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Teaching and Learning Resources
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Strategic Management
Rationale
Competitive advantage is defined as the strategic advantage one business entity has over its rival entities within its competitive industry. Achieving competitive advantage strengthens and positions a business better within the business environment.
- Resource-based view
- Core competency
- Economies of scale
- Value chain
- Differentiation (economics)
- Cost leadership
- Tacit knowledge
- References
- Further reading
Strategic management seeks to answer a simple and basic question: How and why do some firms outperform others? Stated differently, Why are some firms able to enjoy the benefits of developing and maintaining competitive advantages in the marketplace while others are not? To do so, we examine the three interrelated and principal activities that are part of the overall strategic management process: analysis, formulation, and implementation.
Strategy analysis involves the careful consideration of an organization’s goals as well as a thorough analysis of its external and internal environment. Strategy formulation focuses on developing strategies to attain competitive advantages in the marketplace that are difficult for competitors to imitate. Strategy implementation addresses the challenge of making sure that the desired strategies are effectively carried out. This involves such things as creating the necessary action plans, incentive and control systems, and organisational structures. After all, without effective implementation, the whole process becomes the proverbial "academic exercise" and nothing is accomplished except frustration and wasted resources.
Strategic Management: Text and Cases
Gregory
G. Dess, University of Texas at Dallas
G.T. Lumpkin, University of Illinois - Chicago
Marilyn Taylor, University of Missouri-Kansas City
Learning Outcomes
Knowledge
After completing this module, students will have a good understanding of
1. the strategic management process and its interrelated and principal activities.
2. why stakeholder management is so critical in the strategic management process and how “symbiosis” can be achieved among an organization’s stakeholders
3. the key environmental forces that are creating more unpredictable change and requiring greater empowerment throughout the organization
4. the importance of developing forecasts of the business environment
5. the impact of the general environment on a firm’s strategies and performance
6. the benefits and limitations of SWOT analysis in conducting an internal analysis of the firm
7. the central role of competitive advantage in the study of strategic management
8. the importance of international expansion as a viable diversification strategy
9. the key participants in corporate governance:shareholders, management (led by the CEO), and the board of directors
10. the importance of organisational structure and the concept of the "boundaryless" organization in implementing strategies
11. the value of creating and maintaining a "learning organization" in today's global marketplace
12. the high financial and nonfinancial costs associated with ethical crises
13. the importance of opportunity recognition in the venture development process
14. how strategic concepts contribute to the competitive advantages of new ventures and small businesses
15. the pitfalls associated with new venture strategies and corporate entrepreneurship
Skills
After completing this module, students will be able to:
1. participate in the development and implementation of strategic plans.
2. undertake environmental scanning, monitoring, and collecting competitive intelligence are critical for a company's achievement of its objectives
3. assess the impact of the general environment on a firm’s strategies and performance
4. construct a firm’s value chain
5. perform and interpret financial ratio analysis
6. make meaningful comparisons of performance across firms
7. recognize the interests of a variety of stakeholders
8. recognize the interdependence of attracting, developing, and retaining human capital
9. effectively combine the generic strategies of overall cost leadership and differentiation
10. create value through diversification initiatives
11. design appropriate market entry strategies in recognition of the relative benefits and risks associated with each of them
12. use of Internet technologies for achieving competitive advantage
13. make effective us of strategic control systems in strategy implementation.
Today's Videos
- Connect with us on http://www.youtube.com/finntrack
- Google's Playlists
Teaching and Learning Resources
Introduction to Strategic Management
Michael Porter has described a category scheme consisting of three general types of strategies that are commonly used by businesses to achieve and maintain competitive advantage. These three generic strategies are defined along two dimensions: strategic scope and strategic strength. Strategic scope is a demand-side dimension (Michael E. Porter was originally an engineer, then an economist before he specialized in strategy) and looks at the size and composition of the market you intend to target. Strategic strength is a supply-side dimension and looks at the strength or core competency of the firm. In particular he identified two competencies that he felt were most important: product differentiation and product cost (efficiency).
He originally ranked each of the three dimensions (level of differentiation, relative product cost, and scope of target market) as either low, medium, or high, and juxtaposed them in a three dimensional matrix. That is, the category scheme was displayed as a 3 by 3 by 3 cube. But most of the 27 combinations were not viable.
In his 1980 classic Competitive Strategy: Techniques for Analysing Industries and Competitors, Porter simplifies the scheme by reducing it down to the three best strategies. They are cost leadership, differentiation, and market segmentation (or focus). Market segmentation is narrow in scope while both cost leadership and differentiation are relatively broad in market scope.
Empirical research on the profit impact of marketing strategy indicated that firms with a high market share were often quite profitable, but so were many firms with low market share. The least profitable firms were those with moderate market share. This was sometimes referred to as the hole in the middle problem. Porter’s explanation of this is that firms with high market share were successful because they pursued a cost leadership strategy and firms with low market share were successful because they used market segmentation to focus on a small but profitable market niche. Firms in the middle were less profitable because they did not have a viable generic strategy.
Porter suggested combining multiple strategies is successful in only one case. Combining a market segmentation strategy with a product differentiation strategy was seen as an effective way of matching a firm’s product strategy (supply side) to the characteristics of your target market segments (demand side). But combinations like cost leadership with product differentiation were seen as hard (but not impossible) to implement due to the potential for conflict between cost minimization and the additional cost of value-added differentiation.
