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MADM 760 > Ch 8 &9 > Flashcards

Ch 8 &9 Flashcards

1
Q

What tier of strategy does function strategy represent

A

Functional strategies represent the lowest strategy tier its link with business strategy isn’t always clear.

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2
Q

What does business strategy dictate

A

business strategy usually dictates what must be done within the various functions.

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3
Q

What is the key to functional and business strategy

A

The key is integration. All functional strategies must blend together to support the business strategy.

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4
Q

What are Functional Strategies of marketing

A

Functional Strategies of marketing include the 4 P’s

  1. Pricing
  2. Promotion
  3. Production/Service
  4. Place (Distribution)
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5
Q

What’s key to the Marketing Functional Strategy :

Pricing for low cost and differentiated businesses

A

For the Marketing Functional Strategy : Pricing

Low-cost businesses tend to emphasize low prices.

Differentiated businesses price is less of a concern

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6
Q

What’s key to Marketing Functional Strategy :

Promotion for low cost and differentiated businesses

A

For the Marketing Functional Strategy : Promotion:

Low-cost businesses spend less on promotion and often emphasize price.

Differentiated businesses highlight the uniqueness of their products or services

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7
Q

What’s key to the Marketing Functional Strategy :

Product/Service for low cost and differentiated businesses

A

For the Marketing Functional Strategy : Product/Service

Low-cost businesses emphasize basic, no-frills
products.

Differentiated businesses distinguish their products from the competition.

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8
Q

What’s key to Marketing Functional Strategy :

Place (Distribution) for low cost and differentiated businesses

A

For the Marketing Functional Strategy : Place (Distribution):

Low-cost businesses seek most efficient means of distribution.

Differentiated businesses may emphasize quality or speed of delivery.

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9
Q

What are important steps for case analysis step 12 the marketing strategy

A

Case Analysis Step 12: the Marketing Strategy

i. Describe 4 P’s of an org
ii. examine recent ads and company website
iii. report on success or failure of market strategy

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10
Q

What’s key to functional strategy for finance strategy for low cost and differentiated businesses

A

For Functional Strategy in Finance :
Low-cost businesses minimize financial costs and defer expansion if cost of capital is too high.

Differentiated businesses fund initiatives associated with quality improvements and expansion even when the cost of capital is high.

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11
Q

What are financial ratios use for analysis in the financial strategy process

A 
Financial Strategy Financial Ratios are 
i. Liquidity Ratios
ii Activity Ratios
iii. Leverage Ratios
iv. Performance Ratios
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12
Q

What are the Financial Strategy Financial Ratio: Liquidity Ratios

A

the Financial Strategy Financial Ratio: Liquidity ratios

i. current ratio
ii. Quick Ratio/Acid Test/Liquidity Ratio

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13
Q

What is the Financial Strategy Financial Ratio: Liquidity Ratio- Current Ratio

A

Current Ratio

assess current assets / current liabilities
indicate how much of the current liabilities the current assets can cover (2:1 or better desirable)

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14
Q

What is the Financial Strategy Financial Ratio: Liquidity Ratio- Quick Ratio/Acid Test/Liquidity Ratio

A

Quick Ratio/Acid Test/Liquidity Ratio

current assets-inventory/current liabilities
indicate how quickly a business can produce cash on short notice not relevant to firms where inventory is immediately convertible to cash (i.e.fast food)

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15
Q

What are the Financial Strategy Financial Ratio: Activity ratio

A

the Financial Strategy Financial Ratio: Activity ratios

i. Asset turnover
ii. inventory turnover
iii. sales -to-working capital

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16
Q

What is the Financial Strategy Financial Ratio: Activity Ratio- Asset turnover

A

Asset turnover

total revenues/total assets (during period)

measures efficiency of total assets use to generate sales

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17
Q

What is the Financial Strategy Financial Ratio: Activity Ratio- Inventory turnover

A

Inventory turnover

COGS/avg inventory for a period

indicates number times inventory of finished goods is sold annually

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18
Q

What is the Financial Strategy Financial Ratio: Activity Ratio- Sales-to-Working-Capital

A

Sales-to-Working-Capital

Net Sales/Working Capital

measures efficiency of net working capital ( current assets-liabilities) use generates sales

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19
Q

What are the Financial Strategy Financial Ratio: Leverage Ratios

A

the Financial Strategy Financial Ratio: Leverage Ratios

i. Debt-to Asset ratio
ii. Debt-to-equity ratio
iii. Long-term-debt-to-equity ratio

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20
Q

What is the Financial Strategy Financial Ratio: Leverage Ratio- Debt-to Asset ratio

A

Debt-to Asset ratio

total debt/StkH equity

indicates % borrowed funds utilized to finance assets

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21
Q

What is the Financial Strategy Financial Ratio: Leverage Ratio- Debt-to-equity ratio

