Strategic Management Study Guide

STRATEGIC MANAGEMENT TEST 2 (Chapters 3, 4, and 6) STUDY GUIDE fill out definitions and be able to recognize examples of concepts Test will be deucefold choice, 45-50 items Bring s offertron sheet and 2 pencil Additional free educatee study resources available including an interactive quiz from the publisher at http// gamyered. mcgraw-hill. com/sites/0078029317/student_view0/chapter1/chapter_quiz. hypertext markup language Chapter 3 Assessing the Internal Environment What is take account chain abstract? How is it effectual for intellect competitive advantages?St driftgic compendium of an disposal that roles grade-creating activities. It is useful for understanding the grammatical construction blocks of competitive advantages. In the observe chain, what be the 5 elementary activities? Which 4 activities ar support activities? Primary- inward logistics, operations, outbound logistics, food marketing and sales, and work. Support- roomyly distributed admininistration , human resource circumspection, technology break-dancement, and procurement. Relating to primary activities, what specific activities ar associated with inbound logistics? Operations? Outbound logistics? merchandise and sales? Service? Inbound logistics- receiving, storing, and distributing inputs of a harvest. Operations- all activities associated with transforming inputs into the final product form. Outbound logistics- collecting, storing, and distributing the product or service to buyers. Marketing and sales- activities associated with purchases of products and services by end users and the inducements used to get them to get a presbyopic purchases. Service- actions associated with providing service to enhance or maintain the shelter of the product. What is a Just-in-time history system? were designed to achieve efficient inbound logistics. Parts and deliveries bewilder only hours before they atomic number 18 needed. Relating to support activities, what specific activ ities ar associated with procurement? Technology development? HR management? General administration? Procurement- acquire inputs used in the profligates shelter chain, including raw materials, supplies, and former(a)(a) consumable items as well as assets such(prenominal) as machinery, science laboratory equipment, office equipment, and buildings. Technology development- development of juvenile companionship that is applied to the pisseds operations.HR management- activities involved in the recruiting, hiring, training, development, and compensation of all types of personnel. General administration- banner general management, planning, finance, accounting, legal and government affairs, quality management, and information systems activities that support the entire pass judgment chain and non respective(prenominal) activities. How has Walgreens used information systems to be a sources of competitive advantage? Introduction of a computer ground prescription management sys tem- automates telephone refills, store to store prescription transfers, and do drugs reordering.Also provides information on drug fundamental interactions and frees up pharmacists from administrative tasks to devote more than time to patient counseling. What are the two levels of inter kins among value-chain activities? 1. Interrelationships among activities at bottom the pie-eyed 2. Interrelationships among activities at bottom the satisfying and other stakeholders. What is resource-establish view of the bulletproof? Perceptions that rigids competitive advantages are overdue to their endowment of strategical resources that are valuable, exalted, personifyly to imitate, and costly to substitute. What are the 3 types of secure resources? Tangible, Inpalpable, and Organizational Capabilities. What are the 4 kinds of tangible resources? Financial, physical, technological, and organizational. What are the 3 kinds of intangible asset asset resources, Human, Innovation an d Creativity, and Reputation. What examples of organizational capabilities? Ex. Outstanding customer service. Excellent product development capabilities, innovativeness of products and services. Ability to hire, motivate, and retain human capital. What are the four criteria that a firms resources must possess to maintain a sustainable advantage? 1. Resource must be valuable in the sentiency that it exploits opportunities and/or neutralizes threats in the firms milieu. 2. It must be rare among the firms current and potential competitors. 3. It must be severe to imitate. 4. Must have no strategically equivalent substitutes. How sewer the adjacent four resource characteristics military service sustain a competitive advantage based on inimitability physical uniqueness, path dependency, causal ambiguity, and mixer complexity? 1.Inherently difficult to copy. 2. Resources are scarce because they were acquired with a unique serial publication of events. 3. courtly to imitate becaus e competitor female genitalsnot determine what the resource is and/or how it fanny be re-created. 4. Costly to imitate because the social engineering required is beyond the capability of competitors, including interpersonal relations among managers, organizational culture, and reputation with suppliers and customers. Substitutability notify take which two forms? 1. Substitute a equivalent resource that enables it to develop and implement the same schema. . Very different firm resources lavatory bend strategic substitutes. See exhibit 3. 