Fluent Essays

Initial Postings: Read and reflect on the assigned readings for the week. Then post what you thought was the most important concept(s), method(s), term(s), and/or any other thing that you felt was worthy of your understanding in each assigned textbook chapter. Your initial post should be based upon the assigned reading for the week, so the textbook should be a source listed in your reference section and cited within the body of the text. Other sources are not required but feel free to use them if they aid in your discussion .Also, provide a graduate-level response to each of the following questions: Provide examples of companies that are actively trying to increase the amount of empowerment in the strategic management process throughout the organization. Do these companies seem to be having positive outcomes? Why? Why not? [Your post must be substantive and demonstrate insight gained from the course material. Postings must be in the student's own words - do not provide quotes!] [Your initial post should be at least 450+ words and in APA format (including Times New Roman with font size 12 and double spaced). Post the actual body of your paper in the discussion thread then attach a Word version of the paper for APA review]   Dess, G., McNamara, G., Eisner, A., & Lee, S. H. (2021). Strategic Management: Creating Competitive Advantages (10th edition). McGraw-Hill Higher Education CHAPTER 1 Strategic Management: Creating Competitive Advantages Copyright Anatoli Styf/Shutterstock 1 Learning Objectives After reading this chapter, you should have a good understanding of: 1-1 The definition of strategic management and its four key attributes. 1-2 The strategic management process and its three interrelated and principal activities. 1-3 The vital role of corporate governance and stakeholder management as well as how “symbiosis” can be achieved among an organization’s stakeholders. 1-4 The importance of social responsibility, including environmental sustainability, and how it can enhance a corporation’s innovation strategy. 1-5 The need for greater empowerment throughout the organization. 1-6 How an awareness of a hierarchy of strategic goals can help an organization achieve coherence in its strategic direction. ©McGraw-Hill Education. 2 The Importance of Leadership Consider… Maintaining competitive success or even surviving over long periods of time is difficult for companies of any size. SO how much credit (or blame) does a leader deserve? ©McGraw-Hill Education. See the chapter opener “learning from mistakes.” When things don’t go well, much of the failure of an organization can also, rightfully, be attributed to the leader. Introduced are the concepts of romantic leadership versus the resource perspective. Even innovative firms struggle in the marketplace if they do not anticipate and respond proactively to changes in the environment. Today’s leaders face a large number of complex challenges in the global marketplace. In considering how much credit (or blame) they deserve, two perspectives of leadership immediately come to mind: the “romantic” and “external control” perspectives. 3 Two Perspectives of Leadership External control perspective: External forces determine the organization’s success. Economic downturns OR Romantic view: A leader is the key force in the organization’s success. Steve Jobs ©McGraw-Hill Education. External control view of leadership = situations in which external forces – where the leader has limited influence – determine the organization’s success. Romantic view of leadership = situations in which the leader is the key force determining the organization’s success – or lack thereof. 4 Leaders Can Make a Difference Be proactive - anticipate change. Refine strategies continually. Be aware of external opportunities and threats. Understand thoroughly the firm’s resources and capabilities. Make strategic management both a process and a way of thinking throughout the organization. ©McGraw-Hill Education. BUT leaders CAN make a difference. 5 Defining Strategic Management Strategic management involves: Analysis Strategic goals (vision, mission, strategic objectives) Internal and external environment Decisions - Formulation What industries should we compete in? How should we compete in those industries? Actions – Implementation of strategy Allocate necessary resources. Design the organization to bring intended strategies to reality. ©McGraw-Hill Education. Strategic management = the analyses, 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. Strategy = the ideas, decisions, and actions that enable a firm to succeed. 6 Two Fundamental Questions How should we compete in order to create a competitive advantage in the marketplace? How can we create competitive advantages in the marketplace that are unique, valuable, and difficult for rivals to copy or substitute? NOTE: Operational effectiveness is not enough to sustain a competitive advantage. ©McGraw-Hill Education. Competitive advantage = a firm’s resources and capabilities that enable it to overcome the competitive forces in its industry(ies). Operational effectiveness = performing similar activities better than rivals; sustainable competitive advantage is possible only by performing different activities from rivals, or performing similar activities in different ways. 7 Strategic Management Key attributes of strategic management: Directs the organization toward overall goals and objectives. Includes multiple stakeholders in decision making. Needs to incorporate short-term and long-term perspectives. Recognizes trade-offs between efficiency and effectiveness. ©McGraw-Hill Education. Stakeholders = individuals, groups, and organizations that have a stake in the success of the organization. These include owners (shareholders in a publicly held corporation), employees, customers, suppliers, and the community at large. Efficiency = performing actions at a low cost relative to a benchmark, or “doing things right.” Effectiveness = tailoring actions to the needs of an organization rather than wasting effort, or “doing the right thing.” 