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46 Cards in this Set
- Front
- Back
Why is the Industry Environment so Important?
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-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 |
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Types of Industries (5)
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1. fragmented
2. embryonic (start-up) 3. growth 4. mature 5. declining |
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Leadership Style, driving Forces and competition
Start-up Cycle |
LS: creative, frenetic, opportunity, individual, informal, action
DF: cash, gross sales C: no real competition |
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Leadership Style, driving Forces and competition
Growth cycle |
LS: implement, planned, proactive, team, freedom, change
DF: market share, sales, capital investment C: many competitors |
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Leadership Style, driving Forces and competition
Mature Cycle |
LS: continuity, analytical, status quo, organization, bureaucratic, maintain
DF: profit, cautious, slow investment C: competitors consolidate |
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Leadership Style, driving Forces and competition
Aging/Declining Cycle |
LS: beyond crisis, survival, impersonal, turmoil, cost driven
DF: reduce cost, defer repair, no investment C: few direct competitors |
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Strategic Implication of Market Growth Rates
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-growth rate measures rate industry's product spreads (speed of adoption)
-different markets develop at different rates -growth rates for products accelerates over time |
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factors affecting market growth rates
(five) |
1. relative advantage
2. compatibility 3. complexity 4. observability/trailability 5. availability of complementary products |
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Strategic Group
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a set of business units or firms that pursue similar strategies with similar resources
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Porters Five Forces Model - factors affecting the intensity of rivalry among established firms
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1. risk of entry by potential competitors
2.bargaining power of buyers 3. bargaining power of suppliers 4. threat of substitutes |
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How Five Forces Shape competition
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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 |
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Rivalry Among Established companies
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1. industry competitive structure
2. industry demand conditions 3. cost conditions 4. exit barriers |
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Risk of New Entry (Barriers to Entry)
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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 |
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Bargaining Power of Buyers
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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 |
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Bargaining Power of Suppliers
(most powerful when) |
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) |
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Substitute Products
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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 |
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Complements
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- existence of lack of complements can dramatically influence demand
-important in demand & profitability in many hi-tech industries |
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Life Cycle Issues
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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 |
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Key Strategic Questions
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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? |
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Vision
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Future Preferred State
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Strategic Management
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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 |
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Phases of Strategic Management (four)
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1. basic financial planning
2. forecast-based planning 3. externally oriented strategic planning 4. strategic management |
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Strategies
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form a comprehensive master plan that states how the corporation will achieve its missions and objectives (corporate, business, functional)
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Policies
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the broad guidelines for decision making that links the formulation of a strategy with its implementation
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Strategy Formulation
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includes strategies and policies
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Corporate Strategies
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overall direction of company and management of its businesses
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Business Strategies
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competitive and cooperative strategies
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Functional Strategies
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maximize resource productivity
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Strategy Implementation
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the process by which the strategies and policies are put into action through the development of: programs, budgets and procedures
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Strategic Decision Making Process
(8 steps) |
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 |
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The Theory of Business
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1. Synthesize (reality- external & internal) DRIVES
2. strategize (your focus - strategies, plans, budgets) DRIVES 3. Systematize (systems, skills, competencies - to accomplish) |
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What makes a business theory valid?
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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 |
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Core Competency
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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 |
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Business Hierarchy
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Philosophy
Defining Policies Strategies Execution and Tactics |
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Overview of the Process
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Reality, Focus, How, Execution, Review
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Reality
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WHERE ARE WE NOW?
external audit, internal audit, assumptions, KSF's |
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Focus
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WHERE DO WE WANT TO BE?
vision, mission, KRA's, priorities |
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How
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HOW WILL WE GET THERE?
objectives, strategies, tactics |
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Execution
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WHO MUST DO WHAT?
actions plans, budgets, delegation |
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Review
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HOW ARE WE DOING?
Reviews |
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Thought Leadership
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highly iterative process its random, intuitive, holistic, associative, subjective
includes reality, focus, and objective portion of how |
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Action Leadership
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highly sequential process its logical, sequential, rational, analytical, and objective
includes the strategy and tactic portion of how, execution, and review |
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External Analysis
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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 |
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Internal Analysis
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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 |
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Corporate Priorities
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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 |
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Objectives
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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 |