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46 Cards in this Set
- Front
- Back
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What are the 3 stages for choosing Strategy_formulation framework?
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• Stage 1 - Input Stage
EFE Matrix – External Factor evaluation IFE matrix – Internal factor evaluation CPM – Competitive Profile Matrix • Stage 2 - Matching Stage - Match between organization’s internal resources & skills and the opportunities & risks created by its external factors SWOT SPACE matrix-Strategic Position & Action Evaluation Matrix BCG matrix IE Matrix Grand strategy matrix – Tools for formulating alternative strategy. Based on two dimensions – Competitive position and Market growth. • Stage 3 - Decision Stage QSPM – Quantitative Strategic Planning Matrix – Technique designed to determine the relative attractiveness if feasible alternative actions. |
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what's a SWOT?
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• SO strategies use a firm’s internal strengths to take advantage of external opportunities
• WO strategies improve internal weaknesses by taking advantage of external opportunities • ST strategies use a firm’s strengths to avoid or reduce the impact of external threats • WT strategies defensive tactics aimed at reducing internal weakness and avoiding external threats |
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What happens in the BCG matrix within the Star quadrant?
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High market share
High sales growth Market development Product development Market penetration Backward, forward or horizontal penetration |
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What happens in the BCG matrix within the Questions Marks quadrant?
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Low market share
High sales growth Divestiture Market & Product development |
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What happens in the BCG matrix within the Cash Cows quadrant?
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High market share
Low sales growth Product Development Diversification Retrenchment Divestiture |
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What happens in the BCG matrix within the Dogs quadrant?
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Low market share
Low sales growth Retrenchment Divestiture Liquidation |
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How is the board of directors made?
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a group of individuals who are elected by the ownership of a corporation to have oversight and guidance over management and who look out for shareholders interests
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Who are the board of directors?
How many times do they meet? |
12 (board members who are held accountable)
outsiders who are becoming more involved in organizations strategic management They meet 10 times or more |
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14 rules to be within a board
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1) 2 or less directors are current or former company executives
2) No directors do business with or for the company, neither consult for fees 3) Only outside directors are in(audit, compensation, nominating) committees 4) Each director owns a large equity stake in the company(no stock options) 5) One director must have extensive experience with the core business & One must have been a CEO of a similar size company 6)Fully employed directors = 4 boards max., retired = 7 boards max. 7) 75% of meeting must be attended 8) management should not be present during boards & shouldn't evaluate its performance annually 9) Audit committee meets 4 times min. 10)effective on executive pay, diligent in CEO succession oversight responsibilities, quick to act when troubles arises 11) CEO is not also the chairman of board 12) Shareholders have power & info to replace/choose directors 13) Stock options = Corporate expense 14) No interlocking directorship |
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what are the importance of annual objectives in achieving organizational strategies?
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They are important because they may lead to acceptance and commitment.
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Why do management issues central to strategy implementation?
BCG Matrix. - Boston Consulting Group Matrix |
strategy implementation requires a shift in responsibility from strategists to divisional & functional managers. Therefore, they are central because implementation problems may arise because of this shift in responsibility
. BCG Matrix. - Boston Consulting Group Matrix • Assists multidivisional firm in formulating strategies • Autonomous divisions = business portfolio • Divisions may compete in different industries • Focus on relative market-share position & industry growth rate |
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What are management issues central to strategy implementation?
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Establish annual objectives
Devise policies Allocate resources Alter existing organizational structure Restructure & reengineer Revise reward & incentive plans Minimize resistance to change Match managers to strategy Develop a strategy-supportive culture Adapt production/operations processes Develop an effective human resources function Downsize & furlough as needed Link performance & pay to strategies |
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What is the relationship between changes in strategy & changes in structure
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Changes in strategy lead to changes in organizational structure.
when a firm changes its strategy, the existing organizational structure may become ineffective. However changes in structure should not be expected to make a bad strategy good. |
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What is the most frequently used organizational structures in small business?
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functionally or centralized structure
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a)3 ways of solving conflict
b)why is it good/bad? |
a)Avoidance
Defusion Confrontation b)Conflict not always “bad” Lack of conflict may signal apathy Can energize opposing groups to action May help managers identify problems |
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What is the purpose of Annual objective?
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Basis for resource allocation
Mechanism for management evaluation Major instrument for monitoring progress toward achieving long-term objectives Establish priorities (organizational, divisional, and departmental) |
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What is the purpose of Policies?
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Policies set boundaries, constraints, and limits on the kinds of administrative actions that can be taken to reward and sanction behavior
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What are the advantages of market segmentation & product positioning?
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Market Segmentation - Subdividing of a market into distinct subsets of customers according to needs and buying habits.
The market is segmented by geographic, demographic, psychographic, and behavioral. Market-development, product-development, market-penetration, and diversification strategies require market segmentation. Market segmentation allows operating with limited resources; enables small firms to compete successfully Market segmentation decisions affect marketing mix variables • Product Positioning - Schematic representations that reflect how products/services compare to competitors’ on dimensions most important to success in the industry. |
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what is the process after segmentation?
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Product positioning
both are marketing issues. |
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what should or shouldn't positioning do?
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Look for a vacant niche
Don’t serve two segments with the same strategy Don’t position yourself in the middle of the map |
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the variables that run as market contribution
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Market segmentation and product positioning rank as marketing’s most important contributions to strategic management. Market segmentation is widely used in implementing strategies, especially for small and specialized firms.
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what are product segmentation/ position steps?
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Product Positioning steps
Select key criteria Diagram map Plot competitors’ products Look for niches Develop marketing plan |
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4P's
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Product
Price Promotion Place |
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What does a product comprise?