8 Strategic Management Trade-offs Managers need to be ambidextrous. Focus on long-term effectiveness. Expand product-market scope by proactively exploring new opportunities. At the same time: Focus on short-term efficiency. Align resources to take advantage of existing product markets. ©McGraw-Hill Education. Ambidexterity = the challenge managers face of both aligning resources to take advantage of existing product markets and proactively exploring new opportunities. 9 Question (1 of 2) According to Henry Mintzberg, the realized strategies of a firm are a combination of deliberate and emergent strategies. are a combination of deliberate and differentiation strategies. must be based on a company’s strategic plan. must be kept confidential for competitive reasons. ©McGraw-Hill Education. Answer: A. Henry Mintzberg, a management scholar at McGill University, argues that viewing the strategic management process as one in which analysis is followed by optimal decisions and their subsequent meticulous implementation neither describes the strategic management process accurately nor prescribes ideal practice. He sees the business environment as far from predictable, thus limiting our ability for analysis. For a variety of reasons, the intended strategy rarely survives in its original form. Unforeseen environmental developments, unanticipated resource constraints, or changes in managerial preferences may result in at least some parts of the intended strategy remaining unrealized. Thus, the final realized strategy of any firm is a combination of deliberate and emergent strategies. 10 Intended vs. Realized Strategies The business environment is far from predictable. Intended strategy Organizational decisions are determined only by analysis. Intended strategies rarely survive in the original form. VERSUS Realized strategy Decisions are determined by both analysis (deliberate) and unforeseen environmental developments, unanticipated resource constraints, and/or changes in managerial preferences (emergent). ©McGraw-Hill Education. Intended strategy = strategy in which organizational decisions are determined only by analysis. Realized strategy = strategy in which organizational decisions are determined by both analysis and unforeseen environmental developments, unanticipated resource constraints, and/or changes in managerial preferences. 11 Strategic Management Process Exhibit 1.3 The Strategic Management Process Jump to Appendix 1 for long description. ©McGraw-Hill Education. The Strategic Management Process involves strategy analysis, strategy formulation, and strategy implementation. 12 Strategy Analysis (1 of 3) Strategy analysis is the starting point in the strategic management process. The analysis needs to be done to effectively formulate and implement strategies. It involves careful analysis of the overarching goals of the organization. It requires a thorough analysis of the organization’s external and internal environment. ©McGraw-Hill Education. Strategy Analysis = study of firms’ external and internal environments, and their fit with organizational vision and goals. Consider using Case: Robin Hood or Case: QVC to illustrate how the whole strategic management process works, starting with strategy analysis. Case: The Casino Industry gives a good overview of the importance of external environmental analysis (addressing concepts covered in Chapter 2.) 13 Strategy Analysis (2 of 3) Analyzing organizational goals & objectives Establish a hierarchy of goals. Vision Mission Strategic Objectives Analyzing the external environment of the firm Managers must monitor and scan the environment as well as analyze competitors. General environment Industry environment ©McGraw-Hill Education. Chapter 1 = Analyzing Organizational Goals and Objectives Chapter 2 = Analyzing the External Environment of the Firm 14 Strategy Analysis (3 of 3) Assessing the internal environment of the firm Analyze strengths & relationships among activities that constitute a firm’s value chain. Analysis can uncover potential sources of competitive advantage. Assessing a firm’s intellectual assets Knowledge workers & other intellectual assets drive competitive advantage & wealth creation. Networks & relationships plus technology enhance collaboration, accumulates & stores knowledge. ©McGraw-Hill Education. Chapter 3 = Assessing the Internal Environment of the Firm Chapter 4 = Assessing a Firm’s Intellectual Assets 15 Strategy Formulation (1 of 3) Based on strategy analysis, strategy formulation is developed at several levels. Business-level strategy  how to compete in a given business to attain competitive advantage Corporate-level strategy  what businesses to compete in; how businesses can be managed to achieve synergy International strategy  what strategies are needed as the business ventures beyond its national boundaries Entrepreneurial initiatives  how can businesses create new value ©McGraw-Hill Education. Strategy Formulation = decisions made by firms regarding investments, commitments, and other aspects of operations that create and sustain competitive advantage. Involves questions about what businesses to compete in, and how to manage these businesses in order to achieve synergy – how they can create more value by working together than by operating as stand-alone businesses. Requires international strategies and entrepreneurial initiatives that can recognize viable opportunities. 