BPL 5100 Midterm 1 Study Guide latest update (Score an A)

BPL 5100 Midterm Study Sheet (chp. 1,2,3,5) I. Chapter 1: Strategic Management creating competitive advantages A. Romantic view of leadership : situations in which the leader is the key force determining the organization’s success or lack thereof B. External control view of leadership : situations in which external forces-where the leaders has limited influence-determine the organization’s success 1. Ex. Developments in the general environment, such as economic downturns, governmental legislation, or an outbreak of major internal conflict or war greatly restrict the choices made by a firm’s executives a) Hurricane Katrina in 2007 had a negative effect on businesses along the coast b) BP oil spill in 2010 caused the fishing and tourism industries to suffer greatly C.What is Strategic Management? 1. Strategic management : the analyses, decisions and action an organization undertakes in order to create and sustain competitive advantages a) Strategic management contains 3 ongoing processes (1) Analysis: analysis of strategic goals (vision, mission, and strategic objectives) and analysis of the internal and external environment (2) Decisions: decisions address two basic questions (a) What industries should we compete in? (b) How should we compete in those industries? (3) Actions: firms must take the necessary actions to implement their strategies. Leaders must allocate necessary resources and to design the organization to bring the intended strategies to reality b) Strategic management is the study of why some firms outperform others (1) Focus on two main questions (a) How should we compete in order to create competitive advantages in the marketplace? --> low cost producer or product differentiation or both? (b) How can we create competitive advantages in the marketplace that are unique, valuable and difficult for rivals to copy or substitute? (2) Sustainable competitive advantage: (a) Sustainable competitive advantage is no done through operation effectiveness alone. (b) Sustainable competitive advantage is possible by performing different activities from rivals or performing similar activities in different ways 2. The four key attributes of strategic management a) Directs the organization toward overall goals and objectives b) Includes multiple stakeholders in decision making c) Needs to incorporate short-term & long-term perspectives d) Recognizes trade-offs between efficiency and effectiveness (1) Effectiveness : tailoring actions to the needs of an organization rather wasting effort or “doing the right thing” (2) Efficiency : performing actions at a low cost relative to a benchmark, or “doing it things right” (3) Ambidexterity: the challenge managers face of both aligning resources to take advantage of existing product markets as well as proactively exploring new opportunities D. The strategic management process: Analysis, Formulation, Implementation 1. Strategy analysis: study of firms’ external and internal environments, and their fit with organizational vision and goals a) Considered to be the “starting point” of the strategic management process, consists of the “advance work” that has to be done to effectively formulate and implement strategies 2. Strategy formulation : decisions made by firms regarding investments, commitments, and other aspects of operations that create and sustain competitive advantage a) 1 st level: business-level strategy addresses how to compete in the business to attain competitive advantage. b) 2nd level: corporate-level strategy focuses on 2 areas (1) What businesses to compete in (2) How businesses can be managed to achieve synergy c) 3 rd level: a firm has to develop an international strategy as it ventures outside its borders d) 4 th level: managers have to formulate effective entrepreneurial initiatives 3. Strategy implementation : actions made by firms that carry out the formulated strategy, including strategic controls, organizational design, and leadership. a) Insuring proper strategic controls and organizational designs b) Promotes learning and continuous improvement and acts entrepreneurially in creating new opportunities 4. Intended vs. Realized strategy a) Intended strategy: where organizational decisions are determined only by analysis b) Realized strategy: where organizational decisions are determined by both analysis and unforeseen environmental developments, unanticipated resource constraints, and/or changes in managerial preferences