A

Debt-to-equity ratio

total debt/SH equity

indicates % funds prodivided by creditors compared to owners

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22
Q

What is the Financial Strategy Financial Ratio: Leverage Ratio- Long-term-debt-to-equity ratio

A

Long-term-debt-to-equity ratio

long-term debt/StckH equity

indicates % of funds provided by long-term creditors compared to owners

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23
Q

What are the Financial Strategy Financial Ratio: Performance ratio

A

the Financial Strategy for Performance ratio:

i. Gross Profit Margin
ii. Return on Assets
iii. Return on Equity
iv. Return on Sales

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24
Q

What is the Financial Strategy Financial Ratio: Performance ratio- Gross Profit Margin

A

Gross Profit Margin
gross profit/total revenue

measures efficiency during production process
variations over time suggest :
i. fraud
ii. financial difficulties

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25
What is the Financial Strategy Financial Ratio: Performance ratio- Return on Assets
Return on Assets net income (before taxes)/total assets measure return on total assets employed
26
What is the Financial Strategy Financial Ratio: Performance ratio- Return on Equity
Return on Equity net profit (after taxes)/StckH equity measure firms profitability compared to total amt of SH equity
27
What is the Financial Strategy Financial Ratio: Performance ratio- Return on Sales
Return on Sales operating profit before taxes/net sales ratio of return on net sales
28
What are important steps for case analysis step 13 the financial strategy
step 13 the financial strategy i. identify org financial strategy ii. how is performance? compare financial ratios of org vs industry norms or close competitors iii. explain substantial differences between firm and rival ratios
29
What's key to functional strategy for production strategy
``` for production strategy how a business generates goods or services consider I.experience curve ii. economies of scale iii. capital-labor- substitution ```
30
What is the Production Strategy concept experience curve
Experience curve the reduction in per-unit cost attributed organizational learning, economies of scale or capital-labor subs an org gains over time
31
What is the Production Strategy concept organizational learning
organizational learning | when employees become more efficient preforming the same takes many times
32
What is the Production Strategy concept economies of scale
economies of scale | the reduction in per-unit cost as volume increases
33
What is the Production Strategy concept capital-labor substitution
capital-labor substitution orgs ability to sub labor for capital (or vice versa) as volume increases depending on which combo minimizes cost and or maximizes effectiveness
34
What's key to the production Functional Strategy for low cost and differentiated businesses
For production strategy low-cost businesses emphasize cost reduction via experience curve and often engage in business process engineering to eliminate unnecessary or low value operations affecting final prodcut
35
What is quality consideration ( historically)
quality consideration | historically was a control activity occurred at the end of production process
36
What is quality consideration ( today)
today quality is essential and a concern of all members of the org
37
What is total quality management
TQM, total quality management (1990s) totality of features and characteristics of products or service that bear on its to satisfy customers
38
What's key to functional strategy for research and development strategy
For reasarch and Development strategy (R&D) i. products and service R&D ii. proccess R&D
39
What is the R&D Strategy concept of products and services
products and services efforts directed towards improvements or innovations in the quality or uniqueness of a company’s outputs Differentiators usually invest more in product/service R&D
40
What is the R&D Strategy concept of process
process reduce operational costs and make them more efficient. cost leaders usually invest more in process R&D.
41
When is R&D most important
R&D is most important in rapidly changing industries (growth phase) where production modifications are most often required to remain competitive.
42
What's key to functional strategy for purchasing strategy for low cost and differentiated businesses
For purchasing strategy Low cost business buy supplies and raw materials at lowest possible price consistent with quality standard differentiated businesses willing to pay more for raw materials if they help differentiate final product/service
43
What's functional strategy purchasing strategy's JIT inventory management
Just-in-time (JIT) inventory management - request or purchase items as needed has grown in popularity during the past two decades
44
What are important steps for case analysis step 14 Production and Purchasing Strategies
ase analysis step 14 Production and Purchasing Strategies i. identify org production and purchasing strategies in two separate sections ii. how do strategies differ from competitors
45
What's key to functional strategy for human resources strategy for low cost businesses
human resources strategy | Low-cost businesses attempt to minimize staffing expenses, training & development, and salaries.
46
What's the problem in functional strategy for human resources strategy for low cost businesses
the problem in human resources strategy its often necessary to pay “market wages” for quality people, HR strategies may differ between low-cost and differentiated businesses.
47
What is the Human Resources Strategy concept for how employees are viewed
