Business Strategy and Management Exam PDF

Here's the conversion of the provided text into a structured markdown format: # Exam - Lesson 1-9 - Roger Martin: Why do people plan? - Assume that people in corporations are just like regular people. “Humans don't suddenly change when they cross the boundary into a corporation.” Data analytic...

Here's the conversion of the provided text into a structured markdown format: # Exam - Lesson 1-9 - Roger Martin: Why do people plan? - Assume that people in corporations are just like regular people. “Humans don't suddenly change when they cross the boundary into a corporation.” Data analytics are the enemy of change “The only thing data analytics will do is convince you that the future will be identical to the past, or continue the precise trend of the past indefinitely into the future.” - **1 Introduction to Mental Models** - Managers often rely on established mental models to guide decisions. - Overreliance on outdated models can hinder innovation and effectiveness. Kodak's failure to adapt to digital photography despite inventing it. - **2 The Pitfall of Entrenched Thinking** - Persisting with ineffective models leads to diminishing returns. - Reapplying the same model with more effort doesn't guarantee success. Blockbuster ignored streaming, leading to its downfall while Netflix thrived. - **3 Embracing New Mental Frameworks** - Adopt flexible thinking to address evolving business challenges. - Challenge existing assumptions to discover innovative solutions. Tesla redefined the automotive industry by integrating software into cars. - **4 Rethinking Competition** - Shift focus from defeating competitors to creating unique value. - Understand that true success revolves around customer satisfaction. Apple focused on seamless user experience rather than direct tech specs competition. - **5 Integrating Strategy and Execution** - Recognize that strategy and execution are interconnected. - Align organizational activities with strategic objectives for coherence. Amazon integrates logistics, AI, and customer service seamlessly to support its strategy. - **6 Redefining Corporate Culture:** Culture evolves from shared experiences and collaborative work. - Foster an environment where culture supports strategic goals. - Google fosters an innovation-driven culture with flexible work environments - **7 Innovating Beyond Traditional Processes** - Move away from rigid innovation pipelines. - Encourage experimentation and adaptability in innovation efforts. 3M encourages employees to spend 15% of their time on personal innovation projects. - **8 Reevaluating Leadership Incentives:** - Question the effectiveness of stock-based compensation. - Consider alternative incentives that promote long-term value creation. Warren Buffett prioritizes business fundamentals over short-term stock gains - **9 Focusing on Customer-Centric Models** - Prioritize understanding and fulfilling customer needs. - Develop products and services that resonate deeply with target audiences. Airbnb disrupted hospitality by providing unique and affordable lodging experiences. - **10 Conclusion: Continuous Evolution in Thinking** - Regularly assess and update mental models to stay relevant. - Cultivate a mindset open to change and continuous learning. Google fosters an innovation-driven culture with flexible work environments - Practical Steps for Applying Roger Martin's Planning Concept: - Define the Problem or Opportunity: Clearly articulate the challenge or goal you are addressing. - Gather Diverse Perspectives: Engage stakeholders with different viewpoints to enrich the planning process. - Explore Multiple Models and Scenarios: Consider various approaches and potential future scenarios. - Prototype and Test: Develop small-scale experiments or prototypes to test your ideas before full implementation Zappos example). Iterate and Refine: Use feedback and results to refine your plan continuously. Focus on Execution: Ensure that the plan is actionable and aligned with the organization's resources and capabilities. - Strategy and planning. - The approach of new management. - Describe the importance of external environmental factors by analyzing two megatrends and explaining their impact on business organizations. Why are external environmental factors critical in strategic decision-making? - Define the essential components of a business plan and explain why it is considered a strategic planning tool. What are the key elements of a business plan? How does a well-structured business plan support decision-making, risk assessment, and goal achievement? - It is a classic but powerful tool. You need a business plan to make a strategy. - Marketing campaign, social media, why do you want to release our company. - Cost? Does it generate revenue and in what way? Revenue links to marketing sales, and opportunities, where did you launch? Everything is linked together. How does a company organize its business? - One question about marketing- 50 points. - What is