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Quality
Brand name Style features & options Packaging product line warranty Service level other services |
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hints for market positioning
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Look for a vacant niche
Don’t serve two segments with the same strategy Don’t position yourself in the middle of the map |
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why & how do you treat each segment from operating on different ones?
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treating each segment depends on 2 criteria:
a) (why) it uniquely distinguishes a company from the competition b) (how) it leads customers to expect slightly less service than a company can deliver |
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Equity vs capital
What are the drawbacks? |
loans/debts or stock to finance projects
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Explain why strategy evaluation is complex but important?
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• Strategy evaluation –
Vital to the organization’s well-being Alert management to potential/actual problems in a timely fashion Erroneous strategic decisions can have severe negative impact on organizations Complex & sensitive undertaking Overemphasis can be expensive & counterproductive |
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4 Rumelt's criteria for evaluation
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• Consistency (internal) - Strategy should not present inconsistent goals and policies- they should be in sink not competing.
• Consonance (External) - Need for strategists to examine sets of trends, as well as individual trends. Look at trends most of which are external. • Feasibility (internal) - Neither overtaxes resources nor creates unsolvable sub-problems or putting undue burden on resources. • Advantage (internal) - Creation or maintenance of competitive advantage |
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3 Process of evaluating strategies
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• The three basic process activities of evaluating strategy:
Examine the underlying bases of a firm’s strategy Compare expected to actual results Take corrective actions to ensure that performance conforms to plans |
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The strategy-evaluation framework: what are you evaluating?
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reviewing the underlying bases of an organization’s strategy to evaluate when their strategies are no longer effective
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Why do you evaluate your strategy?
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In many organizations, strategic evaluation is simply an appraisal of how well an organization has performed. Adequate and timely feedback is the cornerstone of effective strategic evaluation.
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What is strategy evaluation?
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refer to the Strategy- Evaluation Assessment Matrix which look at if there were changes in the EFE and IFE matrix and if these changes have impacted in positive or negative manner the firms progress towards achieving its stated objectives.
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When do you take corrective action? understand chart
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There are eight (8) alternatives for understanding when corrective action is taken. They are:
• IFE (No), EFE (No), and Achieving Objectives (No) = Take corrective action • IFE (Yes), EFE (Yes), and Achieving Objectives (Yes) = Take corrective action • IFE (Yes), EFE (Yes), and Achieving Objectives (No) = Take corrective action • IFE (Yes), EFE (No), and Achieving Objectives (Yes) = Take corrective action • IFE (Yes), EFE (No), and Achieving Objectives (No) = Take corrective action • IFE (No), EFE (Yes), and Achieving Objectives (Yes) = Take corrective action • IFE (No), EFE (Yes), and Achieving Objectives (No) = Take corrective action • IFE (No), EFE (No), and Achieving Objectives (Yes) = Continue present action |
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Key financial ratio
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Return on investment (ROI)
Return on equity (ROE) Profit margin Market share Debt to equity Earnings per share (EPS) Sales growth Asset growth |
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Corrective actions may be:
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Divest a division
Alter firms vision and /or mission,strategy, the firms structure Revise objectives Devise new policies Raise capital – stock or debt Allocate resources differently Make changes to top management Add or terminate salespersons, employees or managers. Outsource (or rein in) business functions Install new performance incentives |
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What is ethics?
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Principles of conduct within organizations that guide decision making and behavior
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What is social responsibility and social irresponsibility?
what about Social Irresponsibility? |
Social Responsibility -Actions an organization takes beyond what is legally required to protect or enhance the well-being of living things.
Social Irresponsibility: the opposite of this definition |
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In terms of ethics how is dumping of expired/low quality products viewed?
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it is viewed as unethical
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What is considered unethical actions?
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Class-action legal fraud suit
fake medical study by pharmaceutical firms misleading advertising / labeling Causing environmental harm Poor product or Service safety Padding expense account Insider training dumping banned or flawed products in foreigns markets Not providing equal opportunities for women & minorities overpricing moving job overseas sexual harassment |
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What is whistle blowing?
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refers to policies that require employees to report any unethical violations they discover or see in the firm. Reporting unethical/illegal acts to outside third parties.
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What does Bribes involved?
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Bribery is defined as – the offering, giving, receiving, or soliciting of any item if value to influence the actions of an official or other person in discharge of a public or legal duty.
• A gift bestowed to influence a recipient’s conduct • Illegal in many countries, acceptable in other |
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Define social policy
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embraces managerial philosophy and thinking at the highest level of the firm.
• Concerns what responsibilities the firm has to its employees, consumers, environmentalists, minorities, communities, shareholders, and other groups • Should be considered during each stage of strategy formulation, implementation, and evaluation |
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What kind of social policy should a company be involved in?
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Managers must formulate strategies that preserve and conserve natural resources and control pollution
• Environmental strategies could include Developing or acquiring green businesses Divesting or altering environment-damaging businesses Striving to become a low-cost producer through waste minimization and energy conservation Pursuing a differentiation strategy through green product features |
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How does a firm become a good steward of the natural environment?
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environment consists of air, water, land, natural resources, flora, fauna, humans and their interrelation.
Attempt to promote healthy environment is being a good steward Ex: using solar energy/ wind power generator |
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What are the criteria for making a claim for a green product?
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Providing a sustainability report that shows performance facts & figures of green efforts such as:
employee's wellness: organizing weight loss, biking to work, smoking cessation, recycling programs, Clean energy: solar/wind power, biofuels, insulation firms, diesel & electric locomotive, waste reduction, ozone depletion, global warming, biodegradable products, made from recycled product |
