HINF 410 midterm
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What is strategic management?
Strategic management consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages.
- Strategic management is the study of why some firms outperform others (how to create competitive
- advantages in the marketplaces)
- Key attributes: directs organization toward overall goals and objectives; includes multiple stakeholders; incorporates long/short term perspectives; recognizes tradeoffs
What is the strategic management process?
- - Strategic goals (vission, mission, objectives)
- - Internal and external environment of the firm
- - What industries should we compete in?
- - How should we compete in those industries?
- Actions- Allocate necessary resources
- -Design the organization to bring intended strategies to reality
What is strategic Analysis?
The starting point in the strategic management process. Precedes effective formulation and implementation strategy.
Clear goals and objectives permit effective allocation of resources.
Hierachy of goals: Vission, Mission, Strategic objectives.
Managers: scan the enviroment (general and industry) and analyze competitors.
In strategic analysis, what are some essential areas/topics?
- - Intellectual assets (drivers of competitive advantage/wealth creation)
- -Networks and relationships (among employees, customers, suppliers, alliances)
What is strategy formation?
- Successful firms develop bases for competitive advantage:
- •Cost leadership
- •Focusing on narrow or industry-wide market segments
•Industry life cycle
What is strategy implementation?
- Informal Control-Monitor and scan the enviroment
- -Respond effectively to threats and opportunities
- -Behavioral control
- -Effective corporate governance
- - organizational structure and design
- -Organizational boundaries (flexible, permeable)
- -Strategic alliances
- -Develop an organization that is commited to excellence, and ethical behavior
- -Learing organization responsive to rapid and unpredictable change in today's competitive enviroments
What is human capital? What is social captial?
Human capital is individual capabilities, knowledge, skills, and experience of the company's employees and managers.
Social capital is the network of relationships that individuals have throughout the organization.
What kind of knowledge can employees have?
Explict Knowledge : What We can tell E.g. If you ask How did you write this article someone could say I saw the list of below refernce and wrote the article from that.
Tacit Knowledge : What We can't tell E.g If you ask How d you drive a Bike or a car , there's only certain things you can tell. the rest is the Real experience , Also called as Tacit Knowledge (Tacit - meaning what lies within)
Discuss protecting assets (ie intellectual)
- -Provide mechanisms that prevent the transfer of valuable and sensitive information outside the organization:
- 1. Identify with organization's mission and values
- 2. Strong alliance to organization (strategic intents)
- -Challenge work and stimulating enviroment
What is cost leadership?
It describes a way to establish the competitive advantage. Cost leadership, in basic words, means the lowest cost of operation in the industry. The cost leadership is often driven by company efficiency, size, scale, scope and cumulative experience (learning curve). A cost leadership strategy aims to exploit scale of production, well defined scope and other economies (e.g. a good purchasing approach), producing highly standardized products, using high technology.  In the last years more and more companies choose a strategic mix to achieve market leadership. This patterns consist in simultaneous cost leadership, superior customer service and product leadership. 
What is differentiation?
- Unique qualities, perceived or real, of a good or service that
- distinguish it from a competing good or service. For example, a consumer products company may develop a razor with an additional blade and advertise that it produces a closer shave. Companies use differentiation in order to improve sales and/or charge a higher price. Also called product differentiation.
What is focus strategy?
A marketing strategy in which a company concentrates its resources on entering or expanding in a narrow market or industry segment.
A focus strategy is usually employed where the comopany knows its segment and has products to competitively satisfy its needs. Focus strategy is one of three generic marketing strategies. See differentiation strategy and low cost strategy for the other two.
What is the industry life cycle?
- A concept relating to the different stages an industry will go
- through, from the first product entry to its eventual decline. There are
- typically five stages in the industry lifecycle. They are defined as:
- i.Early Stages Phase - alternative product design and positioning, establishing the range and boundaries of the industry itself.
- ii. Innovation Phase - Product innovation declines, process innovation begins and a "dominant design" will arrive.
- iii.Cost or Shakeout Phase - Companies settle on the "dominant design"; economies of scale are achieved, forcing smaller players to be acquired or exit altogether. Barriers to entry become very high, as large-scale consolidation occurs.
- iv. Maturity - Growth is no longer the main focus, market share and cash flow become the primary goals of the companies left in the space.
- v. Decline - Revenues declining; the industry as a whole may be supplanted by a new one.
What is the value chain?
