Strategic Management Concepts PDF

Strategic Management Concepts: A Competitive Advantage Approach, Concepts and Cases Seventeenth Edition Chapter 4 The Internal Assessment a weaknesses...

Strategic Management Concepts: A Competitive Advantage Approach, Concepts and Cases Seventeenth Edition Chapter 4 The Internal Assessment a weaknesses strength Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Learning Objectives (1 of 2) 4.1 Describe the nature and role of an internal assessment in formulating strategies. 4.2 Discuss the nature and role of management in formulating strategies. 4.3 Discuss the nature and role of marketing in formulating strategies. 4.4 Discuss the nature and role of finance and accounting in formulating strategies. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Learning Objectives (2 of 2) 4.5 Discuss management information systems (MIS) in terms of formulating strategies. 4.6 Explain how to develop and use an Internal Factor Evaluation (IFE) Matrix. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved  Figure 4.1 The Comprehensive Strategic-Management Model department > - finance marketingunce functional Company > division - - > product department [meja division > - geographic combination of 2 organizational +Mathson chart input stage =>EFE > ( PM - > - I FE Source: Fred R. David, “How Companies Define Their Mission,” Long Range Planning 22, no. 1 (February 1989): 91. See also Anik Ratnaningsih, Nadjadji Anwar, Patdono Suwignjo, and Putu Artama Wiguna, “Balance Scorecard of David’s Strategic Modeling at Industrial Business for National Construction Contractor of Indonesia,” Journal of Mathematics and Technology, no. 4 (October 2010): 20. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved The Process of Performing an Internal Audit The internal audit – Requires gathering, assimilating, and prioritizing information about the firm's management, marketing, finance, accounting, production/operations, research and development (R and D), and management information systems operations – Provides more opportunity for participants to understand how their jobs, departments, and divisions fit into the whole firm Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved The Resource-Based View (RBV) more important than external (1 of 3) focus on ↑ internal resources q The Resource-Based View (RBV) Approach – contends that internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved The Resource-Based View (RBV) (2 of 3) Proponents of the RBV contend that organizational performance will primarily be determined by internal I resources. These resources can be grouped into – tangible-physical easily measure (quantitative physical – intangible -non copywrite > trademark - , Focus on resources : Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved The Resource-Based View (RBV) (3 of 3) Jusah jumpa ; For a resource to be valuable, it must be either (1) rare, ↑ (2) hard to imitate, or (3) not easily substitutable. tak mudah diganti Susan ditin These three characteristics of resources are called Empirical Indicators These enable a firm to implement strategies that improve its efficiency and effectiveness and lead to a sustainable competitive advantage. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Key Internal Forces Distinctive competencies – A firm’s strengths that cannot be easily matched or imitated by competitors – Building competitive advantages involves taking advantage of distinctive competencies Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved O Management (POMC) The functions of management consist of four basic activities: planning organizing motivating controlling Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved The Basic Functions of Management (1 of 2) Planning: forecasting, establishing objectives, devising strategies, and developing policies Organizing: organizational design, job specialization, job descriptions, span of control, coordination, job design, and job analysis Motivating: leadership, communication, work groups, behavior modification, delegation of authority, job enrichment, job satisfaction, needs fulfillment, organizational change, employee morale, and managerial morale Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved The Basic Functions of Management (2 of 2) noerroreere corrective measure. Ensure is problem can take - , Controlling: quality control, financial control, sales control, inventory control, expense control, analysis of variances, rewards, and sanctions Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Production/Operations Production/operations function – consists of all those activities that transform inputs into goods and services Production/operations management deals with inputs, transformations, and outputs that vary across industries and markets. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved  Integrating Strategy and Culture Organizational culture significantly affects planning activities. If strategies can capitalize on cultural strengths, such as a strong work ethic or highly ethical beliefs, then management often can swiftly and easily implement changes. : Culture EX : clock ind out early flexibility > - can ↓ Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Organizational Culture Organizational culture is “a pattern of behavior that has been developed by an organization as it learns to cope with its problem of external adaptation and internal integration and that has worked well enough to be considered valid and to be taught to new members as the correct way to perceive, think, and feel.” Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Table 4.4 Aspects of Organizational Culture Dimension Low Degree Degree Degree High 1. Strong work ethic; arrive early and leave late 1 2 3 4 5 2. High ethical beliefs; clear code of business ethics followed 1 2 3 4 5 3. Formal dress; shirt and tie expected 1 2 3 4 5 4. Informal dress; many casual dress days 1 2 3 4 5 5. Socialize together outside of work 1 2 3 4 5 6. Do not question supervisor’s decision 1 2 3 4 5 7. Encourage whistle-blowing 1 2 3 4 5 8. Be health conscious; have a wellness program 1 2 3 4 5 9. Allow substantial “working from home” 1 2 3 4 5 10. Encourage creativity, innovation, and open-mindedness 1 2 3 4 5 11. Support women and minorities; no glass ceiling 1 2 3 4 5 12. Be highly socially responsible; be philanthropic 1 2 3 4 5 13. Have numerous meetings 1 2 3 4 5 14. Have a participative management style 1 2 3 4 5 15. Preserve the natural environment; have a sustainability 1 2 3 4 5 program Fifteen Example (Possible) Aspects of an Organization’s Culture Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Management Audit Checklist of Questions (1 of 2) 1. Does the firm use strategic-management concepts? 2. Are company objectives and goals measurable and well communicated? 3. Do managers at all hierarchical levels plan effectively? 4. Do managers delegate authority well? 5. Is the organization's structure appropriate? Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Management Audit Checklist of Questions (2 of 2) 6. Are job descriptions and job specifications clear? 7. Is employee morale high? 8. Are employee turnover and absenteeism low? 9. Are organizational reward and control mechanisms effective? Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Marketing Marketing customer have their own needs Every the process of defining, anticipating, creating, and fulfilling customers’ needs and wants. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved  + our product reach targeted customers. Important Five Basic Activities in Marketing 1. Marketing research and target market analysis 2. Product planning 3. Pricing products 4. Promoting products 5. Placing or distributing products Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved  Marketing Research and Target Market Analysis > - solution to problems Marketing Research – the systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services – can uncover critical strengths and weaknesses Target Market Analysis – The examination and evaluation of consumer needs and wants will not be a problem if to it is a problem only one person. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved  Product Planning baik & tambah Try& Error Product Planning – includes activities such as test marketing; product and brand positioning; devising warranties; packaging; determining product options, features, style, and quality; deleting old products; and providing for customer service – important when a company is pursuing product development or diversification. Warranty -> ensure customer's loyalty if beli fake. premium - lose competitive advantage strategise pricing Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Pricing Pricing – Refers to deciding the amount an individual must exchange to receive a firm’s product offering. – Pricing strategies are often based on costs, demand, the competition, or on customers’ needs. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Promotion Promotion – Includes many marketing activities, such as advertising, sales promotion, public relations, personal selling, and direct marketing. – Common promotional tools designed to inform consumers about products include TV advertising, magazine ads, billboards, websites, and public relations, among others. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Distribution Channels of Distribution – This is a term that refers to various intermediaries that take a product from a producer to an end customer. – These intermediaries have names such as wholesalers, retailers, brokers, facilitators, agents, vendors, or simply distributors. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Marketing Audit Checklist of Questions (1 of 2) 1. Are markets segmented effectively? 2. Is the organization positioned well among competitors? 3. Are present channels of distribution reliable and cost effective? 4. Is the firm conducting and using market research effectively? Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Marketing Audit Checklist of Questions (2 of 2) 5. Are product quality and customer service good? 6. Are the firm's products and services priced appropriately? 7. Does the firm have an effective promotional strategy? 8. Is the firm's Internet presence excellent as compared to rivals? Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Finance/Accounting Functions (1 of 4) The functions of finance/accounting comprise three decisions: 1. The investment decision 2. The financing decision 3. The dividend decision Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Finance/Accounting Functions (2 of 4) Investment Decision (Capital Budgeting) – the allocation and reallocation of capital and resources to projects, products, assets, and divisions of an organization Financing Decision – determines the best capital structure for the firm and includes examining various methods by which the firm can raise capital Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Finance/Accounting Functions (3 of 4) Dividend Decisions – concern issues such as the percentage of earnings paid to stockholders, the stability of dividends paid over time, and the repurchase or issuance of stock – determine the amount of funds that are retained in a firm compared to the amount paid out to stockholders Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Finance/Accounting Functions (4 of 4) 1. How has each ratio changed over time? 2. How does each ratio compare to industry norms? 3. How does each ratio compare with key competitors? Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 4.2 Financial Ratio Trend Analysis Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Table 4.9 A Summary of Key Financial Ratios (1 of 4) Ratio How Calculated What it measures Liquidity Ratios Current assets extent to which a firm can meet its short- Current Ratio Current liabilities term obligations Current assets minus inventory The extent to which a firm can meet its Quick Ratio short-term obligations without relying on Current liabilities the sale of its inventories Leverage Ratios Debt-to-Total- Total debt The percentage of total funds provided by Assets Ratio Total assets creditors Debt-to-Equity Total debt The percentage of total funds provided by Ratio Total stockholders' equity creditors versus by owners Long-Term Debt- Long-term debt The balance between debt and equity in a to-Equity Ratio Total stockholders' equity firm’s long-term capital structure the extent to which earnings can decline Times-Interest- Profits before interest and taxes without the firm becoming unable to meet Earned Ratio Total interest charges its annual interest costs Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved A Summary of Key Financial Ratios (2 of 4) Ratio How Calculated What it measures Activity Ratios Whether a firm holds excessive stocks of Inventory Sales inventories and whether a firm is slowly turnover Inventory of finished goods selling its inventories compared to the industry average Fixed Assets Sales Sales productivity and plant and turnover Fixed assets equipment utilization Sales Whether a firm is generating a sufficient Total Assets volume of business for the size of its asset turnover Total assets investment Accounts The average length of time it takes a firm Annual credit sales Receivable to collect credit sales (in percentage turnover Accounts receivable terms) Average Accounts receivable The average length of time it takes a firm Collection Period Total credit sales/365 days to collect on credit sales (in days) Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved A Summary of Key Financial Ratios (3 of 4) Ratio How Calculated What it measures Profitability Ratios Sales minus cost of goods sold the total margin available to Gross Profit cover operating expenses and Margin Sales yield a profit Operating Profit Earnings before interest and taxes EBIT Profitability without concern for Margin Sales taxes and interest Net income After-tax profits per dollar of Net Profit Margin Sales sales Net income After-tax profits per dollar of Return on total assets; this ratio is also called Assets (ROA) Total assets return on investment (ROI) Return on Net income After-tax profits per dollar of Stockholders’ Total stockholders' equity stockholders’ investment in the Equity (ROE) firm Earnings Per Share Net income Earnings available to the owners (EPS) Number of shares of common stock outstanding of common stock Market price per share Attractiveness of firm on equity Price-Earnings Ratio Earnings per share markets Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved A Summary of Key Financial Ratios (4 of 4) Ratio How Calculated What it measures Growth Ratios Sales Annual percentage growth in total sales Firm’s growth rate in sales Net Income Annual percentage growth in profits Firm’s growth rate in profits Earnings Per Annual percentage growth in EPS Firm’s growth rate in EPS Share Dividends Per Annual percentage growth in dividends Firm’s growth rate in dividends per share Share per share Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Finance/Accounting Audit Checklist (1 of 2) 1. Where is the firm financially strong and weak as indicated by financial ratio analyses? 2. Can the firm raise needed short-term capital? 3. Can the firm raise needed long-term capital through debt or equity? 4. Does the firm have sufficient working capital? 5. Are capital budgeting procedures effective? Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Finance/Accounting Audit Checklist (2 of 2) 6. Are dividend payout policies reasonable? 7. Does the firm have excellent relations with its investors and stockholders? 8. Are the firm's financial managers experienced and well trained? 9. Is the firm's debt situation excellent? Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Management Information Systems Management Information System – Receives raw material from both external and internal evaluation of an organization – Improves the performance of an enterprise by improving the quality of managerial decisions – Collects, codes, stores, synthesizes, and presents information in such a manner that it answers important operating and strategic questions Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Business Analytics A business technique that involves using software to mine huge volumes of data to help executives make decisions. Also called predictive analytics, machine learning, or data mining. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved The Internal Factor Evaluation (IFE) combine Matrix weakness & table strength 1. List key internal factors as identified in the internal-audit process. 2. Assign a weight that ranges from 0.0 (not important) to 1.0 (all-important) to each factor. 3. Assign a 1-to-4 rating to each factor to indicate whether that factor represents a strength or weakness. 4. Multiply each factor's weight by its rating to determine a weighted score for each variable. 5. Sum the weighted scores for each variable to determine the total weighted score for the organization. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 4.3 How to Gain and Sustain Competitive Advantages Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Copyright Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved