Questions and Answers
What is strategic management?
Consists of the analyses, decisions, and actions an organization undertakes in order to create and sustain competitive advantages.
What is the intended strategy?
Decisions are determined only by analysis.
What is the realized strategy?
Decisions are determined by both analysis and unforeseen environmental developments.
Leaders must be ________________.
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What are the two fundamental questions in strategic management?
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What constitutes strategic management?
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What does SWOT analysis stand for?
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What is the purpose of environmental scanning?
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What is the general environment?
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What are the primary activities in a value chain?
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Value chain analysis examines how an organization creates value for its business and its customers by analyzing ______________.
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What is corporate governance?
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Which of the following is a key attribute of strategic management?
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Management in this class is considered a science.
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SWOT analysis is solely an end point in strategic discussions.
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What is the importance of scenario analysis?
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What does 'Marketing and Sales' refer to?
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Which of the following are components of 'Service'?
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What are 'Support activities'?
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Define 'Procurement'.
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What is 'Technology development'?
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Explain 'Human Resource Management'.
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What is the role of 'General Administration'?
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What does 'Prosumer' mean?
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Define 'Crowdsourcing'.
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What is the resource-based view definition?
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List the 3 types of resources.
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What are 'Tangible resources'?
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Define 'Intangible resources'.
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Explain 'Organizational capabilities'.
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Match the resource characteristics with their definitions:
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What does it mean for a resource to be 'valuable'?
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What does 'rare' indicate about a resource?
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What is meant by a resource being 'difficult to imitate'?
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Why is a resource considered 'difficult to substitute'?
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What are sources of inimitability?
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How can resources be a source of competitive advantage?
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What happens if resources possessed by competitors are similar?
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What constrains competition related to resources?
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What is critical regarding strategically equivalent valuable resources?
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Study Notes
Strategic Management Overview
- Strategic management involves analyses, decisions, and actions to create and sustain competitive advantages.
- Leaders must be proactive and adaptable to changes while refining strategies.
- Two fundamental questions:
- How to compete for competitive advantages?
- How to create unique and valuable advantages that rivals cannot imitate?
Key Attributes of Strategic Management
- Directs organizations toward overarching goals.
- Incorporates multiple stakeholders in decision-making.
- Balances short-term and long-term perspectives.
- Recognizes trade-offs between efficiency and effectiveness.
Strategy Components
- Intended strategy results from analytical decisions but may lead to unrealized strategies.
- Realized strategy encompasses both planned actions and unforeseen factors, resulting in emergent strategies.
Corporate Governance
- Involves relationships among shareholders, management (including CEO), and board of directors.
- Board of directors provides oversight but often faces criticism for ineffectiveness.
Theories of Stakeholder Management
- Zero-sum view: stakeholders compete for resources, gains for one lead to losses for others.
- Stakeholder symbiosis view: stakeholders are interdependent, and mutual benefits enhance success.
Social Responsibility
- Businesses are expected to positively impact society.
- Emphasis on environmental sustainability in current business practices.
Strategic Objectives and Goals
- Hierarchical organization of goals from vision statements to strategic objectives that guide the organization.
- Vision: inspiring and overarching statements representing company values and aspirations.
- Mission statements define company purpose and competitive means.
Analyzing the External Environment
- External analysis tools include SWOT analysis, forecasting, Porter's Five Forces, and strategic group issues.
- Environmental scanning monitors trends and critical changes.
- Competitive intelligence collects data on industry competitors.
SWOT Analysis
- Strengths: internal capabilities to build upon.
- Weaknesses: areas needing improvement.
- Opportunities: external prospects to capitalize on.
- Threats: external risks requiring protection.
General Environment Factors
- Demographic, sociocultural, legal/political, technological, economic, and global factors influence industry dynamics.
Porter's Five Forces Model
- Threat of new entrants, bargaining power of buyers and suppliers, threat of substitutes, and rivalry among competitors determine industry attractiveness.
Strategic Group Analysis
- Identifies groups of firms sharing similar strategies, determining barriers to mobility and competitive dynamics among firms within groups.
Internal Analysis
- Value chain analysis examines primary (inbound logistics, operations, outbound logistics, marketing, service) and support activities (HR, technology, administration) in creating value.
- Resource-based view emphasizes firm resources (tangible and intangible) and capabilities that contribute to competitive advantage.
Emerging Concepts
- "Prosumer": customers act as producers, enhancing loyalty through increased involvement in customization.
- Crowdsourcing leverages community talent/ideas but poses risks, such as adverse reputation impacts and declining quality of ideas.
Resource-Based View
- Competitive advantages arise from strategic resources that are valuable, rare, costly to imitate, and non-substitutable.
- Three types of resources: tangible, intangible, and capabilities that enable firms to outperform competitors.### Tangible Resources
- Defined as organizational assets that are easy to identify.
- Categories include:
- Financial: cash, equity raising capacity.
- Physical: property, plant, equipment.
- Technological: patents, trademarks.
- Organizational: evaluation and control systems.
Intangible Resources
- Assets that are hard to identify and account for, embedded in routines and practices.
- Categories include:
- Human: employee experience and capabilities, trust.
- Innovation and Creativity: technical skills and capacity for science.
- Reputation: brand name significance.
Organizational Capabilities
- Represent competencies and skills used to transform inputs into outputs.
- Capable of combining tangible and intangible resources for desired outcomes.
- Examples include:
- Outstanding customer service.
- Excellent product development.
- Innovative product features.
- Effectiveness in hiring, motivating, and retaining talent.
Resource Characteristics
- Resources must be:
- Valuable: has the ability to neutralize threats and exploit opportunities.
- Rare: not widely possessed by other firms.
- Difficult to Imitate: poses challenges in replication due to various complexities.
- Difficult to Substitute: lacks equivalent resources or capabilities.
Sources of Inimitability
- Derived from:
- Physical uniqueness of resources.
- Path dependency: uniqueness due to a distinct series of events (e.g., QWERTY keyboard).
- Causal ambiguity: difficulty in determining the value or reproduction of resources.
- Social complexity: value derived from interpersonal relations, culture, and reputation.
Competitive Advantage
- Resources serve as a competitive advantage only when they are valuable.
- They enable strategies that enhance efficiency or effectiveness, as well as neutralize threats and leverage opportunities.
- Resources held by competitors do not create competitive advantages; common strategies and similar resources equal no advantage.
Constraints on Competition
- Imitating resources can limit competition, leading to sustainable profits from unique resources.
- Critical inimitable characteristics include physical uniqueness, path dependency, causal ambiguity, and social complexity.
Substitutable Resources
- There must be no strategically equivalent valuable resources that are both non-rare and non-inimitable.
- Understanding substitutability is essential for assessing competitive positioning.
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Description
Prepare for your Strategic Management exam with these flashcards covering key concepts from Chapters 1, 2, 3, and 13, along with the Trader Joe's case study. Enhance your understanding of intended versus realized strategies and competitive advantages to excel in your class.