7 what are the implications for competitiveness based on differing characteristics of a resource or capability? The slight valuable, less rare, easier to imitate, more substitutes, the less competitive advantage. What are the four factors that help let off the extent to which employees will be able to obtain a proportionally high level of a firms profits? 1. Employee talk terms designer. 2. Employee replacement cost. 3. Employee exit cos ts. 4. Manager Bargaining Power. What are the two approaches to use when evaluating a firms carrying into action? Financial ration analysis and taking a broad stakeholder view. What is monetary ratio analysis? How can historical comparisons, assiduity norm comparisons, and competitor comparisons separately serve as useful reference points? 1. Technique for measuring the performance of a firm according to its balance sheet, income statement, and market valuation. 2. Provides a means of evaluating trends. 3. Assesses congenator performance. 4. get hold of valuable insights into a firms financial and competitive position. What is the fit scorecard? Why is it useful? a method of evaluating a firms performance using performance measures from the customers, ingrained innovation, and culture, and financial positionings. Provides managers with a fast, but comprehensive review of the stock (operations measures that drive the future financial performance). What are the four key per spectives of the balanced scorecard? 1. Customer perspective- measures of firm performance that indicate how well firms are satisfying customers expectations. 2.Internal fear perspective- measures of firm performance that indicate how well firms internal processes, decisions, and actions are contributing to customer satisfaction. 3. Innovation and learning perspective- measures of a firm performance that indicate how well firms are changing their product and service offerings to change to changes in the internal and external environments. 4. Financial perspective- measure of firms financial performance that indicate how well strategy, implementation and execution are contributing bottom-line improvement. What are the limitations of the balanced scorecard?Lack of a adopt strategy, limited or in in effect(p) executive sponsorship, too much fierceness on financial measures rather than nonfinancial measures, poor data on actual performance, strange links of scorecard measures to co mpensation, inconsistent or inappropriate terminology. Chapter 4 Recognizing a Firms Intellectual Assets Moving beyond a Firms Tangible Resources What is the knowledge miserliness? An economy where wealth is created through the effective management of knowledge workers instead of by the efficient control of physical and financial assets. How has the emphasis shifted mingled with intangible and tangible resources as a result of changes in the competitive environment? Shifted from tangible resources such as land, equipment, and money. Efforts were more directed toward the efficient assignation of labor and capital. Now intellectual and information processes create most of the value for firms in large service industries. What is the market value of a firm? What is the book value of a firm? What does the difference between the two values represent? In what types of firms does this difference tend to be the sterling(prenominal)?Market value- the value of a share of its common stock propagation the number of shares outstanding. Book value- is primarily a measure of the value of its tangible resources total assets- total liabilities. The difference between the two represents the firms intellectual capital ( a measure of the firms intangible assets). In firms where knowledge and the management of knowledge workers are relatively distinguished contributors to development products and services and physical resources are less tiny, the ratio of market to book value tends to be much higher. What is intellectual capital and how can it be increased?Intellectual capital= market value of firm-book value of the firm. To increase attract and leverage human capital effectively through mechanisms that create products and services of value over time. What is human capital? social capital? Explicit knowledge? Tacit knowledge? Human capital- the individual capabilities, knowledge, skills, and experience of a companys employees and managers. Social capital- the network of fr iendships between talented people both inside and outside the organization. Explicit knowledge- knowledge that is codified, documented, easily reproduced, and round-eyedly distributed.Tacit knowledge- knowledge that is in the minds of employees and is based on their experiences and backgrounds. How is naked knowledge created? Through the continual interaction of explicit and tacit knowledge. How has employee inscription to the company changed relative to loyalty to the profession? Knowledge workers place professed(prenominal) development and personal enrichment above company loyalty. What is a first critical step in the process of of building intellectual capital? What are the other processes organizations use to build human capital?Hiring talented individuals, developing them to fulfill their full potential to maximize their joint contributions. Retain the trounce and brightest. Why do many companies use employee referrals for red-hot hires? Incentive bonuses salaried to the referrers are cheaper than what they would have to pay headhunters to take place candidates, plus the current employees would rise good candidates because they are putting their reputation on the line for them. What strategies are used to develop human capital? Encouraging widespread involvement, Transferring knowledge, supervise progress and development, and evaluating human capital. How as the importance of evaluating human capital changed in recent years? Collaboration and interdependence are vital to organizational success. Individuals must work collectively. Traditional past systems evaluate performance from a single perspective. What is 360 degree feedback? Superiors, direct reports, colleagues, and even external and internal customers rate a persons performance. What are the 6 benefits of diversity in a firms workforce? 