CBM 121 Strategic Management Final Exam Summary PDF

CBM 121 Strategic Management Final Summary Strategic management is the long-term aim of an organization. Strategic management is about handling the entirety of an enterprise. - This requires the degree to which activities meet the strategic needs of the organization’s policy. Strategic management is...

CBM 121 Strategic Management Final Summary Strategic management is the long-term aim of an organization. Strategic management is about handling the entirety of an enterprise. - This requires the degree to which activities meet the strategic needs of the organization’s policy. Strategic management is the overall long-term goal of the management of the organization. - It differs from strategy, the overall method of a company in managing activities to achieve the long-term objective. - The organization's strategy must guide and align sub-strategy formation at different parts. Strategic planning is organizing and scheduling tasks concerning roles and resources within a given timeline to achieve the organization's goals. Strategic change is a phase of fundamental transition that takes a company to a new sustainable competitive position, likely to entail changes to the current strategy. Continuous improvement is organizational learning, which promotes and incrementally increases the efficiency and satisfaction of the customer in day-to-day management according to the organization's strategic requirements. Competitive strategy is a method at the company level intended to retain a competitive edge over rivals and future rivals. Strategic change is a structural transition aimed at bringing an organization to a new success role. A strategy is an approach to managing the activities of an entity to ensure its mission and function are maintained over time. - It serves as a frame of reference for all organizational decision-making by clarifying the organization's overall goals and defining the critical options for advancing the course of activities in line with its intent. Purpose The purpose is the reason for the organization and its overall goals. A vision statement is the organization’s desired future state or ideal. - is a desired future state or ideal for an organization; this requires an organization to make a substantial strategic change. The mission is the organization’s statement of its overriding purpose, such as the value it creates for its stakeholders and other responsibilities. - is a statement of an organization's present aims and core activities; these guide its control of its core business areas and continuous improvement for creating customer value. - Visionary change and its strategy bring change to existing working. Values are the organization's statement of its expected collective norms and behaviors. - They will include its overall core business methodologies and management philosophies. - Values, the expected collective norms, and everybody's Vision or Mission mediating role in how values influence the management of vision and mission. The External Environment - The external environment is those conditions external to the organization which influences the organization and its industry, especially those that influence the intensity of competition. - The PESTEL framework is a broad but helpful mnemonic to group external environmental influences into political, economic, social, technological, ecological, and legal factors. - Structural breaks are major and unpredictable events in the external environment. o These will likely require a sudden rethinking of an organization's purpose and strategy. o The industry life cycle likens the life of an industry to a living organism that goes through stages of introduction, growth, maturity, and decline; each step exhibits distinct characteristics that should be considered against the organization’s purpose. - The five competitive forces are the primary influences affecting the choice of industry and competitive positioning, which involve an organization's competitive advantage and profitability. - Hyper competition is a dynamic state of constant disequilibrium and competitive change in an industry. The Internal Environment - The internal environment comprises those internal conditions, including the organization's strategic resources, abilities, and management capabilities. - The resource-based view of strategy (RBV) is based on the view that competitive advantage and superior performance are based on the internal management of strategic resources. - The VRIO framework – value, rarity, inimitability, and organizational support is a mnemonic that identifies four critical criteria for assessing which capabilities are strategic. - Core competencies are organization-specific abilities that an organization's people have, which enable them to sustain competitive advantage and superior performance. - Dynamic capabilities allow an organization to renew and re-create its strategic capabilities, including its core competencies, to meet the needs of a changing environment. - Organizational learning is broad incremental learning. o It is based on the organization's experience of routine working and existing knowledge, which is called exploitative learning, and innovatory, based on unfamiliar working and new knowledge, which is called exploratory learning. Objectives - Objectives are strategically desired outcomes that must be managed effectively if the organization continues to fulfill its purpose. - The balanced scorecard is a documented set of objectives and measures grouped typically into four perspectives. - Critical success factors (CSFs) are the factors that primarily account for an organization’s success in achieving its strategic purpose. - Key performance indicators (KPIs) are targets to monitor progress on strategyrelated incremental objectives. - Strategy maps are pictorial representations of the relative order of balanced scorecard perspectives used to illustrate cause and effect. - Strengths, weaknesses, opportunities, threats (SWOT) is a mnemonic framework used to analyze an organization's strengths strategically, weaknesses (concerned with internal factors), opportunities, and threats (arising because of changes in external factors). A strategic SWOT is made of the following: 1. Strengths are attributes of the organization that are helpful to achieving the strategic objectives. 