when employees are viewed as expenses, organizations minimize costs. When they are viewed as investments, organizations maximize their value
48
What is the Human Resources Strategy concept knowledge management perspective
Human Resources Strategy concept knowledge management perspective, people and their skills and abilities represent the resource that cannot be reproduced by competitors.
49
What is the Human Resources Strategy concept Human capital
Human Resources Strategy concept Human capital | is the sum of the capabilities of individuals in an organization, and is a source of competitive advantage
50
What is the concept information systems management Strategy
effective information systems (IS) strategy can benefit the entire organization
51
What is the concept for computer based decisions in information systems management Strategy
computer-based decision support system can permit each functional area to access information it needs and improve coordination by communicating electronically across functional departments.
52
What can information systems management Strategy do for companies
Effective information systems can support all other functional strategies. Its important for all businesses,
53
How does Functional Strategies and Industry Life Cycle correlate
Certain strategic capabilities tend to become more valuable in firms as their industries progress through different life cycle stages. HR function is important but not dominant in all stages.
54
What Functional Strategies correlate to Industry Life Cycle -Introduction
Introduction stage- emphasis on R&D
55
What Functional Strategies correlate to Industry Life Cycle -Maturity
Maturity stage- emphasis on production
56
What Functional Strategies correlate to Industry Life Cycle -Growth
Growth stage- emphasis on marketing
57
What Functional Strategies correlate to Industry Life Cycle -Decline
Decline stage- emphasis on finance
58
What are important steps for case analysis step 15 other functional strategies
case analysis step 15 other functional strategies i. Identify orgs functional strategies in other areas, including HR and information systems. ii. Emphasize differences between those of the organization and key competitors
59
What is the SWOT analysis and what is its purpose
``` SWOT analysis stands for Strengths (internal) Weaknesses (internal) Opportunities (external) Threats (external) Purpose of the SWOT: organize research and perspectives into a useful framework for strategic decision-making. ```
60
What are the key concepts of Strength and Weaknesses of the SWOT Analysis
Key concepts of Strength and Weaknesses i. gap analysis ii. values chain iii. strategic capabilities
61
What is the key concept of Strength and Weaknesses: Gap Analysis
Gap Analysis | identifies the distance between a firm’s current position and its desired position with regard to an internal weakness.
62
What should firms do regarding gap analysis
a firm should take action to close the gap, especially when it leaves it vulnerable to external threats.
63
What is the key concept of Strength and Weaknesses: value chain
value chain helps a firm analyze its strengths and weaknesses, and understand how they might translate into competitive advantage or disadvantage.
64
What is the key concept of Strength and Weaknesses: strategic capabilities
Strategic capabilities are how resources are translated into strengths or weaknesses, the mechanism through which individuals in the org coordinate efforts alone one or more resources to solve a particular problem
65
What are sources of Organizational Strength and Weaknesses
sources of Organizational Strength and Weaknesses are i. Human Resources ii. Organizational Resources iii. Physical Sources
66
What's Human Resources as a source of Organizational Strength and Weaknesses
Human Resources: The experience, capabilities, knowledge, skills, and judgment of all the firm’s employees.
67
What's Organizational Resources as a source of Organizational Strength and Weaknesses
Organizational Resources: The firm’s systems and processes, including its strategies at various levels, structure, and culture.
68
What's Physical Resources as a source of Organizational Strength and Weaknesses
Physical Resources: Plant and equipment, geographic locations, access to raw materials, distribution network, and technology.
69
What are some issues to consider with Human Resources as a source of Organizational Strength and Weaknesses
Issues to consider with Human Resources as a source of Organizational Strength and Weaknesses are: i. BOD- tenure, experience, present level of investment ii. Top managers( including CEO)- background capabilities, experience iii.Other managers & employees: Effective HR planning, training & development, turnover, effective performance appraisal (PA)
70
What are some issues to consider with Organizational Resources as a source of Organizational Strength and Weaknesses
issues to consider with Organizational Resources as a source of Organizational Strength and Weaknesses i. consistency among corporate, business and functional strategies ii. consistence between organizational strategies and firm's mission and goals iii. consistency between firm's strategies and its structure iv consistency between firm strategy and its structure iv. relative position in industry
71
What are some issues to consider with Physical Resources as a source of Organizational Strength and Weaknesses
Issues to consider with Physical Resources i. currency of tech ii. quality and sophistication of distrib network iii. Production capacity iv. reliable access to cost effective sources iv. favorable locations.
72
what makes up the VRIO Framework
VRIO Framework describe resource characteristics i. valuable ii. rare iii. inimitable iv. organization
73
what is VRIO Framework resource characteristic of valuable