1. Cost argument- firms with more effective management in diversity will have a cost advantage over those that are not. 2.Resource acquisition argument- f irms with excellent reputations as prospective employers for minorities will have an advantage in the competition for top talent. 3. Marketing argument- for multinational firms this will be useful. 4. Creativity argument- less emphasis on conformity to norms of the past and diversity of perspectives will improve the level of creativity. 5. trouble solving argument- people with different perspectives have a better twinge at solving complex problems than those who all think a alike(p). 6. Organizational flexibility argument- greater flexibility leads means better reactions to environmental changes. What is network analysis? Closure relationships? Bridging relationships? Analysis of the pattern of social interactions among individuals. How can effective social networks be advantageous to an individuals career? Private information now available. entry to diverse skill sets. Power. What is groupthink? tendency in an organization for individuals not to question shared beliefts. What are intellectual keeping rights? What actions can be taken to manage intellectual property? Intangible property owned by a firm in the forms of patents, copyrights, slewmarks, or trade secrets. What are dynamic capabilities? The ability to sense and seize wise opportunities, generates new knowledge, and reconfigure existing assets and capabilities. Chapter 6 Corporate-Level Strategy Creating Value Through Diversification What is corporate-level strategy? What two colligate issues does it address? a strategy that focuses on gaining semipermanent revenue, profits, and market value through managing operations in multiple businesses. Acquisitions and mergers. How is tie in diversification different than unrelated diversification? What are the potential benefits of each?Related diversification- a firm entering a different business in which it can benefit from leveraging core competencies, sharing activities, or building market power. Unrelated diversification- a firm entering a di fferent business that has little horizontal interaction with other businesses of a firm. Be familiar with the classifications of Exhibit 6. 2 3M was using exorbitant rebates to retailers, which pushed them into a monopolistic position and courts ordered 3M to pay 68. 5 million dollars to some other tape company. In related diversification, what is meant by economies of scope?Cost savings from leveraging core competencies, sharing activities, or building market power. What is a core skill? What are the one-third criteria for assessing if a core competency creates value? Firms strategic resources that reflect the collective learning in the organization. 1. Must enhance competitive advantage by creating superior customer value. 2. Different businesses in the corporation must be similar in at least one important way related to the core competence. 3. Must be difficult for competitors to imitate or find substitutes for. What are sharing activities?What are the two payoffs associated w ith sharing activities. -Having activities of two or more businesses value chains done by one of the businesses. -1. Cost savings -2. Revenue enhancement In related diversification, what is market power? Firms ability to profit through restricting or controlling supply to a market or coordinating with other firms to reduce enthronization. What is pooled negotiating power? the improvement in bargaining position relative to customers and suppliers. What is vertical integration, in its associated risks and benefits? an xpansion or extension of the firm by integration preceding or successive production processes (occurs when a firm becomes its own supplier or distributer). Pros- secure supply of raw materials or dispersion channels. Protection and control over assests and services required to produce and deliver. Access to new business opportunities and new forms of technology. Eliminating the need to deal with a wide variety of suppliers and distributors. Cons- costs and expenses ass ociated with increased overhead and capital expenditures. Loss of flexibility resulting from large investments.Problems associated with unbalanced capacities a abundant the value chain. Additional administrative costs associated with managing a more complex set of activities. What 5 issues should be considered in making vertical integration decisions? 1. Is the company satisfied with the quality of the value that its present suppliers and distributors are providing? 2. Are there activities in the industry value chain presently being outsourced or per make independently by others that are a viable source of future profits? 3. Is there a high level of stability in the demand for the organizations products? . Does the company have the necessary competencies to execute the vertical integration strategies? 