Lecture 2 - Strategy, Strategic Analysis, Assessing Performance Flashcards
What is a general manager?
- They are responsible for all functional facets of the organization.
- Their job is to create, capture, and appropriately distribute value for the enterprise.
What are the 4 key roles of the general manager?
- Setting Direction
- Creating Strategy
- Implementing Change
- Assessing Performance
What are the differences between qualitative and quantitative assessment of performance?
Qualitative assessment - is the strategy well conceived?
- Makes sense? Covers all the bases? Internally consistent?
Quantitative assessment - what are the results?
- Are we achieving financial and strategic objectives?
- Are we performing above-average in the industry?
What are 3 methods of assessing performance?
- Performance Matrix
- Balanced Scorecard
- Quantitative Financial Indicators (Ratios)
What are the 2 spectrums that we look at for a performance matrix?
Operating Performance - QUANTITATIVE, financial and market performance
Organizational Health - QUALITATIVE AND QUANTITATIVE measures of operating performance (e.e., employee satisfaction, workplace culture, etc.)
What 3 questions does the performance matrix ask?
- Where was your business 3 years ago?
- Where is your business today?
- Which way is it currently moving?
Describe the 4 quadrants of the performance matrix and give an example of a business for each of the quadrants.
Quadrant 1 = Desired state - where you want to be!
- High operating performance and organizational health
- Example: Google, Shopify
Quadrant 2 = Complacent organization - inward looking, people enjoy their work but collectively are performing inadequately
- Low operating performance but high organizational health
- Example: Canada Post
Quadrant 3 = Troubled organization - achieving operating objectives at expense of organizational health
- High operating performance but low organizational health
- Example: Amazon
Quadrant 4 = Crisis - BAD!!!
- Low operating performance and organizational health
- Example: Blackberry
What are the 4 basic questions asked by the balanced scorecard?
It’s Impossible Chopping Fat :) (IICF)
- Innovation & Learning - can we continue to improve and create value?
- Internal - what must we excel at?
- Customer - how do customers see us?
- Financial - how do we look to shareholders?
Give an example ratio for each category:
- Profitability Ratios
- Liquidity Ratios
- Financial Leverage Ratios
- Asset Turnover Ratios
- Other
- EPS, Net Profit Margin, Return on Assets
- Current Ratio, Working Capital
- Debt-to-Equity, Debt-to-Assets
- Inventory Turnover, Days of Inventory
- % of sales from new products, dividend yield
What does strategic management look at in regards to financial analysis?
- Year over year INTERNAL change in key ratios
- Year over year change in key ratios as compared to COMPETITION
- Can you finance your recommended option?
What does having a strong vision do for an organizatoin?
- Gives a strong sense of direction for the company
- Clearly communicates the PURPOSE of the business
- Provides direction for strategy formulation
According to the Collins and Porras Framework, what two major components make up an organization’s vision?
Guiding Philosophy
- Values - basic beliefs that guide individual and group behaviour in an organization
- -> Core purpose - the organization’s reason for being, may never be fully realized (long term)
Tangible Image
- Mission statement - a clear and compelling goal that serves to unify an organization’s efforts
- -> Vivid description - HOW to achieve the vision
What are the differences between a vision and a mission?
- A vision concerns the firm’s future (where they are going) while a mission focuses on the present business purpose (who we are and what we do)
Vision
- Markets to be pursued
- Future products, customers, technology, etc.
Mission
- Current products
- Current customer needs
What are the payoffs of a clear strategic vision?
- Crystallizes long-term direction
- Reduces risk of rudderless decision making
- Creates a committed enterprise
- Helps the organization prepare for the future
What does the Vision “Acid Test” say makes a vision useful?
- Should be DESIRABLE and FEASIBLE
- Should be FLEXIBLE for management to get there
- Should be a STRETCH for the organization to achieve (motivate, inspire, etc.)