VRIO Framework resource characteristic of valuable | can be employed to exploit an opportunity or neutralize a threat
74
what's the implication of VRIO Framework resource characteristic of valuable
implication of VRIO Framework resource characteristic of valuable if only valuable hen there is only parity rivals , no competitive advantage
75
what is VRIO Framework resource characteristic of rare
VRIO Framework resource characteristic of rare | controlled by one or a few entities
76
what's the implication of VRIO Framework resource characteristic of rare
implication of VRIO Framework resource characteristic of rare if only valuable and rare competitive advantage exist but is likely temporary
77
what is VRIO Framework resource characteristic of inimitable
VRIO Framework resource characteristic of inimitable | costly for rivals to duplicate
78
what's the implication of VRIO Framework resource characteristic of inimitable
implication of VRIO Framework resource characteristic of inimitable if valuable, rare and inimitable the firm has potential for long-term competitive advantage
79
what is VRIO Framework resource characteristic of organization
VRIO Framework resource characteristic of organization | firm posses appropriate capabilities to leverage the resource
80
what's the implication of VRIO Framework resource characteristic of organization
the implication of VRIO Framework resource characteristic organization if valuable, rare and inimitable and if firm has appropriate capabilities then sustainable competitive advantage can be achieved
81
What are the key concepts of Opportunities and threats of the SWOT Analysis
Opportunities and threats of the SWOT Analysis are external and have two sources of application 1. application of maroevnironmental forces 2. application of industry analysis (Porter's 5 force model) to the org
82
What are the pitfalls | to avocado in Opportunities and threats of the SWOT Analysis
itfalls to avocado in Opportunities and threats of the SWOT Analysis 1. Don’t confuse external opportunities with internal strengths and weaknesses 2. Distinguish between opportunities and alternatives
83
what's Opportunities and Threats:Pitfall #1 to Avoid
Opportunities and Threats: pitfall #1 to Avoid Don’t confuse external opportunities with internal strengths and weaknesses. Factors associated with the firm internally classified as strength or weakness (poor financial position, ineffective marketing strategy, strong brand image) factors outside the firm are external and must classified s oppp and threats (demographic changes, competitive threats, recent legislation)
84
What's Opportunities and Threats:Pitfall #2 to Avoid
Opportunities and Threats:Pitfall #2 to Avoid Distinguish between opportunities and alternatives. opps and alts are not synonymous Opportunities represent application of macroenvironmental forces to a specific organization. Alternatives emanate from the SW/OT matrix and represent specific courses of action that the organization can choose to pursue
85
what is involved in Case Analysis Steps 16–19:SWOT Analysis
Case Analysis Steps 16–19:SWOT Analysis i. Strength and weaknesses come for analysis of a firm's resources ii. opps and threats are rooted in earlier macorevnironmental or industry analysis iii. don't confuse internal (S&W) with external (O&T) factors iv. don't confuse opps - external factors applied to a firm with alts specific course of action a firm can take, are developed in next step of analysis
86
What is the SW/OT Matrix
What is the SW/OT Matrix utilizes SWOT to develop strategic alternatives by observing combinations of external and internal factors that can lead to alternatives which are evaluated in another step
87
what are 4 categories of SW/OT Matrix
what are 4 categories of SW/OT Matrix 1. Strength-Opp 2. Weakness-Threat 3. Strength-Threat 4. Weakness-Opp
88
what is the SW/OT Matrix category : Strength-Opp
Strength-Opp | “Offensive” alternatives, utilize a strength to address an opportunity
89
what is the SW/OT Matrix category : Weakness-Threat
Weakness-Threat | “Defensive” alternatives, eliminate or minimize a weakness in order to minimize the effect of a threat.
90
what is the SW/OT Matrix category : Strength-Threat
Strength-Threat | Utilize a strength to minimize the effect of a threat.
91
what is the SW/OT Matrix category : Weakness–Opp
Weakness–Opp | Shore up a weakness to enable the organization to take advantage of an opportunity.
92
What are some Issues in Strategy Formulation
Issues in Strategy Formulation include : i. strategic change- do benefits out weight cots ii. social responsibility and ethics- is strategy companionable iii. what effect dos change in strategy have on existing resources iv. how will competitors respond to implementation of change
93
What is Blue Ocean Strategy
Blue Ocean Strategy | growth strategy contingent upon inventing or discovering a new industry or industry segment that creates new demand
94
What is are examples of What is Blue Ocean Strategy
Examples include Starbucks, eBay, and Cirque Du Soleil in the coffee house, auction, and circus industries.
95
What determines success What is Blue Ocean Strategy
Success is not highly dependent on competitive responses, but effective blue ocean strategies require research, creativity, and a lot of savvy.
96
what is Case Analysis Steps 20–22:Strategic Alternatives
Case Analysis Steps 20–22:Strategic Alternatives i. use SW/OT matrix to develop alts and keep in mind the specific combo of internal and internal factors assoc with each alt ii. use SLSC matrix to eval alts iii. eval pros and cons of each alt iv. select more than one alt to implement and provide rationale in detail including why others were rejected

MADM 760 (4 decks)

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