16 Strategy Formulation (2 of 3) Formulating business-level strategy Successful firms develop bases for sustainable competitive advantage through: Cost leadership and/or Differentiation, as well as Focusing on a narrow or industrywide market segment. Formulating corporate-level strategy Addresses a firm’s portfolio (or group) of businesses What business or businesses should we compete in? How can we manage this portfolio of businesses to create synergies? ©McGraw-Hill Education. Chapter 5 = Formulating Business-Level Strategy Chapter 6 = Formulating Corporate-level Strategy 17 Strategy Formulation (3 of 3) Formulating international strategy What is the appropriate entry strategy? How do we go about attaining competitive advantage in international markets? Entrepreneurial strategy and competitive dynamics How do we recognize viable opportunities? How do we formulate effective strategies? ©McGraw-Hill Education. Chapter 7 = Formulating International Strategy Chapter 8 = Entrepreneurial Strategy and Competitive Dynamics 18 Strategy Implementation (1 of 5) Strategy implementation takes action to implement the formulated strategy. Ensure proper strategic control systems. Establish an appropriate organizational design, coordinating & integrating activities within the firm. Coordinate activities with suppliers, customers, alliance partners. Leadership ensures organizational commitment to excellence & ethical behavior. Promote learning & continuous improvement. Act entrepreneurially in creating new opportunities. ©McGraw-Hill Education. Strategy Implementation = actions made by firms that carry out the formulated strategy, including strategic controls, organizational design, and leadership. 19 Strategy Implementation (2 of 5) Strategic control & corporate governance Informational control Monitor & scan the environment Respond effectively to threats & opportunities Behavioral control Proper balance of rewards & incentives Appropriate cultures & boundaries (or constraints) Effective corporate governance ©McGraw-Hill Education. Chapter 9 = Strategic Control and Corporate Governance 20 Strategy Implementation (3 of 5) Creating effective organizational designs Organizational structures must be consistent with strategy. Organizational boundaries must be flexible & permeable. Strategic alliances must capitalize on capabilities of other organizations. ©McGraw-Hill Education. Chapter 10 = Creating Effective Organizational Designs 21 Strategy Implementation (4 of 5) Creating a learning organization & an ethical organization Effective leaders Set a direction. Design the organization. Develop an organization committed to excellence & ethical behavior. Create a “learning organization” Benefit from individual & collective talents ©McGraw-Hill Education. Chapter 11 = Creating a Learning Organization and an Ethical Organization 22 Strategy Implementation (5 of 5) Fostering corporate entrepreneurship Firms must continually improve & grow. Firms must find new ways to renew themselves. Entrepreneurship & innovation provide for new opportunities enhance a firm’s innovative capacity. ©McGraw-Hill Education. Chapter 12 = Fostering Corporate Entrepreneurship 23 Corporate Governance & Stakeholder Management Appropriate strategic management requires an effective & appropriate corporate structure. Corporate governance is the relationship among various participants in determining the direction and performance of corporations. Primary participants: Shareholders Management (led by the Chief Executive Officer) The Board of Directors (BOD) ©McGraw-Hill Education. Strategic management = the analysis, formulation & implementation of strategy, requiring an effective & appropriate organizational design. A STRUCTURE that can allow for these strategic activities to take place. According to economist Milton Friedman, the overall purpose of a public corporation is to maximize the long-term return to the owners (shareholders). But who is really responsible for fulfilling this purpose? Corporate governance = the relationship among various participants in determining the direction and performance of corporations. The primary participants are (1) the shareholders, (2) the management (led by the chief executive officer), and (3) the board of directors. 24 Corporate Governance Board of Directors Elected representatives of the owners Ensure interests & motives of management are aligned with those of the owners: Create an effective and engaged board. Address shareholder activism. Provide proper managerial rewards & incentives. Establish external control mechanisms. Exhibit 1.4 The Key Elements of Corporate Governance Jump to Appendix 2 for long description. ©McGraw-Hill Education. The board of directors (BOD) provides detailed procedures for formal evaluation of directors and the firm’s top officers. Such guidelines serve to ensure that management is acting in the best interests of shareholders. Chapter 9 highlights important internal and external control mechanisms to ensure effective corporate governance. 