Chp 1: Session 1 Overview

Question 1

Who are the Stakeholders interested in the company

Answer 1

1. Input providers: employees and suppliers
2. Providers of Capital: Equity and Debt Holders
3. Government, Society, public
4. Customers, consumers, companies

Question 2

In strategic management, decisions are
usually guided by

Answer 2

shareholder approach

Question 3

Stakeholder vs Shareholder approach

Answer 3

Stakeholder approach:

Perspective - The firm exists as a coalition of
groups acting in joint interest
Definition of Business success -Maximizing the differential between the benefits and the costs of all groups
Assessment - Non-operational because of
interpersonal utility comparison and pluralistic view
Primary Business goal- Stakeholder Value

Sharholder Approach:

Perspective: The firm exists to create wealth
for its owners
Definition of Business success - Maximizing future returns to owners
Assessment - Operational because of
orientation to market and resource efficiency and monistic view
Primary business goal - Shareholder value

Question 4

what is strategy

Answer 4

Strategy is the pattern of objectives, purposes, or goals and the major
policies and plans for achieving these goals, stated in such a way as to
define what business the company is in or is to be in and the kind of
company it is or is to be

Question 5

From the strategic point of view there are
two basic questions to be answered

Answer 5

1. In which industry should we
   operate?
   – Diversification
   – Vertical integration
   – Takeover
   – Entry into new business segments
   – Disinvestments
   – Distribution of rare resources to the
   best possible use
   – Role of the company’s headquarters
   all the above leads to Corporate Strategy
   and Parenting Advantage
2. How should we compete?
   – Product strategy
   – Advertising measures
   – Price strategy
   – Make or buy
   – Innovation strategy
   – Building up market entry barriers
   – Usage of economies of scale
   – Building up alliances
   leads to Competitive Strategy and Competitive Advantage

Question 6

what is the core of strategic management ( 2 strategies)

Answer 6

1. Business level strategies: Business
   strategy; Competitive advantage
   (in a single industry); Value (standalone) of the single business units
2. Corporate level strategies: Corporate
   strategy, Parenting advantage (as an owner
   of businesses), Value of the whole
   corporation

Question 7

Strategic management has to decide on a
competitive strategy as well as structures,
systems, and processes for its implementation

Answer 7

1. Strategies -Market position, Resource base, Competitive strategy
2. Structures - Organizational Structure
3. Systems -Management
   information systems, Incentive systems
4. Processes -

Question 8

Strategies bring 4 perspectives into Equilibrium

Answer 8

I
Threats and opportunities of the
economic-technical environment
II
Strengths and weaknesses of the
company
III
Values of the founders/
managers/ employees
IV
Requirements of the social
environment

Question 9

Some remarks on the impact of
Top-Managers in regards to Organizational Change

Answer 9

(1) Organizational change is more likely, if an external CEO is hired.
(2) The likelihood of change decreases with increased age and experience of
managers.
(3) The likelihood of change increases with a change in the owner structure and
changes in the „Board of Directors“.
(4) The success rates of new managers is rather low.
(5) The involvement of middle managers in the process of strategy formulation has
a positive impact on firm performance.

Question 10

3 key roles for managers in
different contexts

Answer 10

1. Specialist - Task environment
2. Strategist - Competitive environment
3. Leader - People environment