Busn 418

Front 1

Why is the Industry Environment so Important?

Back 1

-different environments present different opportunites and threats
-business model/strategy have to change to meet environment
-managers face different challenges developing/maintaining a competitive strategy in different life cycles

Front 2

Types of Industries (5)

Back 2

1. fragmented
2. embryonic (start-up)
3. growth
4. mature
5. declining

Front 3

Leadership Style, driving Forces and competition
Start-up Cycle

Back 3

LS: creative, frenetic, opportunity, individual, informal, action
DF: cash, gross sales
C: no real competition

Front 4

Leadership Style, driving Forces and competition
Growth cycle

Back 4

LS: implement, planned, proactive, team, freedom, change
DF: market share, sales, capital investment
C: many competitors

Front 5

Leadership Style, driving Forces and competition
Mature Cycle

Back 5

LS: continuity, analytical, status quo, organization, bureaucratic, maintain
DF: profit, cautious, slow investment
C: competitors consolidate

Front 6

Leadership Style, driving Forces and competition
Aging/Declining Cycle

Back 6

LS: beyond crisis, survival, impersonal, turmoil, cost driven
DF: reduce cost, defer repair, no investment
C: few direct competitors

Front 7

Strategic Implication of Market Growth Rates

Back 7

-growth rate measures rate industry's product spreads (speed of adoption)
-different markets develop at different rates
-growth rates for products accelerates over time

Front 8

factors affecting market growth rates
(five)

Back 8

1. relative advantage
2. compatibility
3. complexity
4. observability/trailability
5. availability of complementary products

Front 9

Strategic Group

Back 9

a set of business units or firms that pursue similar strategies with similar resources

Front 10

Porters Five Forces Model - factors affecting the intensity of rivalry among established firms

Back 10

1. risk of entry by potential competitors
2.bargaining power of buyers
3. bargaining power of suppliers
4. threat of substitutes

Front 11

How Five Forces Shape competition

Back 11

1. weak competitive force - viewed as an opportunity as it allows companies to earn greater profits
2. strong competitive force - viewed as a threat because it depresses industry profits
3. strength of forces may change as industry conditions change

Front 12

Rivalry Among Established companies

Back 12

1. industry competitive structure
2. industry demand conditions
3. cost conditions
4. exit barriers

Front 13

Risk of New Entry (Barriers to Entry)

Back 13

1. economies of scale (unit cost falls)
2. brand loyalty (creating customer preferences)
3. absolute cost advantage v. new entrants
4. Customer Switching Costs
5. government regulation

Front 14

Bargaining Power of Buyers

Back 14

1. suppliers - small companies, buyers large/few
2. purchase in large quanities
3. suppliers depend on buyers for large % of orders
4. buyers switching costs are low
5. buyers can purchase from several suppliers
6. buyers supply own needs

Front 15

Bargaining Power of Suppliers
(most powerful when)

Back 15

1. few substitutes
2. industry not important to suppliers
3. buyers purchase large % of orders
4. buyers experience significant switching costs
5. suppliers can threaten to enter industry (produce/supply own product; buyers can produce their own inputs)

Front 16

Substitute Products

Back 16

1. existence of close substitutes a strong threat (limit price a company can charge for a product
2. substitutes are a weak competitive force when there are few of them and when companies in the industry can raise prices and earn additional profits

Front 17

Complements

Back 17

- existence of lack of complements can dramatically influence demand
-important in demand & profitability in many hi-tech industries

Front 18

Life Cycle Issues

Back 18

1. cycles dont always follow generalization
2. rapid growth situations may skip embryonic
3. growth revitalized by innovation/social change
4. time span of stages can vary

Front 19

Key Strategic Questions

Back 19

1. where is the organization now?
2. if no changes are made, where will the organization be in the future? Are the answers acceptable?
3. if the answers are not acceptable, what specific actions should management undertake? What risks and payoffs are involved?

