: VRIO
Do a firms resources and caps. Enable the firm to respond to environmental threats or opportunities: Question of Value; How many competiting firms already possess specific, valuable resources and cap: Questions of Rareness; Do firms w/o a resource or cap. Face a cost disadvantage in obtaining it compared to other firms that already possess it? : Question of Imitability; Is a firm organized to exploit the full competitive potential of its resources: Question of Organization
A skilled workforce: an organizational resource; A revolving line of credit is an example of what? Organizational resource;
The following is an example of a frozen preference: The unwillingness or inability of a manager to alter his/her perspective on an issue.
The term, “manager preferences” refers to: The preference of managers that impact decision making in a firm.
An organization “brand” is an example of what: An organizational resources
One of the levers that can be used to induce change in organizational capabilities is: Management process
The organizational chart displays how the people are grouped and how responsibilities are assigned within the organization: Structure
Management process that can/should be altered to construct new capabilities include: Management decision making process, operating process performance, assessment process
Managers from Jamison Inc. began the process of evaluating the firm’s business capabilities by classifying the firm’s current capabilities into 3 “baskets”-customers, innovation, and operational capabilities? Is this appropriate? YES
Strategic gaps identified in Part 2-A of the SBI process, represent, misalignment between: ; The environment & Strategy of the firm ; Business capabilities & strategy of the firmStrategic gaps: are typically assessed during subjective measures/data; When measuring fit between the firm’s strategy and the environment (i.e., external fit) in Part 2-A of the SBI process, a question that I would need to answer is: Will the drivers of change (in the environment) prevent my firm from leveraging its value proposition.
During a strategic gap identification process, we are more likely to find gaps between the firm’s strategy and its business capabilities than between its strategy and the external environment: FALSE;
We are less likely to find gaps between the firm’s strategy and its business capabilities than between its strategy and the external environment because: Managers can intelligently tweak their business capabilities and strategy to keep them aligned
Assume that there are many strategic options available to a firm that is flush with funds (e.g., Apple). What would be an appropriate benchmark that this firm should use when it invests some of its “mountain of cash” in a new strategy? The new strategy must provide a long-term risk-adjusted ROI that is better than their current risk-adjusted ROI.
Which of the following is a necessary condition for the new strategy to provide a risk-adjusted ROI that is better than their current ROI? Adjusted for cost, the new strategy must result in an improved competitive advantage for the firm
Improving the competitive advantage of the firm can be best achieved… 2. By using the new investments to judiciously close “internal strategic gaps,” thereby improving the firm’s ability to create value. 3. By using the investments to judiciously close “external strategic gaps,” thereby ensuring that the value created by the firm more effectively addresses market needs.
Restore is a division of Habitat for Humanity. Its declaration to be “a way for local affiliates of Habitat for Humanities to generate proceeds to help fund their home building efforts.” Represents part of the MISSION of the firm.; Hawaiian Air operates in the A SEGMENT OF THE AIRLINE INDUSTRY; United Airlines domestic market-focus is: Broad
SERVICE HUSTLE is a component of United Airline’s current value proposition; Which of the following is an intangible resource for Hawaiian Airline? Brand loyalty of Hawaiian Airline customers
Assuming that no major strategic change is implemented by Hawaiian Airline, the firm’s performance for the next 5 years can likely be approximated by interpreting appropriate financial data. This method is commonly known as: Common Size method
In Part 2-B of the SBI process, we formulate a new strategy to: Close strategic gaps; Managers of the “Old-fashioned Ideas” retail store determined that they need a walk-in and an online retail option. To address this need, they purchased “DigiRentals”, an online retailer. This purchase is an example of: A related diversification
unique historical conditions, casual ambiguity, social complexity, patents: 4 Key Aspects of Imitation
ID resource requirements, test the strategy resource Linkage, develop gap-closing analysis: Steps of Resource Analysis
Covers all the mechanisms that govern managers behavior and delineates their discretionary latitude: Corporate Governance
Firm-specific processes of checks & balances, board of directors, external mechanisms: Corporate Governance Mechanisms
broad members must be expert, board meeting: Pounds Five Recommendations
Corporate Social Responsibility: CSR
Social welfare is maximized when firms are guided by the single obj. function: Argument Against CSR
Plays are role in both formulation and execution of strategy: Management
Inconsistence between proposed & preferred strategy or inconsistency between the preferred strategy and other realtities: 2 Sources of Conflict
Firms serve more than its shareholders, customers; it servers society at large. It enhances financial performance: Argument for CSR
Missappropriation of assets, misallocation of resources, and due process: Three Economic Arguments Against CSR
Duty to respond, co. benefits, & duty of benevolence: Three Counter Arguments