the strategy of a company, define the mission, goal, and core values, and define strategy? - Understand models. - Megatrends - Shifting economic power. - Resource scarcity. - technological breakthrough. - Social change. - Rapid urbanization. - Sustainability. - Define strategy for a company and planning. - High-value product, sustainability, good customer reputation. - Marketing strategy and the marketing mix. - Poter's five force. - Why is marketing fundamental to an organization and why do manager so often contribute to their success to making their marketing plan the core of their strategy? - **Strategic management processes: basic elements** - Environmental scanning - Swot analysis - Pestle analysis - Competitive analysis - Strategy formulation - Define the organization's financial and nonfinancial objectives - Strategy implementation - Evaluation and Control - Implements strategy, and useBalanced Scorecard (BSC) to evaluate and measure. - **PESTLE ANALYSIS:** - Political - Taxation policy - privatization/deregulation policies - Environmental legislation - Health and safety regulations - Public expenditure controls - European union directives - Government stability - Economic - Interest and inflation rates - Consumer confidence - The business cycle - Economic growth prospects - Unemployment rates - Disposable incomes - Labor costs - Socio-cultural - Demographics (population and household numbers) - Values in society - Lifestyles (attitudes to work and leisure) - Consumer preferences (attitudes to green issues) - Levels of education - Technological - Housing stock - Scientific discoveries - Communications - Production - Infrastructure (power, transport) - Environmental - Climate change - Water resources - Legal - Energy supplies - Employment law - Company law - Business regulations - **Selecting the appropriate market entry method:** - The companies objectives and expectation - The size and financial resources of the company - Existing foreign market involvement (e.g. direct exporting or foreign direct investment) - The skills, abilities and attitudes of the company management towards international marketing (e.g. language ability and understanding or local culture) - The nature and power of the competition with the market - The nature of the product itself - The company must decide whether market factors favor: - Manufacturing "at home" - Indirect export - Active export - Or manufacturing abroad - **Domestic purchasing:** - E.g. In China a foreign company (importer) purchases goods in China and export to the UK. The company can also be an importer in the UK. - Foreign organization purchases the product for export to another country (e.g The body shop, OEM's original equipment manufactory). - Gives access to and limited knowledge of the international market - Little control over choice of markets entered - For longer term, need a more proactive approach (i.e. understanding target foreign market) - **Export management companies/ export houses:** - Export houses or expert marketing companies (EMCs) are specialist companies set up to act as the export department for a range of SME companies. - Specialist companies act as the export department for a range of companies (Spread selling and administration cost). Help SMEs to initiate/develop/maintain international sales (e-businesses benefit). Deal with documentation, government regulation. Concentrate upon product with immediate sales potential - **Trading companies:** - (TC are part of historical legacy) Trading companies are businesses working with different kinds of products which are sold for consumer, business or government purposes. Trading companies buy a specialized range of products, maintain a stock or a shop, and deliver products to customers. Trading companies are associated with the operations of the client, such as the process/logistics of moving and storing products. Their extensive operations and controls enable operation in more difficult trading areas. - Manage countertrade activities, focus raw material. - **Export marketing mix:** - Pricing - Policy, strategies, discount, structures, and trading terms - Promotion - Corporate, promotions and local selling, trade shows and literature - Product - Selection, development and sourcing - Distribution - Sales force management agents, distribution and logistics - Technical - Specifications, testing and product quality - Services - Market research, training and sales servicing - Finance and Administration - Budgets, order processing, insurance and credit control - Reasons for setting up overseas manufacture and service operations: - Product avoiding problems, e.g. perishability - Services Dependant for success on local intellectual property, knowledge & sensitivity - Costs of transporting - Costs of warehousing - Tariff barriers and quotas - Government regulations e.g.local investment - Market Local manufacture viewed favourably by market? - Government contacts - Market information feedback ■ nternational culture in firm - Local