Front 20

Vision

Back 20

Future Preferred State

Front 21

Strategic Management

Back 21

a set of managerial decisions and actions that determines the long-run performance of a corporation
INCLUDES: environmental scanning, strategy formulation, strategy implementation, evaluation and control

Front 22

Phases of Strategic Management (four)

Back 22

1. basic financial planning
2. forecast-based planning
3. externally oriented strategic planning
4. strategic management

Front 23

Strategies

Back 23

form a comprehensive master plan that states how the corporation will achieve its missions and objectives (corporate, business, functional)

Front 24

Policies

Back 24

the broad guidelines for decision making that links the formulation of a strategy with its implementation

Front 25

Strategy Formulation

Back 25

includes strategies and policies

Front 26

Corporate Strategies

Back 26

overall direction of company and management of its businesses

Front 27

Business Strategies

Back 27

competitive and cooperative strategies

Front 28

Functional Strategies

Back 28

maximize resource productivity

Front 29

Strategy Implementation

Back 29

the process by which the strategies and policies are put into action through the development of: programs, budgets and procedures

Front 30

Strategic Decision Making Process
(8 steps)

Back 30

1. evaluate current performance results
2. review corporate governance
3. scan/assess external environment
4. scan/assess internal corporate environment
5. Analyze strategic (SWOT) analysis
6. generate, evaluate, and select the best alternative strategy
7. implement selected strategies
8. evaluate implemented strategies

Front 31

The Theory of Business

Back 31

1. Synthesize (reality- external & internal) DRIVES
2. strategize (your focus - strategies, plans, budgets) DRIVES
3. Systematize (systems, skills, competencies - to accomplish)

Front 32

What makes a business theory valid?

Back 32

1. assumptions must match reality
2. assumptions must fit with each other
3. the theory must be known and understood by all
4. the theory must stand up to regular challenge

Front 33

Core Competency

Back 33

the fundamental human skills and technical competencies of an organization that
1. differentiate you from your competitors
2. are difficult to duplicate
3. focus your strategy development
4. are the foundation on which to grow the business

Front 34

Business Hierarchy

Back 34

Philosophy
Defining Policies
Strategies
Execution and Tactics

Front 35

Overview of the Process

Back 35

Reality, Focus, How, Execution, Review

Front 36

Reality

Back 36

WHERE ARE WE NOW?
external audit, internal audit, assumptions, KSF's

Front 37

Focus

Back 37

WHERE DO WE WANT TO BE?
vision, mission, KRA's, priorities

Front 38

How

Back 38

HOW WILL WE GET THERE?
objectives, strategies, tactics

Front 39

Execution

Back 39

WHO MUST DO WHAT?
actions plans, budgets, delegation

Front 40

Review

Back 40

HOW ARE WE DOING?
Reviews

Front 41

Thought Leadership

Back 41

highly iterative process its random, intuitive, holistic, associative, subjective
includes reality, focus, and objective portion of how

Front 42

Action Leadership

Back 42

highly sequential process its logical, sequential, rational, analytical, and objective
includes the strategy and tactic portion of how, execution, and review

Front 43

External Analysis

Back 43

1. markets/segments/customer needs
2. competition
3. economy
4. government/regulatory
5. social/demographic
6. factors of production (labor, capital, materials)
7. technology
8. environment
- helps you to guess your opportunities, threats and market indicators

Front 44

Internal Analysis

Back 44

1. Markets/Segments/Customers ( attractiveness, profitiability, segment SWOT)
2. capacity and access (capital, labor, materials and equipment)
3. infra-structure ( technology, communication, etc.)
4. Intangibles (people, training, opportunity, goodwill, lobbying) - -helps strengths, weaknesses and assumptions

Front 45

Corporate Priorities

Back 45

1. those few (1-5) priority actions that the firm MUST work toward relentlessly over the long term planning horizon
2. the are derived directly from the Vision, Mission
3. the should be clear and compelling recitations of intent that drive action and spur innovation
4. they span the gap from where the company is today to the Future Preferred State

Front 46

Objectives

Back 46

1. those actions that if the firm is to satisfy its Corporate Priorities, MUST be completed as interim steps along the way
2. Developed directly from, and driven by, the corporate priorities
3. specific enough to give clear guidance yet broad enough to drive coordinated annual improvement planning towards the Future Preferred State
4. Wellspring for the annual Action Plans