SESSION 2-3

Question 1

What is Strategic Management?

Answer 1

The art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.

Question 2

What is the goal of Strategic Management?

Answer 2

Competitive advantage

Question 3

What does Strategic Management say about Competition?

Answer 3

• We operate in a world of
  competition.
• We have to out-run competition
• But we compete not just to be the
  best, but to be UNIQUE vs.
  competition, and to sustain it.

Question 4

What does Strategic Management say about Plan?

Answer 4

You have to have an objective and a plan to meet that objective.

Question 5

What is the role of management according to Peter Drucker?

Answer 5

To make people capable of joint performance through common goals, common values, the right structure, and the training and development they need to perform and to respond to change

Question 6

What are the four functions of Management?

Answer 6

Planning, Organizing, Leading, Controlling

Question 7

What is Planning?

Answer 7

This involves identifying short-term and long-term goals, establishing strategies and developing policies and procedures that will serve as the framework for decision making.

Question 8

What is Organizing?

Answer 8

Organize resources to execute initiatives required to attain goals. Identify activities, delegating them, and establish
relationships with others. This also involves staffing or organizing the right people for the job.

Question 9

What is Leading?

Answer 9

Leading your team comes next, and is the most obvious yet difficult function to accomplish. Entails properly communicating with your team, and motivating them.

Question 10

What is Controlling?

Answer 10

The final phase involves controlling or monitoring results to see if you have achieved your goals or not. Involves performance measurement, identifying errors and correcting them.

Question 11

What is Strategic Thinking?

Answer 11

It highlights a mindset involved
with making action plans or decisions grounded on a vision or long-term objectives.

The goal now is to shift from simply doing things towards doing things with a purpose.

• Identifying “the purpose” is one of the key measures of strategic thinking.

Question 12

What is Strategic Management Process/Plan?

Answer 12

A strategic plan is a company’s game plan or battle plan.

To have any chance of success a company needs a strategic plan to compete successfully.

Strategic plans also involve making trade-offs and tough decisions among several alternatives.

Question 13

What are the three stages of Strategic Management Process?

Answer 13

Formulate, Implement, Evaluate

Question 14

What is Strategy Formulation?

Answer 14

• Developing a vision and a mission
• Identifying external opportunities and
  threats
• Determining internal strengths and
  weaknesses
• Establishing long-term objectives, generating alternative strategies, and choosing particular strategies to pursue.
• Strategy Formulation Decisions:
• What new businesses to enter
• What businesses to abandon
• Whether to expand operations or diversify
• Whether to enter other markets
• Normally happens at the top-level of the organization

Question 15

What is Strategy Implementation?

Answer 15

• Stage where a firm will establish annual objectives, devise policies, motivate employees, and allocate resources so that formulated strategies can be executed
• Also called the action stage
• The most difficult part of the Process
  because it involves working with people
• Strategy has to be communicated clearly to the entire organization

Question 16

What is Strategy Evaluation?

Answer 16

*Determining which strategies are not
working well

*Three fundamental activities:
✓reviewing external and internal factors that are the bases for current strategies
✓measuring performance
✓taking corrective actions if needed

Question 17

What is the Role of Managers?

Answer 17

To ensure that work activities are completed efficiently and effectively by the people responsible for doing them

Question 18

Is Strategic Management Process a “pure” or “hard” science? Explain.

Answer 18

No. Strategic Management Process is not a “pure” or “hard” science.

• Objective, logical, systematic
  approach to making major decisions
• Data-based
• Organizes qualitative and
  quantitative information to allow
  effective decision-making in times of uncertainty
• But there is still room for “intuition” or experience

Question 19

What are the key takeaways on Strategic Management?

Answer 19

• Strategic management is focusing on
  a single vision and linking all activities and decisions into that long-term goal or objective.
• It is important to stand out and
  differentiate yourself from competition in order to become the premier choice of your customers.
• It all boils down to having a competitive advantage, and devising strategies to ensure that such advantage is sustained.
• To do so requires the three stages of
  the strategic management process.

Question 20

What is Competitive Advantage?

Answer 20

• Micheal Porter

*Any activity a firm does especially well compared to activities done by rival firms or any resource a firm possesses that rival firms desire.

• An attribute that allows an organization to out- perform its competitors.
• Can be natural resources, such as high-grade ores or a low-cost power source, highly skilled labor, geographic location, high entry barriers, and
  access to new technology.
• A firm must strive to achieve sustained
  competitive advantage

Question 21

What are Strategists?

Answer 21

• Individuals most responsible for the success or failure of an organization
• Help an organization gather, analyze, and organize information
• Values, ethics, personal beliefs impact corporate strategies
• Founder, CEO, President, Chief Strategy Officer, Strategic Planning
  Director
• “Visionary”
• Good communicators
• With great imagination
• Sports coaches

Question 22

What are Vision and Mission Statements?

Answer 22

• A vision statement answers the
  question “What do we want to
  become?”
• A mission statement answers the
  question “What is our business?” and
  why an organization exists

Question 23

What are Opportunities and Threats?

Answer 23

External Environment

• Economic, social, cultural, demographic, environmental, political,
  legal, governmental, technological, and competitive trends and events
• Factors the firm cannot control

Question 24

What are Strengths and Weaknesses?

Answer 24

Internal Environment

• An organization’s controllable activities that are performed especially well or really poorly
• Determined relative to competitors

Question 25

What are Long Term Objectives?

Answer 25

• Specific results that an organization seeks to achieve in pursuing its basic mission
• Long-term means more than one year, at least 3 years
• Should be challenging, measurable, consistent, reasonable, and clear
• Provide CLEAR direction and basis for evaluation of results

Question 26

What are Strategies?

