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Course Exercise Questions – Course Exercise Doc. (Part 3)
- How do the three elements of Globalization, Innovation, and Sustainability impact your understanding of Strategy?
- Organizational strategy can be divided roughly into two categories: a) formulation and b) implementation. While there is legitimate crossover between the two, how would you characterize the issues involved in each effort?
- What is meant by a hierarchy of strategy?
4) What are the roles and responsibilities of an effective and active Board of Directors? What are the issues that suggest the need for oversight of a particular company’s management team?
- What recommendations would you make to improve the effectiveness of today’s boards of directors?
- How has moral relativism led to criminal activities by some employees in companies?
- Using Carroll’s list of four responsibilities, should a company be concerned about discretionary responsibilities? Why or why not?
- How does STEEP analysis aid in the development of the strategy in a company?
- Why is environmental uncertainty an important concept in strategic management?
- Explain how using an IFAS Table impacts the understanding of a company’s internal resources and capabilities.
- What kind of internal factors help managers determine whether a firm should emphasize the production and sales of a large number of low-priced products or a small number of high-priced products?
- Explain how our understanding of the three generic strategic approaches available to companies can be used to direct the efforts of all employees at those companies.
- What does a business have to consider when trying to follow a cost leadership strategy and a differentiation strategy simultaneously? Can you name a company doing this?
- How does horizontal growth differ from vertical growth as a corporate strategy? From concentric diversification?
- Compare and contrast a SWOT approach with portfolio analysis.
- What concepts or assumptions underlie the BCG growth-share matrix? Are these concepts valid? Why or why not?
- Should functional strategies be categorized under strategy formulation or under strategy implementation?
- How do timing tactics impact the strategy implementation efforts of a company?
- How can a corporation keep from sliding into the decline stage of the organizational life cycle?
- Does structure follow strategy or does strategy follow structure? Why?
- How can corporate culture be changed?
- Why is an understanding of national cultures important in strategic management?
- Why bother with shareholder value or a stakeholder scorecard? Isn’t it simpler to evaluate a corporation and its SBUs just by using standard measures like ROI or earnings per share? What are the pros and cons of using the strategic audit as a framework for case analysis?
- What ratios would you use to begin your analysis of a case? What are the five crucial steps to follow in basic financial analysis?
Strategic Business Management
- Globalization refers to a phenomenon where businesses develop an international influence hence start operating internationally. The global market is very competitive and challenging since businesses have to adapt their strategies to meet the business practices of the countries of operation. Therefore, businesses or organizations have to be innovative and develop strategies that will increase sustainability.
- The formulation is the process of planning and coming up with decisions that help in the development of an organization. It is the process of coming up with strategic goals that will drive the organization to success. Implementation involves the execution of the strategic plans. All the plans arrived at in the formulation stage are executed at the implementation stage.
- It refers to the layout and relations of a corporate strategy as well as sub-strategies of an organization. Each strategy is ordered in a hierarchically manner that is consistent with the vision, mission, metrics, and goals of the organization.
- The board of directors is charged with the duty of providing continuity of the organization through setting up a legal existence for the company. Boards of directors also oversee the management of the company by acting as supervisors for the management team. They are in charge of the appointment of the chief executive officer of the company. Board of directors also formulate policies and approve budgets issued to them by the managers of the organization. A company is supposed to generate profits for the shareholders. There is need for an oversight to defend the assets of the shareholders. They oversee the risk function in an organization.
- To improve the effectiveness of a board of directors, I would recommend that more outsiders are included in the board. The positions of CEO of the organization and the chairman should be separated to ensure there isno too much one-person influence in board meetings and agenda. Lastly, people nominated to serve in the board should be knowledgeable of the principles of top management.
- Moral relativism complicates ways of solving disputes because every person has a partial view about an activity in the organization. Employees therefore participate in criminal activities by arguing that the acts are not wrong based on their morals.
- Carroll outlines four responsibilities as economic, legal, ethical, and discretionary. Discretionary responsibilities refer to the voluntary obligations that are assumed by an organization. It is important for organizations to fulfil discretionary responsibilities as they help in improving the employee as well as the surrounding community experiences. The company gains more customers through its involvement in philanthropic activities.
- STEEP analysis involves evaluation of external factors that have an influence on the company. It allows an organization to have an understanding of external forces that affect their companies before they can make any decision. Plans are arrived at in consideration of the external forces.
- Environmental uncertainty refers to the unknown in an organization. It is when an organization has no competent information on the external and internal operating environment. Strategic management requires that decisions or plans are made based on facts established on the environment.