2. Weaknesses are attributes that could be more helpful or require attention to make them useful in achieving strategic objectives. 3. Opportunities are external influences that help achieve strategic objectives. 4. Threats are influences that could harm or prevent the achievement of strategic objectives. The opportunities and threats related to the strategic objectives of the balanced scorecard's financial and customer perspectives, where the external environment's outside influences are considered. The strengths and weaknesses relate to the strategic objectives of the internal processes and learning and growth perspectives, where the inside-out effects of the internal environment are considered. BUSINESS LEVEL STRATEGY - Business-level strategy is the fundamental approach of a company to enable a single entity to retain a competitive edge within a given industry. o A competing single enterprise company can only have one generic strategy. - The cost-Leadership generic strategy is a standard market plan focused on being an industry's lowest-cost company. - Differentiation industry-wide generic strategy is an essential business plan focused on a distinction that provides value for consumers and returns that more than offsets the differentiation costs. - Cost focus and differentiation focus generic strategy is a single business strategy that applies to a given part of an industry, such as a market segment or niche, where the business concerned can design a strategy that meets customer needs more closely than rivals could achieve. - A value chain is an organizational framework to disaggregate and show the strategically relevant activities of an organization, which helps understand and manage cost behavior and existing and potential differentiation sources. - Business models are conceptualizations of critical areas or structures within an enterprise to establish the unique value that the organization provides for its customers. A business-level strategy is a fundamental approach a company takes to help a single business survive and grow its overall intent. The process typically aims at sustaining competitive advantage within a given industry. The Product Expansion Grid - Market penetration means increasing the current company – using the same range of products to maximize the share of established markets in an enterprise. o Of the four options, this is the least risky strategy. o For example, an organization should be able to understand its existing customers and exploit existing activities to encourage them to buy more. o It can also encourage prospective customers, who may buy from rivals. - Market development introduces an organization's existing products and services into new markets. o To move into new areas, active research and marketing strategy are typically needed to provide an initial entry and target segments. o Existing and new markets will likely have significant potential differences, so caution and understanding are required. - Product development introduces new products and services to existing markets. Ideas for new products usually come from knowing current customers ' expectations and behavior. o However, if innovation is piloted or established with existing customers, the possibility of new product failure is minimized. - Diversification involves new products and services being introduced into new markets. o This is the riskier option. o A company must take time to build new tools and consider consumer dynamics and emerging goods. o Inorganic growth provides an attractive shape for large organizations’ way forward to gain the necessary expertise if investors support the move with new finance to cover the costs of acquisitions. Prospectors, Analyzers, Defenders, and Reactors Prospectors These diversify a revolutionary approach and encourage it. Organizational thinking, searching for new strategic roles, is exploratory. Flexibility is what characterizes prospectors; coordination and facilitation are essential. Planning is broad and sensitive to outside changes. Prospectors will likely be first movers. Defenders They address a narrow audience and focus mainly on the engineering issue of how to manufacture value-adding goods and services. Continuous review and improvement are essential, and organizations are committed to a core mission. Controls are centralized and are responsive to internal conditions. Defenders are more functionally oriented, with the supremacy of finance and development. Analyzers These use market development, review, planning, and implement projects of strategic nature. Their features are a combination of prospector and defender approaches to avoid excessive risks and deliver new products and services well. Analyzers are represented by more prominent firms, covering a variety of markets and industries. Reactors These use market penetration, which tends to use expediency and crisis management over the short term. The strategy is to avoid overcrowding. Their response to change could be more coherent and appropriate since there is a mismatch in the three fundamental issues. Often, reactors have little control over their environment outside. Mergers and Acquisitions A merger is an agreement between two organizations under common ownership to combine and integrate their operations. A coalition of equals is rare because one of the companies is typically more powerful, and in post-merger negotiations and reorganization, the management is likely to be preferred. Backward vertical integration enables a company to control some of the tools used as