manufacture faster response and just-in-time delivery - Lower labour cost - Reasons for investment in local operations: - TO gain new business: local production demonstrates strong commitment (e.g. to persuade customers to change suppliers.) - TO defend existing business (e.g. car imports to a number of countries are subject to restriction.) - TO move with an established customer (e.g. to retain existing customers.) - TO save costs: (e.g. labour, raw materials and transport) - TO avoid government restrictions (e.g. to avoid import restrictions of certain good) - How can we define the activity of planning within a company, whether it is an SME or an MNC? - Planning is a fundamental managerial function that involves defining organizational goals, establishing strategies, and outlining the actions needed to achieve them. It provides direction, reduces uncertainty, and ensures efficient resource allocation. - Done well if: - Clarifies direction - Motivates people - Uses resources efficiently - Increases control, by enabling people to measure progress against targets - Provides direction and focus - Reduces risks and uncertainties - Improves decision-making - Ensures efficient resource utilization - Aligns teams with business goals - **Types of planning:** - **Strategic Planning:** Long-term vision (3-5+ years) - Focuses on overall business growth and competitive advantage - Example: Expansion into new markets, mergers, brand positioning Amazon – Expanding its presence in the healthcare sector by acquiring One Medical to integrate telemedicine and pharmacy services into its ecosystem. - **Tactical Planning:** Medium-term strategies (1-3 years) - Translates strategic goals into actionable steps - Example: Developing a marketing campaign to increase brand awareness Nike – Developing a targeted marketing campaign for a new sneaker release, focusing on social media influencers and limited-edition drops to drive hype and sales. - **Operational Planning:** Short-term (daily, weekly, monthly) - Focuses on efficiency and execution of tasks - Example Scheduling employees, managing supply chain logistics McDonald's – Optimizing daily staff shifts and supply chain logistics to ensure the fastest customer service in high-traffic location - **Contingency Planning:** Prepares for unexpected risks and crises - Ensures business continuity in case of disruptions - Example: Cybersecurity breach response plan, economic downturn strategy Tesla – Developing alternative battery suppliers to mitigate risks from lithium shortages and avoid production slowdowns. - Planning process: criteria for assessing goals: SMART goals - Specific: Does the goal set specific targets? A clear statement of what a meeting (or any other activity) should achieve helps to focus effort. - Measurable: Some goals may be quantified ('increase sales of product X by 5 per cent a year over the next three years') but others, equally important, are more qualitative ('to offer a congenial working environment'). - Attainable: Goals should be challenging, but not unreasonably difficult or people will not be committed. Equally goals should not be too easy, as that too weakens motivation. - Rewarded: If people know that if they attain a goal they will receive a reward they will be more committed. - Timed: Does the goal specify the time over which it will be achieved, and is that also a reasonable and acceptable standard? - Why is marketing fundamental to an organization, and why do managers of successful firms often attribute their success to making marketing the core of their strategy? - Understanding customer and market; - Marketers try to understand customers' needs and to decide which segments of a market to target. Doing so effectively depends on developing close customer relations, building a marketing orientation, and using specific marketing capabilities - Customer are no longer buying products and services, they are buying experiences delivered via the products and services. - What si the secret to long-lasting customer relationships? = customer value + customer satisfaction - Marketing: analyzes the market and makes sure to identify and develop customers based on manifest and latent needs (identifying needs) So, it is not just promotion or market research - Sales: explains why our product is the best choice and then aims to make a transaction (filling the need) It involves maintaining and fostering relationships and understanding (and anticipating) customer problems/needs - Business model: - Manufacture to customer - Marketing strategy and the marketing mix: the four P's - Product, price, promotion, and place - To the 7 ps: - People process, and physical evidence - Marketing strategy and the marketing mix part 2: - Consumers are in the center. - The goal is to create value for customers and build profitable customer relationships. - Next comes marketing strategy: The marketing logic by which the company hopes to create customer value and achieve profitable customer relationships - Guided by marketing