- Through IFAS Table, a company is able to establish the resources available so that strategic decisions are made considering such capabilities. Strategic principles that are made leverage on the internal strengths of the company.
- Managers should go through each functional area to establish the important factors. For example, the marketing department can conduct a market research to determine products and services that should be low-priced or high-priced. When looked at from a finance perspective, producing low-priced products in large quantities implies the need for a massive capital-intensive facility. The production of high quality goods may also be possible with small capital. The managers could also consider research and development in determining products.
- There are three generic approaches firms can use; one of them is cost leadership and the other is differentiation. The third approach is focus. Cost leadership strategy involves producing standardized products that attract customers as a result of their price. Differentiation implies creating goods that are different from the ones in the market. It can be in terms of brand, price, design, technology, dealer network, or customer service. Focus refers to producing products that serve a particular consumer base. Knowledge of these strategies by the employees creates more focus and determination.
- Businesses that want to pursue cost leadership and differentiation strategies simultaneously should consider their competitors in terms of the goods and services they are offering to consumers. This will allow them to create products that are rare, valuable, and difficult to imitate. An example of such a company is Walmart.
- Horizontal growth involves expandinga firm’s activities by venturing into geographic regions by increasing product range. Vertical growth, on the other hand, refers to acquisition of a previously existing function by a firm. This function may initially have been at the hands of a supplier. In concentric diversification products or divisions associated with the firm’s core business are introduced into the market. The introduction may be driven more by the industries’ attractiveness as opposed to efforts to support the current production lines.
- In terms of purpose, SWOT analysis is used at individual business level for purposes of identifying the strengths and weaknesses of the company as well as external opportunities and threats. Portfolio analysis is used at market level for analyzing how a portfolio of stocks is performing. While SWOT analysis is used for performance improvement of a business, portfolio analysis improves investments in a number of businesses.
- The BCG growth-share matrix indicates a corporation’s portfolio of investments through plotting of each of the corporation lines based on the industry’s growth rate in which the company competes as well as the relative market share. The experience curve forms the underlying concept of the BCG matrix. The experience curve indicates the level of experience of a company in production of products hence lowering the costs of production.
- The answer is dependent on one’s position on the hierarch of strategies. Functional strategy can be considered as a way of implementing corporate strategy when looked at from a top management level. Strategy formulation and implementation can be used interchangeably depending on their location in corporate hierarchy.
- Timing tactics helps in the development of strategic plans that put a company at a good competitive edge. In timing, when a company is the first to manufacture a product and sell it, then it is referred to as a mover. It is important to have the right timing for each tactic implementation in terms of resource coordination, expenditure planning, and accountability.
- A corporation can avoid sliding into the decline stage by continually coming up with new products from which it makes higher margins. The company continually comes up with new and popular products through research and development.
- Strategy follows structure. Structure basically refers to the entire operations of the organization. When structures are improved, more efficiency is achieved. Structure directly affects how firms execute their corporate strategies.
- Changing corporate culture is a difficult and time-consuming process since culture becomes grounded once a culture has been established. Communication is an important factor in changing corporate culture. Changing culture requires that the company explain the reason for its decision to its employees as well as provide any necessary training. Proposed strategies should be analyzed to determine how they fit in the overall culture of the company. Apart from communication, there should also be training, practice, as well as accountability.
- National cultures have an impact in business practice. Different companies have different cultures that have to be considered for a business to excel. It is imperative to include strategies that are in line with the national culture in a business plan if the company is to be successful.
- Shareholder value reveals the success of a company since it reveals to what extent shareholders are benefiting from the company while stakeholder scorecard assesses the performance of an organization by revealing the relationship between the stakeholders and the organization. Both shareholder value and stakeholder scorecard complement standard measures such as return on investments. Strategic audit involves the review of the business plan and strategies of a firm so that weaknesses can be established. It helps the company to readjust its strategies to plug the weaknesses. On the contrary, strategic audit is time consuming.
- I will use working capital ratio, earnings per share, debt to equity ratio, operating profit margin, price/earnings growth ratio, return on equity and asset turnover ratio. The five crucial steps include:
- Identification of economic characteristics as well as competitive dynamics of the industry of operation
- Identifying strategies for gaining and sustaining a competitive advantage.
- Examining the quality of financial statements of the firm so that necessary adjustments are made to attain desirable characteristics.
- Analyzing the profitability and risk of the firm with information got from financial statements.
- Preparing forecasted financial statements