Lektion 2 - Mission, goals and strategies Flashcards
What are the reasons to having a mission?
- States purpose of the organisation
- Inspires employees (more than numbers)
- Attracts people to organisation
- Strengthening team spirit
(!) Which type of goals can an organization have?
Financial goals:
- Profitability: ROI, ROE, ROA
- Cost effectiveness: ‘‘Bang the bucks’’
____________
Strategic goals:
Deliberate strategies
- Systematic
- Forward-looking
- Rational
- Management-driven
- Defined to fit environment and capabilities.
Emerging strategies:
- Strategies emerging out of how problems are dealt with in practice.
- Replaces designing and planning with learning
(!) Describe the corporate strategies
Single industry:
- Focus
- Market leadership
- One line of business
- Core competencies to pursue growth within industry
Related diversification:
- Ability to share common resources and core competencies
- Synergies
- Operate in a number of industries but connected in operating synergies
- Possible economies of scale
- Possible economies of scope
Unrelated diversifikation / Conglomerates:
- Connection between business units is purely financial
(!) Explain porters five forces
Industry competitors:
- Industry growth
- Product differentiability
- Number & diversity of competitors
- Level of fixed costs
- Intermittent overcapacity
- Exit barrieres
Customers:
- Number of buyers
- B2B higher bargaining power
- Switching costs
- Ability to integrate backwards
- Impact of the business units product on the buyers total costs
- Impact of the business units products on buyers product quality/ performance and significance of the business units volume to buyers
New entrants:
- Capital requirements
- Acces to distribution channels
- Economies of scale
- Product differentiation
- Technological complexity of products or process
- Expected retaliation from existing firms
- Government policy
Substitutes:
- Price on substitute
- Performance on substitute
- Buyers switching costs
- Buyers propensity to substitute
Suppliers:
- Number of suppliers
- Suppliers ability to integrate forward
- Presence of substitute inputs and importance of the business units volume to suppliers
(!) Describe the possible competitive advantages
Cost leadership:
- Economies of scale
- Experience curve effects
- Tight cost control
- Cost minimization
Differentiation:
- Offering something unique: Brand loyality, superior customer service, product design, product features, technology
Stuck-in-the-middle:
- Theoretically must be avoided at all costs
(!) Describe the contingency theory
General:
- No best way to operate organization
- Includes the role of external factors
____________
Business environment:
Volatility:
- World changing faster than ever
Uncertainty:
- Difficult to predict the future
Complexity:
- Change driven by several contradictory forces
Ambiguity:
- Blurred reality
- Cause-effect chains are unclear
_____________
Strategy:
_____________
Technology:
- Manufacturing technology
- Service technology
What is the difference between mechanistic and organic management control systems?
Mechanistic
Characteristics:
- Motivation through pay
- Specialized, defined responsibilities
- Hierarchic communication
- Formal and tight
- Supervision
- Internal focus
- Narrow cost and productivity measures for evaluation
- Planning and budgeting
- Technology and routines
Proper environment: Stable, certain, simple, clear Strategy: Low cost Technology: Manufacturing organizations Structure: Typical top-down Example: Ford Reference: Coercing
____________
Organic
Characteristics:
- Motivation through contributing to goals
- Cooperation, teamwork and interaction
- Horizontal communication
- Informal and loose
- Encouragement
- External focus
- Broader and mainly non-financial measures for learning
- Flexibility and creativeness
- People and culture
Proper environment: Innovative, creativeness Strategy: Differentiation Technology: Service organizations Structure: Typical bottom up Example: Spotify Reference: Enabling
(!) Describe the difference between a shareholder and a stakeholder view
Shareholder:
- Organizations exist to fulfil the owners demands
- Accounting scandals led to development of corporate governance
- Short term focus
- Financial capitalism
- Regulatory framework
- Often interested in shareprice on stockmarket
- Dominating view over stakeholders in centuries and western world
_____________
Stakeholder:
- Organizations exist to fulfil the demands not just of the owners, but of several stakeholder groups
- Input from all of the most important stakeholders are crucial for the company’s survival
- Ensuring that stakeholder groups such as customers and employees are happy will also lead to higher profitability
Examples:
- Owners
- Customers
- Society
- Lenders
- Suppliers
(!) What are the means of corporate governance?
Board of directors:
- Hiring and firing of the CEO
- Strategic decision making
- Ongoing dialog with CEO
Financial reports:
- Accounting standards(IFRS)
Auditing and internal control:
- Framework for internal control
Incentive programs:
- E.i Bonus programmes
Investor meetings:
- Discussion about interest between owners and
investors
Media:
- Sometimes more focused on selling than informing
(!) Describe Corporate social responsibility / CSR
Created to make companies more aware of their social responsibilities
How the organization communicates to stakeholders, the media and the public
A reaction to the strong shareholder and corporate governance trends
How do you calculate ROI, ROE or ROA?
ROI = Revenue-costs / Invested capital
ROE = Net profit / Equity
ROA = Operating profit / Total assets
Relate the topics to the Biotool case
Does the control system work well?
- Enabling, organic management control system
____________
What does the future of the company look like?
Porters five forces:
Industry rivalry:
- ‘’No competitors could match easiness’’
- Medicine industry is known for high competition
New entrants: Risk when patent runs out
Buyers: B2b has higher bargaining power