25 Stakeholder Management Stakeholder Group Nature of Claim Employees Wages, benefits, safe working environment, job security Suppliers Payment on time, assurance of continued relationship Creditors Payment of interest, repayment of principal Customers Value, warranties Government Taxes, compliance with regulations Community Good citizenship behavior such as charities, employment, not polluting the environment Exhibit 1.5 An Organization’s Key Stakeholders & the Nature of Their Claims ©McGraw-Hill Education. In addition to shareholders, there are other stakeholders (e.g. suppliers, customers) who must be taken into account in the strategic management process. A stakeholder can be defined as an individual or group, inside or outside the company, that has a stake in and can influence an organization’s performance. Each stakeholder group makes various claims on the company. Stakeholder management = a firm’s strategy for recognizing and responding to the interests of all its salient stakeholders. 26 Two Views of Stakeholder Management Two views of stakeholder management Zero sum Stakeholders compete for attention & resources. The gain of one is a loss to the other. OR Symbiosis Stakeholders are dependent upon each other for success & well-being. Stakeholders receive mutual benefits. ©McGraw-Hill Education. Zero-sum view of stakeholder management is rooted, in part, in the traditional conflict between workers and management, leading to the formation of unions and sometimes ending in adversarial union – management negotiations and long bitter strikes. The stakeholder challenges facing Walmart is an example of this. However, organizations can achieve mutual benefit through stakeholder symbiosis. The example given is how P&G considered the needs of consumers, shippers, wholesalers, and environmentalists when developing a liquid concentration for cleaning powder. This product breakthrough led not only to a change in consumer shopping habits, but also a revolution in industry supply chain economics. Leading companies are increasingly realizing that learning to partner with governments and communities, suppliers and customers, and even long-term rivals, is essential for dealing with big, complex problems. Stakeholder groups do not have to be in conflict with each other. 27 Question (2 of 2) P&G created a cleaning product that led to a change in consumer shopping habits and also a revolution in industry supply chain economics. According to the text, this is an example of zero-sum relationship among stakeholders. stakeholder symbiosis. rewarding stakeholders. emphasizing financial returns. ©McGraw-Hill Education. Answer: B. There will always be conflicting demands on organizations. However, organizations can achieve mutual benefit through stakeholder symbiosis, which recognizes that stakeholders are dependent upon each other for their success and well-being. 28 Social Responsibility & Environmental Sustainability Firms have multiple stakeholders and must go beyond a focus solely on financial results. Social responsibility is the expectation that businesses or individuals will strive to improve the overall welfare of society. Firms can measure a triple bottom line, assessing financial, social, AND environmental performance. Sustainability projects can yield substantial benefits even when they are difficult to quantify. ©McGraw-Hill Education. Social responsibility recognizes that businesses must respond to society’s expectations regarding their obligations to society. Social responsibility is not just an added cost to business. Instead businesses are creators of value that they then share with society in a mutually beneficial relationship. Triple bottom line = assessment of a firm’s financial, social, and environmental performance – accounting for the environmental and social costs of doing business. The case for sustainability projects needs to be made on the basis of a more holistic and comprehensive understanding of all the tangible and intangible benefits, rather than on the possibility for traditional returns. The alternative of not making these investments is often no longer feasible. 29 Empowered Strategic Management Strategic management requires an integrative view of the organization. ALL functional areas & activities must fit together to achieve goals & objectives. Leaders are needed throughout. Local line leaders – have profit & loss responsibility Executive leaders – champion & guide ideas Internal networkers – hold little positional power, but have conviction & clarity of ideas ©McGraw-Hill Education. An organization can’t succeed if only the top managers in the organization take an integrative, strategic perspective of issues facing the firm and everyone else “fends for themselves” in their independent, isolated functional areas. Instead, people throughout the organization must strive toward overall goals. No longer can organizations be effective if the top “does the thinking” and the rest of the organization “does the work.” Everyone must be involved in the strategic management process. 30 Coherence in Strategic Direction (1 of 5) Organizations express priorities best through stated goals & objectives that form a hierarchy of goals. Vision evokes powerful & compelling mental images of a shared future. Mission encompasses the organization’s current purpose, basis of competition, & competitive advantage. Strategic objectives operationalize the mission statement with specific yardsticks. ©McGraw-Hill Education. Hierarchy of goals = organizational goals ranging from, at the top, those that are less specific yet able to evoke powerful and compelling mental images, to, at the bottom, those that are more specific and measurable. A hierarchy of strategic goals can help an organization achieve coherence in its strategic direction. Vision = organizational goal(s) that evoke(s) powerful and compelling mental images, i.e., “To be the happiest place on earth” (Disney) Mission statement = a set of organizational goals that identifies the purpose of the organization, its basis of competition, and competitive advantage. Strategic Objectives = a set of organizational goals that are used to put into practice the mission statement and that are specific and cover a well-defined time frame. 