Final Exam- Strategic Management

Front 1

Core Compentencies

Back 1

A firm's strategic resources that reflect the collective learning in the organization

Front 2

Off-shoring vs. Outsourcing

Back 2

Off-shoring:

-shifting a value-creating activity from a domestic location to a foreign location

Outsourcing:

-using other firms to perform value-creating activities that were previously performed in-house

Front 3

Blue Oceans vs. Red Oceans

Back 3

Blue Oceans:

-create a uncontested market

-make competition irrelevant

-create/capture new demand

-make the value cost trade-off

-align firm activity in pursuit of differentiation & low-cost

Red Oceans:

-compete in existing market

-beat competition

-exploit existing demand

-make the value

-align firm activity with strategic choice of differentiation or low-cost

Front 4

Boundary-less Organizations

Back 4

: Organizations in which the boundaries, including vertical, horizontal, external, and geographic boundaries, are permeable

Front 5

Modular Organizations

Back 5

:an organization in which non-vital functions are outsourced, which uses the knowledge and expertise of outside suppliers while retaining strategic control

-Out-sourcing non-vital functions keeping strategy control

Front 6

Virtual Organizations

Back 6

: a continually evolving network of independent companies that are linked together to share skills, costs, and access to one another's markets

Front 7

Radical or Disruptive Innovation

Back 7

Radical: an innovation that fundamentally changes existing practices

Disruptive: innovation that overturn markets by providing an altogether new approach to meeting customer needs

Front 8

3 Primary Int'l Strategies

Back 8

1. Global Strategy:

:Low cost with control high quality

- a strategy based on firms' centralization and control by the corporate office, with the primary emphasis on controlling costs, and used in industries where the pressure for local adaptation is low and the pressure for lowering costs is high

2. Multidomestic:

:Local adaptation focus

:Decentralized decision-making

- A strategy based on firms' differentiating their products and services to adapt to local markets, used in industries where the pressure for local adaptation is high and the pressure for lowering costs is low

3. Transnational Strategy:

-:Mix of 1 & 2

-A strategy based on firms' optimizing the trade-offs associated with efficiency, local adaptation, and learning, used in industries where the pressures for both local adaptation and lowering costs are high

Front 9

Corporate Entrepreneurship

Back 9

: the creation of new value for a corporation, through investments that create either new sources of competitive advantage or renewal of the value proposition

2 primary aims

- The pursuit of new venture opportunities

- Strategic renewal

FOCUSED APPROACH

1) New venture groups- identify, evaluate, promote new ideas

2) Business Incubators- support, nurturing, fledgling ideas

DISPERSE APPROACH

: view every value-chain activity has potential

Front 10

Corporate Governance

Back 10

:The relationship among various participants in determining the direction and performance of corporations.

Administration, management, laws/ rules, decision-making, leadership

Involves 3 primary participants

a) shareholders

b) management

c) board of directors

Why it is important?

- avoid embarrassing scandals/ ethics

- stability

- stewardship

- financial performance

- accountability

Front 11

Types of Organizational Structures

Back 11

1. Simple- owner/manager making most decisions

2. Functional- dividing up by operations

3. Divisional- by product line or customer segments

4. Matrix- combo of 2 & 3

Front 12

Mergers

Back 12

: the combining of two or more firms into one new legal entity

-Combining two companies into one

Front 13

Acquisition

Back 13

: the incorporation of one firm into another through purchase

-Incorporating of one company into another through purchase

Front 14

Divestment

Back 14

Exit of a business from a firm's portfolio

Front 15

Strategic Alliances

Back 15

Cooperative relationship between two or more firms

Front 16

Joint Ventures

Back 16

: new entities formed within a strategic alliance in which two or more firms, the parents, contribute equity to form the new legal entity

-A new company is formed, two or more company contribute equity

Front 17

Hostile Takeover

Back 17

Company buy enough share to become majority shareholder

Front 18

Globalization

Back 18

: Increase of international trade

: Growing similarity of laws, norms, values, ideas, rules

Front 19

Bottom of the Pyramid

Back 19

4th world- slums ; poorest section of poorest countries ; 1+ billion people

Front 20

Why Expand Internationally?