strategy, the company designs an integrated marketing mix made up of factors under its control (the four PS). - To find the best marketing strategy and mix, the company engages in ■ marketing analysis, ■ planning ■ implementation control. - **Segmentation:** A group of consumers who respond in a similar way to a given set of marketing efforts. - **Targeting:** A company should target segments in which it can profitably generate the greatest customer value and sustain it over time. - After a company has decided which market segments to enter, it must determine: - How to differentiate its market offering for each targeted segment - What positions it wants to occupy in those segments. - A product's position is the place it occupies relative to competitors' products in consumers' minds. - Marketers want to develop unique market positions for their products. If a product is perceived to be exactly like Others on the market, consumers would have no reason to buy it. - **POSITIONING** Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. - Customer insights are fresh marketing information-based understandings of customers and the marketplace that become the basis for creating customer value, engagement, and relationships. - Managing marketing information (MIS): provides information to the company's marketing, managers and external partners such as suppliers, resellers, and marketing service agencies - Data is everywhere Companies don't necessarily have to build their own massive data repositories before starting with big data analytics. The moves by companies and governments to put large amounts of information into the public domain have made large volumes of data accessible to everyone. - How will Al impact social media content creators? - AI tools are increasingly used for idea generation (new ideas), content production, and analysis. - Al can automate tasks such as video editing, image generation, and even content scheduling. - Using Al to optimize content performance. - The rise of Al has led to a new level of competition in content creation, as more people have access to powerful tools. - Competition from virtual influencers - MNC stands for multi-national corporations. These are usually corporations with international business operations. The number of countries the MNC operates in depends on the size of the MNC. The MNC usually has a headquarter in one country and regional or local offices around the world. They're usually large companies with many employees Lesson 8 - The significance of SMEs to the national economy, MNEs vs SMEs Differences between companies MNC and SME SME stands for small and medium-sized enterprises. These are usually locally owned businesses. - An SME is usually larger than a start-up but smaller than an MNC. SMEs may also generate significantly less revenue than MNCs. Small and medium enterprises are crucial to the local economy as they often hire local staff and employees which helps to reduce unemployment rates. - Market cap - How do managers develop strategies: - The content of strategic plans had also changed in that they now covered shorter periods, dealt with direction not detail, and emphasised performance by setting: - Financial targets; - Operating targets; - Safety and environmental targets; - Strategic mileposts; - Capital expenditure limits. - Strategic planning has become less about strategic decision making and more a mechanism for coordination and performance managing... permitting increased decentralisation of decision making and greater adaptability and responsiveness to external change. - ANSOFF growth strategy: Growth strategies Typically, SMEs have limited resources and so need to make difficult decisions about how to use these resources to grow the business. As long ago as 1957, Ansoff identified four growth strategies: - **product penetration** - **market development** - **product development** - **diversification** - Purpose: It helps companies determine their product and market growth strategy by focusing on whether products are new or existing, and whether markets are new or existing. - The importance of business panning: By developing a good quality and flexible business plan most of the failure problems can potentially be identified, considered and hopefully addressed or if they cannot easily be addressed, then the risk- assessment part of the business plan should have identified them as high-impact/high-probability risks that could compromise the viability of the proposal - What is a business plan? - A business plan is a written document that details the proposed venture. - It must describe the current status, expected needs, and projected results of the new business. - Sometimes it is also referred to as venture plan. - The business plan describes to investors and financial sources all of the events that may affect the proposed venture. - It helps the enterprise avoid common pitfalls that often undo all previous efforts. - You have to incorporate sustainability into a business plan and