31 Coherence in Strategic Direction (2 of 5) Exhibit 1.6 A Hierarchy of Goals Jump to Appendix 3 for long description. ©McGraw-Hill Education. The hierarchy of goals has a relationship to two attributes: general versus specific (from vision to objectives), and time horizon (long-term to short-term). 32 Coherence in Strategic Direction (3 of 5) Organizational vision A “massively inspiring” goal, overarching, long term A destination driven by & evoking passion Developed & implemented by leadership A fundamental statement of an organization’s values, aspirations, and goals Captures both the minds & hearts of employees BUT can backfire and erode a company’s credibility ©McGraw-Hill Education. Vision = organizational goal(s) that evoke(s) powerful and compelling mental images, i.e., “To be the happiest place on earth” (Disney). BUT vision statements are not a cure-all. Sometimes they can backfire and erode a company’s credibility. Visions can fail: Walk doesn’t match the talk = idealistic vision can arouse employee enthusiasm but can be quickly dashed if employees find senior management’s behavior is not consistent with the vision. Irrelevance = vision created in a vacuum unrelated to environmental threats or opportunities, or not a match for organization’s resources & capabilities. Not the holy grail = managers continually search for the ONE elusive solution that will solve their firm’s problems. Too much focus = by directing people & resources toward a grandiose vision, losses can be devastating. Ideal future cannot be reconciled with the present = visions should be anchored in current reality, need to account for the often hostile environment in which the firm competes. 33 Coherence in Strategic Direction (4 of 5) Mission statement Encompasses both the purpose of the company and the basis of competition and competitive advantage More specific than the vision Focuses on the means by which the firm will compete Incorporates stakeholder management Communicates why an organization is special & different Can & should change when competitive conditions change ©McGraw-Hill Education. Mission statement = a set of organizational goals that identifies the purpose of the organization, its basis of competition, and competitive advantage. 34 Coherence in Strategic Direction (5 of 5) Strategic objectives Used to operationalize the mission statement Provide guidance on how to fulfill mission & vision Measurable, specific, appropriate, realistic & timely Channel all employees’ efforts toward common goals Can be both financial and nonfinancial Should be challenging, yet help resolve conflicts Provide a yardstick for rewards & incentives BUT too many objectives can result in lack of focus ©McGraw-Hill Education. Strategic Objectives = a set of organizational goals that are used to put into practice the mission statement and that are specific and cover a well-defined time frame. Short-term objectives can become essential components of a firm’s “action plan,” and therefore can be critical in implementing the firm’s chosen strategy. See Chapter 9 for more details. Also see Case 1: Robin Hood for an example! 35 ADA APPENDICES Descriptions of Images ©McGraw-Hill Education. Appendix 1 The Strategic Management Process Return to slide. Map of the strategic management process, listing all chapters and their titles. The chapters for Strategy Analysis are Chapter 1, Introduction and Analyzing Goals and Objectives. Chapter 2, Analyzing the External Environment. Chapter 3, Analyzing the Internal Environment. Chapter 4, Assessing Intellectual Capital. The chapters concerning Strategy Formulation are Chapter 5, Formulating Business-level Strategies. Chapter 6, Formulating Corporate-Level Strategies. Chapter 7, Formulating International Strategies. Chapter 8, Entrepreneurial Strategy and Competitive Dynamics. Strategy Implementation chapters are Chapter 9, Strategic Control and Corporate Governance. Chapter 10, Creating Effective Organizational Designs. Chapter 11, Strategic Leadership Excellence, Ethics, and Change. Chapter 12, Fostering Corporate Entrepreneurship. and Chapter 13 concerns Case Analysis. ©McGraw-Hill Education. 37 Appendix 2 Corporate Governance Return to slide. The graphic is a triangle with Management (headed by the chief executive officer) at the pinnacle, the Board of Directors (elected by the shareholders to represent their interests) at the bottom right corner and Shareholders (owners) at the bottom left corner. This shows, that as Monks and Minow define, it is a “relationship among various participants in determining the direction and performance of corporations.” ©McGraw-Hill Education. 38 Appendix 3 Coherence in Strategic Direction (2 of 5) Return to slide. The graphic depicts the hierarchy of goals as a triangle on the left, with vision at the top, mission statement in the middle, and strategic objectives at the base. To the right of the triangle is a graphic showing an arrow going both ways between general (vision) and specific (strategic objectives) and another arrow going both ways between long time horizon (vision) and short time horizon (strategic objectives). Visions might be a general message, lacking specifics, whereas strategic objectives would be more specific, containing details. Visions have longer time horizons than would strategic objectives. ©McGraw-Hill Education.