Answer 26

• The means by which long-term objectives will be achieved
• May include geographic expansion, diversification, acquisition, product development, market penetration, retrenchment, divestiture, liquidation, and joint ventures
• Actions that require management decisions and allocation of the
  firm’s resources

Question 27

What are Annual Objectives?

Answer 27

• Short-term milestones that organizations must achieve to reach long-term objectives
• Should be measurable, quantitative, challenging, realistic, consistent, and prioritized
• Should be established at the corporate, divisional, and functional levels in a
  large organization

Question 28

What are Policies?

Answer 28

• The means by which annual objectives will be achieved
• Guidelines, rules and procedures established to support objectives
• Outlines what is expected of the employees (attendance, performance
  appraisal, uniforms, routines, etc)

Question 29

What are three important questions to answer when making a strategic plan?

Answer 29

Where are we now?
Where do we want to go?
How are we going to get there?

Question 30

What are the benefits of Strategic Management: Financial?

Answer 30

• Businesses using strategic-
  management concepts show significant improvement in sales, profitability, and
  productivity compared to firms without systematic planning activities
• High-performing firms tend to do
  systematic planning to prepare for
  future fluctuations in their external
  and internal environments

Question 31

What are the benefits of Strategic Management: Non-Financial?

Answer 31

• Enhanced awareness of external threats
• Improved understanding of competitors’ strategies
• Increased employee productivity
• Reduced resistance to change
• Clearer understanding of performance–reward relationships

Question 32

What are the Benefits of Strategic Management?

Answer 32

• Strategic management allows an
  organization to be more proactive
  than reactive in shaping its own future;
• Stringent process: Long-range, 3-year,
  annual Planning, clear objectives
• Involvement among key stakeholders
  in all levels of the organization.
• Communication, ownership and buy-
  in are key.

Question 33

What are Ethics?

Answer 33

Ethics are moral principles
that govern a person’s behavior or the conducting of an activity.

Question 34

What is Business Ethics?

Answer 34

Business ethics can be defined as
principles of conduct within organizations that guide decision-making and behavior.

Question 35

Basic ethical principles for businesses?

Answer 35

• Be trustworthy, nobody wants to deal with someone you can’t trust
• Be open-minded
• Honor commitments and obligations
• Do not misrepresent, exaggerate, or mislead
• Be a visibly responsible community citizen
• Utilize your accounting practice to eliminate questionable activities
• Do unto others as you would have them do unto you

Question 36

Examples of unethical behavior?

Answer 36

1. Misleading advertising or labeling
2. Causing environmental harm
3. Poor product or service safety
4. Padding expense accounts
5. Insider trading
6. Dumping banned or flawed products in foreign markets
7. Not providing equal opportunities for women and minorities
8. Over-pricing
9. Sexual harassment
10. Using company funds or resources for personal gain
11. Bribery
12. Faking company records

Question 37

Is unethical behavior rare? Who is prone to be unethical?

Answer 37

Research suggests that misconduct is a normal phenomenon and that “wrongdoing” is as prevalent as “right doing,”

It is most often done by people who are primarily good, ethical, and
socially responsible

All of us are candidates to be unethical under the “right”
circumstances in any organization.

Question 38

Key is to develop and ethical culture…

Answer 38

1. Punish wrong-doing swiftly and severely when it is detected.
2. Be careful to hire employees who possess high ethical standards.
3. Develop socialization programs to reinforce desired cultural
   values.
4. Alter chains of command so subordinates report to more than one
   superior.
5. Develop a culture whereby subordinates may challenge their
   superior’s orders when they seem questionable.
6. Develop a better understanding of internal policies, procedures,
   systems, and mechanisms that could lead to misconduct.

Question 39

What are the three contemporary ethical issues?

Answer 39

Whistleblowing
Bribery
Workplace romance

Question 40

What is Whistleblowing?

Answer 40

Whistleblowing refers to employees reporting any unethical violations they discover or see in the firm.

Question 41

What is Bribery?

Answer 41

Bribery is defined as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an
official or other person in discharge of his duty

A bribe is a gift bestowed to influence a recipient’s conduct.

Bribery is a crime in most countries of the world

Question 42

What is Workplace Romance?

Answer 42

Workplace romance is an intimate relationship between two consenting employees.

Question 43

What is the issue of workplace romance?

Answer 43

Workplace romance can be detrimental to workplace morale and productivity, for a number of reasons:
1. Favoritism complaints can arise
2. Confidentiality of records can be breached
3. Reduced quality and quantity of work can become a problem
4. Personal arguments can lead to work arguments
5. Whispering secrets can lead to tensions and hostilities among coworkers
6. Sexual harassment (or discrimination) charges may ensue, either by the involved
female or a third party
7. Conflicts of interest can arise, especially when well-being of the partner trumps
well-being of the company.

Question 44

What is Social Responsibility?

Answer 44

• Social responsibility refers
  to actions an organization
  takes beyond what is legally required to protect or enhance the well-being
  of its employees, consumers, communities, shareholders and other
  groups.

Question 45

What is Sustainability?

Answer 45

• Sustainability refers to
  the extent that an organization’s operations and actions protect, mend, and preserve rather than harm or destroy the natural environment.

*No business wants to be known as a “polluter.”
* It will hurt the firm in the market
* Gives it a bad reputation in the community
* Invites scrutiny from regulators

Question 46

Takeaway of session 3?

Answer 46

It used to be that the only real mission
of a business is to earn a profit and to make money for its owners or investors.

Nowadays, it is no longer enough for a
business to turn a profit. Money is still
important, but it was no longer the be-all and end-all of business. Money has become both result and tool to achieving another end – that is, to fulfill a purpose.

Profit for a purpose

Business ethics, social
responsibility, and environmental
sustainability issues therefore are
interrelated and impact all areas of
the strategic management process.