you must define it - Balancing Profit and Purpose: The business plan demonstrates how the company can maintain financial health while addressing environmental and social challenges. - In preparing the plan it is important to consider the: - Management / Entrepreneur's perspective. - Marketing perspective. - Stakeholder's perspective. - Depth and detail in the business plan depend on: - Size and scope of the proposed new venture. - Size of the market. - Competition. - Potential growth. - When writing a business plan: - Keep the plan respectably short. - Organize and package the plan appropriately Orient the plan toward the future avoid exaggeration Highlight critical risks. - Give evidence of an effective entrepreneurial team - Do not over-diversify identify the target market Keep the plan written in third person. - Capture the reader's interest - Financial information needs: - The entrepreneur has to prepare a budget of all possible expenditures and revenue sources, including sales and any external available funds. - The budget includes capital expenditures, direct operating expenses, and cash expenditures for non expense items. - Industry benchmarks can be used in preparing the final pro forma statements in the financial plan. - Benefits of a business plan: - A business plan is a document that outlines the goals, strategies, and operational details of a business. It serves as a roadmap for success and offers numerous benefits, both for internal decision-making and external communication. - **Key benefits: Clarity and Direction** - A business plan helps define the vision, mission, and objectives - It forces business owners to think critically about their strategy - The plan helps allocate resources (financial, human, and operational) more effectively by prioritizing key activities and initiatives. - A business plan sets measurable goals and milestones - **Risk Management:** By analyzing the market, competition, and potential challenges, a business plan helps identify and mitigate risks. - Communication tool for internal and external stakeholders A business plan outlines the operational structure of the business and improve overall efficiency. - Works as a communication tool for outside financial sources as well as an operational tool for guiding the venture for success - Provides the details of the market potential and plans for securing a share of that market - Provides a comprehensive overview of the entire operation - It provides a useful guide for evaluating the planning skills of individual managers - Works as a communication tool for outside financial sources as well as an operational tool for guiding the venture for success - Provides the details of the market potential and plans for securing a share of that market. - The plan identifies critical risks and crucial - Provides a comprehensive overview of the entire operation - Provides a useful guide for assessing the individual entrepreneur's planning and managerial ability **Roger Martin: Why Do People Plan?** - People in corporations behave like regular people. - Data analytics hinder change by reinforcing past trends. **Mental Models & Strategy** 1. **Mental Models & Decision-Making** - Managers rely on mental models; outdated ones hinder progress. - Example: Kodak failed to adapt to digital photography. 2. **Pitfall of Entrenched Thinking** - Repeating ineffective models leads to failure. - Example: Blockbuster ignored streaming; Netflix thrived. 3. **Embracing New Frameworks** - Flexible thinking drives innovation. - Example: Tesla revolutionized the auto industry. 4. **Competition & Value Creation** - Focus on creating unique value, not just beating competitors. - Example: Apple prioritizes seamless user experience. 5. **Strategy & Execution** - Strategy and execution must align. - Example: Amazon integrates logistics, Al, and customer service. 6. **Corporate Culture** - Culture evolves through shared experiences. - Example: Google's innovation-driven workplace. 7. **Innovation Beyond Processes** - Encourage experimentation. - Example: 3M's 15% time for personal projects. 8. **Leadership Incentives** - Stock-based compensation can be flawed. - Example: Warren Buffett prioritizes long-term value. 9. **Customer-Centric Models** - Success comes from fulfilling customer needs. - Example: Airbnb disrupted hospitality. 10. **Continuous Evolution** - Regularly update strategies. - Example: Google's adaptability. **Strategic Planning & Management** - **Business Plan Components:** - Vision/Mission, Goals, Market Strategy, Financial Plan, Operations Plan. - **Strategic Management Processes:** - Environmental Scanning -> SWOT & PESTLE Analysis -> Strategy Formulation -> Implementation -> Evaluation & Control. **Key External Factors & Megatrends** 1. **Shifting Economic Power** - Emerging markets influencing global business. 2. **Resource Scarcity** - Sustainability becomes a key business strategy. 3. **Technological Breakthroughs** - Al, automation, and digital transformation. 