Chapter 2: Overall Organisation Performance

Question 1

How do you identify external business influences in the Macro environment?

Answer 1

Using PESTLEE: Political, Economic, Social, Technological, Legal, Environmental and Ethical factors.

Question 2

How do you identify the influences on the market environment?

Answer 2

Using PORTERS 6 forces: Level of rivalry, threat of new entrants, substitute products, power of buyers, power of suppliers, complementary products.

Question 3

What are the eight business functions?

Answer 3

Purchasing department
Production department
Financial department
Human Capital function
Marketing department
Public Relations department
Administrative function
General management

Question 4

What is performance in the context of the three environments?

Answer 4

Events having a positive, neutral or negative effect on the business. This is determined by the business’ strategic response to these events.

Question 5

Define creative thinking

Answer 5

Identifying a problem that the consumer is not even aware of yet and finding a way to solve that problems (in some cases, customers make the business aware of the problem)

Question 6

Why is finding creative solutions important?

Answer 6

To maintain a competitive advantage

To constantly keep up to date with consumer needs because life cycles are getting shorter.

Question 7

What are the steps in a problem solving process?

Answer 7

Identify resource gap and acquire resources. Then explain the impact on the business and consider different solutions. Finally, choose the best solution and explain it in breadth and depth.

Question 8

What problem solving technique can show advantages and disadvantages/ the good and the bad are weighed? Explain.

Answer 8

A pros and cons chart. Usually a table. Allows for weighing and decisions to be made — decision can change after awhile.

Question 9

What is a decision tree?

Answer 9

A visual representation, like a flow chart, of different outcomes to a single event. It helps the decision maker to look at different options and the consequences of each.

Question 10

Explain the concept of a value chain analysis?

Answer 10

Adding value for the customer is the aim. In a manufacturing environment, transforming raw material into products is adding value. Others include use of time, knowledge and skills to create services. If something does not add value, outsource it if you can. There are internal and external consumers.

Question 11

Which elements of SWOT do you have control over, and which do you do not? Give examples.

Answer 11

SW - internal: finance, location, quality, price, strength of management, employee morale and teamwork
OT - external: all of PORTER, all of PESTLEE (eg. Unfulfilled needs of consume.s, arrival of technology, changes in regulations)

Question 12

Explain the Delphi Technique

Answer 12

Anonymous experts give opinions on the problem: it avoids group-think.

Question 13

Describe the resource-based approach.

Answer 13

The business should find out which resources are of strategic importance to the business. The business needs to find out which resources are needed to solve a problem. Resources include tangible and intangible elements: tangible include scarce raw materials, CLL. Intangible include patents, brand, skill, reputation and high morale in the workforce.

Question 14

What is the BSC? Describe the outcomes.

Answer 14

The balanced score card is used to describe the key outcomes that the business would like to measure in order to improve these outcomes.

These force the business to focus on important issues to create/maintain/improve the competitive advantage.

FUNNY CATS IN LEGGINGS
Financial perspective: maximum utilisation of assets and minimizing costs to create shareholder value.

Consumer perspective: how customers see the business and what their expectations might be

Internal business perspective: innovative products and services, the management of operations and social investments to improve the business.

Learning and growth perspective: how employers in the business can continue to improve and create value. Done using intangible assets (intellectual property, developed by human capital). Leadership, accountability, culture and teamwork are important components when developing a culture of lifelong learning learning and development.

Question 15

How would you assess the internal environment?

Answer 15

BSC,SW, Resource-based and value chain analysis

Question 16

Define strategic management

Answer 16

Top management analyses events that take place in the business environment. Some may be a trend (over time) and some may be a crisis situation.

The decisions and actions that are taken in response to this analysis. These decisions form the strategic actions.

Question 17

What are the vision and mission of the business?

Answer 17

Vision: what the business want to BE
Mission statement: what the business DOES/ the purpose of the business

Question 18

What is strategic management decision-making in relation to the future?

Answer 18

The decisions must be pre-emotive; the business initiates the change when it is seen as an opportunity for growth and development. This is embedded in short and long term objectives.

Question 19

Define a strategy.

Answer 19

Any plan of action to achieve the desired outcome.

Question 20

What are the three categories of strategies (other than other)?

Answer 20

Generic strategies, corporate strategies, integration strategies

Question 21

What are the three generic strategies? Take a piece of paper and describe each one.

Answer 21

1. Low cost strategy: lowest cost in the industry — can be achieved through cheap materials, efficiency, mass production, technology, low-cost manufacturing. Works best with high turnover. Low-reward activities must be outsourced/discontinued.
2. Focus/Niche market:
   All efforts are aimed at a specific market segment based on geography, culture,hobbies etc. must have expert knowledge and the ability to produce the product. Usually overlooked by competitors.
3. Differentiation:
   Unique product for customer loyalty. High quality, after sales support, good product features, marketing efforts. Requires constant development and must be difficult to copy.

Question 22

What are the three corporate groups of strategies? Describe each one on a piece of paper.

Answer 22

1. Corporate combination
   Joint venture: two or more business enter into an agreement where they share resources (eg. Premises)

When they merge: a takeover. The competition board has to approve this.

2. Decline/defensive strategies
   Retrenchment: reduce size. Reduce expense.
   Divestiture: the business selling some of its operations because assets are under-utilised.
   Liquidation: all assets are sold and the business no longer exists

Question 23

What are the four growth strategies? Also known as intensive strategies, ansoff’s growth matrix etc.

Answer 23

Market penetration: existing products into existing markets (more consumers/ more per consumer)
Product development: new product, existing market
Market development: existing product, new market
Diversification: new product, new market

Question 24

What are the integration strategies?

Answer 24

Forward (business taking over the distributor)
Backward (the business taking over the supplier)
Horizontal (the business taking over a competitor)

Question 25

What are the other possible strategies to improve overall performance?

Answer 25

MTRBFPCT: My tongue red bonnet fits pretty charmingly today

Mission and vision revision: align them with what is desired in the future. Product must be wanted.

TQM: everyone in the business committed to quality of tasks for consumer satisfaction. This applies to knowledge of employees as well. Inspections and sampling can be conducted. Inspections: measuring/examining/testing the product to pre-existing standards. Can be Individual.

Sampling: a certain number of items are tested out of a batch; assume all follow the same standard.

Want feedback from consumers! To know something is wrong about quality.

Benchmarking: Compare to best practices in the industry.

Financial ratios

Performance appraisals (360) and self evaluation: evaluation of achievement of goals after setting them. Planning, evaluation and feedback tool.

Continuous skills development: learning opportunities often; continuous learning, employee taking responsibility for own learning.

Teamwork: new ideas, bounce ideas off each other, mentor each other, collective team effort, different types of intelligence, division of labour … look at teamwork competency in chapter 5.