Back 20

- Increase market size

- Arbitrage

- Extend a product's life cycle

- Optimize value chain - operations

Front 21

Hardball Strategies

Back 21

1. Devastate rivals profits

2. Plagiarize> Direct copy

3. Deceive the competition

4. Unleash massive force

Front 22

5 Dysfunctions of a Team

Back 22

1. Absent of trust

- be vulnerable

2. Fear of conflict

- demand debate

3. Lack of commitment

- force clarity & closure

4. Avoidance of accountability

- confront difficult issues

5. Inattention to results

Front 23

Rule-based Controls

Back 23

-Used to improve operational efficiency and effectiveness

*Most appropriate in organizations with the following characteristics..

- Environments are stable & predictable

- Employees are largely unskilled &

interchangeable

- Consistency in product & service is critical

- The risk of malfeasance is extremely high

Front 24

Shareholder Activism

Back 24

: Actions by large shareholders to protect their interests when they feel that managerial actions of a corporation diverge from shareholder value maximization

Front 25

Integrative Thinking

Back 25

:a process of reconciling opposing thoughts by generating new alternatives and creative solutions rather than rejecting one thought in favor of another

"Both-and", not "either-or"

- consider both views, good in each

Front 26

Emotional Intelligence

Back 26

:an individual's capacity for recognizing his/her own emotions and those of others, including the five components ...

- Self-awareness

- Self-regulation

- Motivation

- Empathy

- Social skill

Front 27

Managing Innovation

Back 27

: new knowledge to create products/services or transform a process

*Involves introducing/changing to something new

Areas include; technology, human resources, firm infrastructure, marketing, service..etc

*Product engineer: efforts to create product designs & applications of technology to develop new products for end users

vs.

Process engineer: Associated with improving the efficiency of an organizational process, especially manufacturing systems & operations

- product

- process

- radical

- incremental

Front 28

How do you become an innovator?

Back 28

-Associating: Have ability to connect unrelated Q,P,I from different fields= allows them to creatively see opportunities that others miss

-Questioning: Constantly ask? Rather than accepting status quo..= This gets others around them to challenge the assumptions that limit possible range of actions firm can take

-Observing: Discovery-driven= Observations help identify challenges customers face & previously unidentified opportunities

-Experimenting: Regularly experiment with new possibilities, accepting many ideas will fail

-Networking: Develop broad personal networks.. use to find & test radical ideas .. diverse set of friends.. attending idea conferences

Front 29

Case Studies

#9 Heineken

#19 FreshDirect

#6 American International Group and the Bonus Fiasco

#12 Yahoo

#3 The Skeleton in the Corporate Closet

#35 Microfinance

Back 29

#9 Heineken

- 5 in Nigeria

- 5 billion

* Grow market share, profits, expand younger audience, competition going global--> Money, snowball effect--> awareness, economy of scale

*Corona

-growing Hispanic

*Social media campaign

*Change decision making progress

#19 FreshDirect

-Location, Manhatten, NY

-Advantage: Eliminate middle men

-Efficiency

-Cleanliness

-Fresh food

-Door to door/ trucks

-tailgate

#6 AIG & the Bonus Fiasco

*Restore confidence in economy

-market crash- 40% decrease Sept 08, Mar 09

-Housing market

-CDS (Credit Default Swap)

*Why bonuses $218 mill--118?

-They were promised-->Profit

#12 Yahoo

*

#3 The Skeleton in the Corporate Closet

*Letters-- stolen business idea

#35 Microfinance

*What type of scale had Grameen Bank reached?

-8.5 million people

-2500 branches

-81000 villages

-22000 workers

*Why Dr. Muhummad Yunus win the Nobel peace prize?

-What he did alleviated -Poverty>crime>war

*Group or individual for successful loan?

-Group, because there is more social collateral