4. **Social Change** - Changing consumer behaviors and expectations. 5. **Urbanization** - Growth in metropolitan areas shaping market dynamics. **Marketing & Strategy** - Marketing is core to success because it: - Identifies customer needs. - Creates and delivers value. - Builds strong relationships. - **Marketing Strategy & Mix (4Ps -> 7Ps):** - Product, Price, Promotion, Place -> + People, Process, Physical Evidence. - **Porter's Five Forces:** - Competitive Rivalry, Threat of New Entrants, Threat of Substitutes, Buyer Power, Supplier Power. - **Segmentation & Positioning:** - Target market selection. - Unique market offering to differentiate from competitors. **Planning in Companies (SME & MNC)** - Strategic Planning (3-5+ years): Long-term growth (e.g., Amazon's healthcare expansion). - Tactical Planning (1-3 years): Medium-term strategy (e.g., Nike's influencer marketing). - Operational Planning (short-term): Execution-focused (e.g., McDonald's staffing logistics). - Contingency Planning: Prepares for unexpected risks (e.g., Tesla's alternative battery suppliers). **Market Entry Strategies** 1. Domestic Purchasing - Buying from local suppliers for export. 2. Export Management Companies - Handling international sales for SMEs. 3. Trading Companies - Managing large-scale international trade. 4. Foreign Direct Investment (FDI) - Establishing local operations abroad. **Key Planning Tools** 1. SWOT Analysis - Strengths, Weaknesses, Opportunities, Threats. 2. PESTLE Analysis - Political, Economic, Social, Technological, Environmental, Legal factors. 3. Balanced Scorecard (BSC) - Measures performance and strategic alignment. 4. SMART Goals - Specific, Measurable, Attainable, Rewarded, Timed. **Customer-Centric Strategy** - Understanding Customer Needs: - Consumers buy experiences, not just products. - Customer value + satisfaction = long-term loyalty. **Al & Future of Marketing** - Al is reshaping content creation, marketing automation, and customer insights. - Data analytics drive personalized marketing campaigns. 1. **Key Concepts in Management** - Planning: Setting goals and determining actions to achieve them. - Organizing: Arranging resources to implement plans. - Leading: Directing and motivating people. - Controlling: Monitoring performance and making adjustments. 2. **Business Strategy** - Corporate Strategy: Overall purpose and scope of the business. - Business-Level Strategy: How the firm competes within a market. - Functional Strategy: Specific strategies for departments like marketing, finance, operations. 3. **Business Plan & Understanding It** A business plan outlines the company's vision, mission, and operational structure. Key components include: - Executive Summary: Overview of the business. - Business Description: Industry, company background. - Market Research: Industry trends, target audience, competitors. - Organizational Structure: Management team. - Product/Service Offering: What the business provides. - Marketing Strategy: How the business attracts customers. - Financial Plan: Budget, revenue projections. 4. **Porter's Five Forces** Framework for analyzing competition in an industry: 1. Competitive Rivalry: Intensity of competition among existing competitors. 2. Threat of New Entrants: How easy it is for new firms to enter. 3. Bargaining Power of Suppliers: Influence suppliers have over pricing. 4. Bargaining Power of Buyers: Influence customers have over pricing. 5. Threat of Substitutes: Likelihood of alternative products replacing existing ones. 5. **Megatrends in Business** Long-term changes that shape industries and economies: - Digital Transformation: Al, automation, cloud computing. - Sustainability: Environmental responsibility, green business. - Globalization: Expansion of international trade and competition. - Demographic Shifts: Aging populations, workforce changes. - New Business Models: Subscription services, gig economy. 6. **Marketing Strategy** A long-term plan to attract and retain customers: - Segmentation: Dividing the market into distinct groups. - Targeting: Choosing which segments to focus on. - Positioning: How the business wants to be perceived by customers. 7. **Marketing Mix (4Ps)** A framework for developing marketing strategies: 1. Product: Features, design, brand. 2. Price: Pricing strategies, discounts. 3. Place: Distribution channels, locations. 4. Promotion: Advertising, sales tactics. 8. **Management Theories** - Classical Management Theory: Emphasizes efficiency and hierarchy. - Human Relations Theory: Focuses on employee motivation and teamwork. - Contingency Theory: Suggests management strategies should vary based on the situation. 9. **Leadership Styles** - Autocratic: Leader makes decisions alone. - Democratic: Encourages team participation. - Laissez-Faire: Minimal supervision, high autonomy. 10. **Decision-Making Process** 1. Identify the problem. 2. Gather information. 3. Develop alternatives. 4. Evaluate and choose the best option. 5. Implement the decision. 6. Monitor and adjust as needed.