- A value chain is a chain of activities for a firm operating in a
- specific industry. The business unit is the appropriate level for construction of a value chain, not the divisional level or corporate level. Products pass through all activities of the chain in order, and at each activity the product gains some value. The chain of activities gives the products more added value than the sum of the independent activities' values. It is important not to mix the concept of the value chain with the costs occurring throughout the activities. A diamond cutter, as a profession, can be used to illustrate the difference of cost and the value chain. The cutting activity may have a low cost, but the activity adds much of the value to the end product, since a rough diamond is significantly less valuable than a cut diamond. Typically, the described value chain and the documentation of processes, assessment and auditing of adherence to the process routines are at the core of the quality certification of the business, e.g. ISO 9001.
What are tangible and intangible assets/resources?
Definition of Intangible and tagible assets:
- Tangible assets are considered the goods of material nature they can be perceived by senses like :
- - Row material and stocks
- - The furniture
- - The machines
- - The lands
- - The money
- Intangible assets are considered the goods of immaterial nature :
- - The science of knowing what to do
- - Our relations with the clients
- - Our operative processes
- - The technology of information and databases.
- - Capacities, abilities and innovations of the employers.
- Intangible assets vs. Tangible assets.
- The present situation of the economy is governed and directed by the intangible assets the company has.
Formerly in 1920, the economy was dominated by the tangible assets , during this period the financial indicators were adopted to manage the company effectively.
A study of Brookings's institute in 1982 showed the tangible assets represented the 62% of the value in the market of industrial organizations. Ten years later, in 1992 the proportion lowered until 38%, Financial indicators are still used to direct and to take decisions, but they just represent less than 10% of our value. The question is why do we still use them?
Discuss the resource based view?
General managers often ask themselves :
- - What makes us distinctive or unique?
- - Why do some and not other customers buy from us ?
- -What are the Key Success Factors in our business?
Typical answers might refer to :
- - Excellent service
- - Technical know-how
- - Responsiveness to market needs
- -Design and engineering capability
- -Financial resources
The common theme :
-Firm specific resources and capabilities are crucial in explaining the firm's performance
What is an enviromental scan?
Careful monitoring of an organization's internal and external environments for detecting early signs of opportunities and threats that may influence its current and future plans. In comparison, surveillance is confined to a specific objective or a narrow sector.
What is enviromental monitoring?
Enviromental scanning is a concept from business management by which business gather information from the environment, to better achieve a sustainable competitive advantage. To sustain competative advantage the company must also respond to the information gathered from environmental scanning by altering its strategies and plans when the need arises.
What is a SWOT?
Strength - Weakness - Opportunity - Threat
Identification of threats and opportunities in the environment (external) and strenths and weaknessews of the firm (internal) is the cornerstone of business policy formation; it si these factors which determine the course of action to ensure the survival and growth of the firm
What is competitive intelligence?
- A broad definition of competitive intelligence is the action of defining, gathering, analyzing, and distributing intelligence
- about products, customers, competitors and any aspect of the environment needed to support executives and managers in making strategic decisions for an organization.
- Key points of this definition:
- 1. Competitive intelligence is an ethical and legal business practice, as opposed to industrial espionage which is illegal.
- 2. The focus is on the external business environment.
- 3. There is a process involved in gathering information, converting it
- into intelligence and then utilizing this in business decision making.
- CI professionals erroneously emphasize that if the intelligence gathered
- is not usable (or actionable) then it is not intelligence.
What is forcasting?
Forecasting involves making the best possible judgment aboutsome future event.It is no longer reasonable to rely solely on intuition, or one sfeel for the situation, in projecting sales, inventory needs,personnel requirements, and other important economic orbusiness variables.
What are Porters Five Forces?
Porter's five forces analysis is a framework for industry analysis and business strategy development.
What is a financial ratio analysis?
A tool used by individuals to conduct a quantitative analysis ofinformation in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis.
What is a balanced scorecard?
The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. It was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance. While the phrase balanced scorecard was coined in the early 1990s, the roots of the this type of approach are deep, and include the pioneering work of General Electric on performance measurement reporting in the 1950’s and the work of French process engineers (who created the Tableau de Bord – literally, a "dashboard" of performance measures) in the early part of the 20th century.
What is a dashboard?
Dashboard provides at-a-glance views of key performance indicators (KPIs) relevant to a particular objective or business process (e.g. sales, marketing, human resources, or production). The term dashboard originates from the automobile dashboard where drivers monitor the major functions at a glance. Dashboards give signs about a business letting you know something is wrong or something is right. The corporate world has tried for years to come up with a solution that would tell them if their business needed maintenance or if the temperature of their business was running above normal.
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