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MBA 705 > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

Strategic Management

A

A process that includes top management’s analysis of the environment in which the org operates prior to a strategy and plan for implementation/control of said strategy.

What must be done before a strategy is implemented…

An organization has a plan, its competitive advantage is understood, and its members understand the reason for its existence. Mission - Strategy - Competitive Advantage

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2
Q

Mission

A

Broadly defined but enduring statement of purpose that identifies scope of an org’s operations and its offerings to various stakeholders

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3
Q

Strategy

A

top management’s plans to develop and sustain competitive advantage so that the org’s mission is fulfilled

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4
Q

Competitive Advantage

A

A state whereby a firm’s successful strategies cannot be easily duplicated by its competitors

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5
Q

Strategic Management Process - 5 Steps

A

1) External Analysis
2) Internal Analysis
3) Strategy Formulation
4) Strategy Execution
5) Strategic Control

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6
Q

Strategic Management Process - 1) External Analysis

A

Analyze opportunities and threats (constraints) that exist in org’s external environment, including industry and forces in the external environment swOT

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7
Q

Strategic Management Process - 2) Internal Analysis

A

Analyze org’s strengths and weaknesses in its internal environment. Managerial ethics and corporate social responsibility SWot

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8
Q

Strategic Management Process - 3) Strategy Formulation

A

Formulate strategies that build and sustain competitive advantage by matching org’s strengths and weaknesses with environment’s opportunities and threats (SWOT)

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9
Q

Strategic Management Process - 4) Strategy Execution

A

Implement strategies that have been developed

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10
Q

Strategic Management Process - 5) Strategic Control

A

Measure success and make corrections when the strategies are not producing the desired outcomes

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11
Q

Business Model

A

The mechanism whereby the organization seeks to earn a profit by selling its goods or services.

Org seeks to earn a profit by selling its goods

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12
Q

Magazine Publisher Adopts different business models

A

1) Subscription Model - profits come from readers

2) Advertising Model - profits come from advertisers

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13
Q

Business models that have high prices on consumables

A

Gillette - Deep discounts on razors with hopes of future purchases of blades
Cell Phones - given away for 2 year contracts
Printers - cheap but ink is expensive

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14
Q

Factors typically associated with successful strategies

A

1) Org’s competitive environment is well understood, in detail
2) Strengths and weaknesses assessed in thorough and realistic manner
3) The strategy is consistent with mission/goals of org
4) Plans for putting strategy into action are designed with specificity before implementation
5) Possible future changes in proposed strategy (strategic control) are evaluated before strategy adopted

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15
Q

Progressive Firms

A

Often devise innovative business models that extract revenue/profits from sources not identified by competitors

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16
Q

Strategic Management - not just for profit firms

A

Top managers of any firm (for profit/non-profit) must understand org’s environment and capabilities to develop strategies to assist in attaining its goals; i.e. Drexel University president

17
Q

Henry Mintzberg

A

Introduced two terms:
Intended strategy
Realized strategy

18
Q

Intended Strategy

A

What management originally planned

May be realized just as planned
May be realized in a modified plan
May be realized in an entirely different form

19
Q

Realized Strategy

A

What management actually implements

Usually differs from the intended strategy

20
Q

Gap between intended and realized strategies

A

Stems from:

1) unforeseen environmental or org events
2) improvement in top management’s ability to assess its environment

Creates constant need for strategic management to continue to ensure firm is staying on course.

Managers should search for new information and be willing to make changes when necessary - i.e. strategic control

21
Q

Scientific Perspective on Strategic Management

A

Most strategy scholars endorse this

Strategic managers are encouraged to systematically assess the firm’s external environment and evaluate pros and cons of alternatives before formulating strategy

Strategic managers should be trained, highly skilled analytical thinkers capable of digesting objective data and translating it into desired direction for firm

22
Q

Artistic Perspective on Strategic Management

A

Lack of environmental predictability & fast pace change render elaborate strategy planning suspect as best

Incorporate large amounts of creativity and intuition to design comprehensive strategy for firm

Mintzberg says craftsman (individual skill/dedication/ perfection through mastery of detail) embodies artistic model

Outcomes of various alternatives, chart course based on holistic thinking, intuition, & imagination

23
Q

Strategy Scientists

A

Minimize/reject the role of imagination/creativity in strategy process and not open to alternatives that don’t come from an analytical approach

24
Q

Business Policy

A

1950s term and start of strategic management

25
Q

Theoretical frameworks of strategic managment

A

1) Industrial Organization (IO) Theory
2) Resource-based Theory
3) Contingency Theory

26
Q

Theoretical Framework - Industrial Organization (IO) Theory

A

Primary Influence on Firm:
Structure of the Industry

How Perspective is Applied to Case Analysis:
Industry analysis portion of the external environment

27
Q

Theoretical Framework - Resource-based Theory

A

Primary Influence on Firm:
Firm’s unique combination of strategic resources

How perspective is applied to case analysis:
Analysis of internal strengths and weaknesses

28
Q

Theoretical Framework - Contingency Theory

A

Primary Influence on Firm:
Fit between firm and its external environment

How perspective is applied to case analysis:
SWOT analysis and SW/OT matrix

29
Q

Industrial Organization (IO)

A

branch of microeconomics that emphasizes the influence of the industry environment upon the firm

firm must adapt to influences in industry to survive

more important for firm to choose correct industry than determine how to compete within a given industry

forces, strategies, resources fairly similar amongst competitors; firm implements new strategy that works, competitors will copy

30
Q

Resource-based theory

A

views performance primarily as a function of a firm’s ability to use its resources

resources are tangible and intangible

distinctive competence and sustained competitive advantage

31
Q

Distinctive competence

A

enables the firm to distinguish itself from rivals and create competitive advantage

32
Q

Sustained competitive advantage

A

A firm’s ability to enjoy strategic benefits over an extended period of time

Resources must be valuable, rare, not subject to perfect imitation, and without strategically relevant substitutes

33
Q

Contingency theory

A

The most profitable firms develop beneficial fits with their environments.

A middle ground perspective views org performance as the joint outcome of environmental forces and firm’s strategic actions

34
Q

Corporate Governance

A

refers to board of directors, institutional advisors, and large shareholders (blockholders) who monitor firm strategies to ensure effective management

35
Q

Blockholders

A

large shareholders, tend to hold less than 20% of shares, influence is less than institutional advisors

36
Q

Sarbanes-Oxley Act

A

Requires firms to include more independent directors on boards and make disclosures on internal controls, ethics codes, and composition of their audit committees on their annual reports

37
Q

CEO Duality

A

CEO also serves as chair of the board

38
Q

Hedge fund

A

investment fund only open to a small number of investors but permitted by regulators to undertake riskier and more speculative investments

MBA 705 (2 decks)

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