5. pull up stakes the vertical integration initiative have potential negative impacts on the firms stakeholders? What is the accomplishment cost perspective? A perspective that the c hoice of a transactions governance structure such as vertical integration or market transaction, is influenced by transaction costs, including, search, negotiating, contracting, monitoring, and enforcement costs, associated with each choice. What is unrelated diversification? What is a parenting advantage?A firm entering a different business that has little horizontal interaction with other businesses of a firm. Parenting advantage- the positive contributions of the corporate office to a new business as a result of expertise and support provided and not as a result of substantial changes in assets, capital structure, or management. What is restructuring? What are the three types of restructuring? The intervention of the corporate office in a new business that substantially changes assets, capital structure and management. 1. Asset restructuring 2. expectant restructuring 3. Management restructuring What is portfolio management?Method of assessing the competitive position of a portf olio of businesses within a corporation, suggesting strategic alternatives for each business, and identifying priorities for the allocation of resources crossways the businesses. What is the Boston Consulting stems (BCG) ontogenesis/share matrix? What are the 4 quadrants in the matrix? What are the suggested strategies associated with each of the quadrants? What are the limitations of the BCG matrix? Each of the firms strategic business units is plotted on a monotone grid in which the axes are relevant market share and industry growth rate. 1.Stars-competing in high growth industries with high market shares, long term growth potential and should continue to receive substantial investment funding. 2. Question marks- competing in high growth industries with but have worn market share, resources should be invested to enhance their competitive positions. 3. Cash cows- have high market shares in piteous growth industries. Have limited long run potential, but represent a source of c urrent exchange flows to fund investments into starts and question marks. 4. Dogs- have weak market shares in low growth industries, weak positions and limited potential.Most recommend they become divested. Limitations of BCG matrix- 1. the only analyse based on two dimensions. 2. View them as a stand-alone entity, ignoring common business practices and value creating activities that may hold promise for synergies across business units. 3. The process becomes largely mechanical, substituting an overly simplified in writing(p) model for the important contributions of the CEO or other managers experience. What are the three primary means by which a firm can veer? 1. Through acquisitions or mergers 2.Pool the resources of other companies with their resource base, commonly known as a joint-venture or strategic alliance. 3. Diversify into new products, markets, and technologies through internal development. What are the benefits and potential of mergers and acquisitions? 1. A means o f obtaining valuable resources that can help an organization expand its product offerings and services 2. Can provide the chance for firms to attain the three bases of synergyleveraging core competencies, sharing activities, and building market power. 3. Can lead to consolidation within an industry and can force other players to merge.Cons- competing firms can often imitate any advantages cognise from the M&A. there can be cultural issues that may day of reckoning the intended benefits from the endeavors. What is a divestment? The exit of a business from a firms portfolio. What is a strategic alliance? Joint venture? How do they differ? What are their potential advantages and downsides? Strategic alliance- a cooperative relationship between two or more firms. Joint venture- new entities formed within a strategic alliance in which two or more firms, the parents, contribute equity to form the new legal entity.A strategic alliance is a cooperative relationship. A joint venture is a special case of alliances where both firms contribute equity to form a new legal entity. Pros- Reducing manufacturing or other costs in the value chain. Developing and diffusing new technologies. Cons- many fail to converge expectations. Without proper partner, a firm should never consider it. Little fear is often given to nurturing the close working relationships and interpersonal connections that bring together the partnering organizations. What is internal development?What are its potential downsides? -Entering a new business through investment in new facilities, often called corporate entrepreneurship and new venture development. -It may be time consuming, firms may forfeit the benefits of hurrying that growth through mergers and acquisitions can provide. How can managerial motives erode value creation? They may often act in their own self-interests (CEOS). growth for growths sake, excessive egotism, and the creation of a wide variety of antitakeover tactics. What is meant b y growth for growths sake? self-confidence? Managers actions to grow the size of their firms not to increase long-term profitability, but to sever managerial self-interest. -Managers actions to shape their firms strategies to serve their selfish interests rather than to maximize long-term shareholder value. What are the antitakeover tactics of greenmail, the golden parachute, and poison pill? Greenmail- a payment by a firm to a hostile party for the firms stock at a premium, made when the firms management feels that the hostile party is about to make a tender offer. (sort of like a bribe)