inputs in its goods and services. Horizontal integration happens when rivals are taken over and combined with internal operations that provide identical or complementary goods and services. With time industries tend to get more concentrated as the activity of horizontal integration narrows down the equal number. The growth-share matrix Cash Cow - In a slow-growing economy, companies known as cash cows have a significant market share, usually in a mature sector. These will generate more cash than needed to maintain the company's health, so any excess is creamed off to provide investment funds for stars and question marks. A cash cow business will likely be unhappy to see its revenue shift if it is prevented from diversifying it into new business. However, from the corporate perspective, the principle is that a slow-growing but cash-rich enterprise should provide the investment needed for the future. Stars Stars have a large share of the market and are in growing markets. The expectation is that these companies will become tomorrow's cash cows but are likely to be hungry for more investment funds for the present than they can generate themselves. The principle is to grow star businesses as fast as possible by eliminating resource constraints, such as investing in capacity-added ahead of demand. Questions Mark Question mark companies have low market share but are in fast-growing markets. Sometimes a question mark business is called a problem child because it typically does not generate investment funds, and the business’s future is uncertain. A question mark business has the potential to become a star, but in its early stages of market development, it is likely to be significantly cash hungry. Corporations typically engage in several promising but unproven undertakings, especially in unfamiliar industries. The principle is to be prepared to move resources into expanding businesses but, at the same time, to note the need for caution. Dogs Dog businesses have a low market share and are in markets with low growth. They are divested or closed if they bring no value to the rest of the company. These may be pet businesses in that once they significantly contributed to the corporation's success, sentimental owners may find it difficult to close them down psychologically. It may be prudent to keep a dog alive if it blocks existing competition (like a guard dog), complements other businesses (guide dog), or creates customers at the product range bottom, who may trade up to later highvalue products (sheepdog). However, the principle is that these businesses should be terminated as soon as conditions allow. GLOBAL LEVEL STRATEGY Global Level Strategy is the organization's strategy for multinational border management of its operations. Porter's diamond is a model for demonstrating how nations' competitive advantages are based on regional and local advantages. Strategies for international markets include multi-domestic, global, international, and transnational. Micro multinationals are small organizations that maintain a hub within a domestic economy but use the Internet to reach customers across global markets. Strategic alliances and partnerships are formal and informal associations and collaborations between independent organizations. Strategy implementation is creating the appropriate organizational structure and processes to execute the strategic plan. Organizing is central: the last twenty years have seen a move away from traditional hierarchical frameworks to favor ideas on organizing to develop and design research that encourages collaboration and process management. The organizational structure includes four essential types – functional, product, matrix, and regional network. A process is a sequence of related tasks to deliver an objective. Cross-functional working involves teams with individuals who come from different functional areas of an organization working together to meet an objective. McKinsey’s 7S framework is a conceptual framework of seven interrelated variables for organizing change management, which emphasizes organizational values in addition to strategy, structure, and systems. Downsizing is synonymous with the re-engineering of business processes, initially described as the use of information technology to overhaul business processes fundamentally but usually meant the overhaul of business processes resulting in a revolutionary shift. Strategic control is the monitoring and reviewing of an organization's strategic purpose, objectives, and management; this involves organizing and managing adaptations and changes during the strategy's ongoing execution. Since its introduction, strategy’s role in operations has been a neglected field of strategic management. Strategy execution is strategy management during day-to-day management and operations once a strategy has been implemented within the organization. Strategic performance management is a strategically controlled framework that allows the implementation management of the delivery of its strategic goals by a senior level. Strategic control levers are four information-based mechanisms that senior managers can use to direct an enterprise into a desired decisive role. Strategic leadership is how top management and other executive levels guide the company to work for the accomplishment of the purpose of the organization. - Since the primary direction of strategic management is a top-down activity, it is essential to have the nature of the approach of top management to lead and influence the rest of the organization. The four leadership competencies comprise the skills of attention, meaning, trust, and self, each of which must be managed. Leadership styles are the distinctive manners in which leaders influence their organizations' strategic management. Leadership and management may have different characteristics; it is essential to understand their differences if they work together to promote effective strategic management;