Since that time, empirical research has indicated companies pursuing both differentiation and low-cost strategies may be more successful than companies pursuing only one strategy.[1]
Some commentators have made a distinction between cost leadership, that is, low cost strategies, and best cost strategies. They claim that a low cost strategy is rarely able to provide a sustainable competitive advantage. In most cases firms end up in price wars. Instead, they claim a best cost strategy is preferred. This involves providing the best value for a relatively low price.
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Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. In order to determine the direction of the organization, it is necessary to understand its current position and the possible avenues through which it can pursue a particular course of action. While strategic planning may be used to effectively plot a company's longer-term direction, one cannot use it to reliably forecast how the market will evolve and what issues will surface in the immediate future. Therefore, strategic innovation and tinkering with the "strategic plan" have to be a cornerstone strategy for an organization to survive the turbulent business climate.
Strategic planning is the formal consideration of an organization's future course. All strategic planning deals with at least one of three key questions:
- "What do we do?"
- "For whom do we do it?"
- "How do we excel?"
In business strategic planning, some authors phrase the third question as "How can we beat or avoid competition?"[1] . But this approach is more about defeating competitors than about excelling.
In many organizations, this is viewed as a process for determining where an organization is going over the next year or—more typically—3 to 5 years (long term), although some extend their vision to 20 years.
- Etymology
- Conceptualization
- Strategic planning outline
- Strategic planning process
- Strategic planning tools and approaches
- Situational analysis
- Goals, objectives and targets
- Business analysis techniques
- References
- Further reading
- Business Strategy Mapping
- Decision making software
- Enterprise planning systems
- Hoshin Kanri
- Integrated Business Planning
- Strategic planning software
In economics, Economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs (labour, capital, material, energy, etc.) for a given amount of output.[1] Lowered costs increase demand for goods and services. Economic growth is also the result of population growth and of the introduction of new products and services.
- Economic growth versus the business cycle
- Economic growth per capita
- Measuring economic growth
- The power of annual growth
- Historical growth
- Origins of the concept
- Various theories on economic growth
- Inequality and economic growth
- Finance and economic growth
- Institutions and growth
- Human capital and growth
- Quality of life
- Negative effects of economic growth
- Prominent growth economists
Articles and lectures
Economic Growth by Paul Romer, The Concise Encyclopedia of Economics.
"Economic growth." Encyclopædia Britannica. 2007. Encyclopædia Britannica Online. 17 November 2007.
Beyond Classical and Keynesian Macroeconomic Policy. Paul Romer's plain-English explanation of endogenous growth theory.
Does Economic Growth increase Living Standards?
Who's afraid of economic growth? Essay by Daniel Ben-Ami on the contemporary anxiety about economic growth.
CEPR Economics Seminar Series Two seminars on the importance of growth with economists Dean Baker and Mark Weisbrot
On global economic history by Jan Luiten van Zanden. Explores the idea of the inevitability of the Industrial Revolution.
The Economist Has No Clothes – essay by Robert Nadeau in Scientific American on the basic assumptions behind current economic theory
World Growth Institute. An organization dedicated to helping the developing world realize its full potential via economic growth.
Economics for Everyone- Evaluating Economic Growth
Understanding the world today Multiple reports on economic growth
Data
Historical data - since 1954 - comparing the US GDP growth rate versus the US Fed Funds Rate
Angus Maddison's Historical Dataseries -Series for almost all countries on GDP, Population and GDP per capita from the year 0 up to 2003
OECD Economic growth statistics
multinational data sets easy to use data set showing gdp, per capita and population, by country and region, 1970 to 2008. Updated regularly.
Discussions
Activities
A
business's activities affect a wide range
of different people and groups. Knowing
who your stakeholders are is an increasingly
important part of business responsibility.
Copyright: Alexander Abolinsh, stock.xchng
The Role and Characteristics of Stakeholders
Image: The lifelong fans of a club -
what might the likely characteristics
of this group of stakeholders be?
Title: Missed By A Mile. Copyright:
Getty Images, available from Education Image Gallery
Business Objectives: Public and Private Sector Aims
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Image:
Hospitals and schools are good examples of public sector organisations.
But what business services does each provide, and what are the objectives
of these?
Copyright: Zarko
Kecman and Carlos
Gustavo Curado
The Problem: Setting up a business and securing long term business survival - can it be planned?
Image: Hmmm, that initial business idea
sounded good but it's not proving as easy
as it first appeared! Copyright: Hexal
Image: Jessops - a familiar high street name, but what has happened to its
share price since flotation?
Review Questions
How is "strategic management" defined in and what are its five key attributes?
Briefly discuss the three key activities in the strategic management process. Why is it important for managers to recognize the interdependent nature of these activities?
Explain the concept of "stakeholder management." Why shouldn't managers be solely interested in stockholder management, that is, maximizing the returns for owners of the firm-its shareholders?
How can "symbiosis" (interdependence, mutual benefit) be achieved among a firm's stakeholders?
What are some of the major trends that now require firms to have a greater strategic management perspective and empowerment in the strategic management process throughout the firm?
What is meant by a "hierarchy of goals"? What are the main components of it and why must consistency be achieved among them?
Strategic Analysis
Lectures and Tutorials
Readings
PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. Some analysts added Legal and rearranged the mnemonic to SLEPT;[1] inserting Environmental factors expanded it to PESTEL or PESTLE, which is popular in the United Kingdom.[2] The model has recently been further extended to STEEPLE and STEEPLED, adding Ethics and demographic factors. It is a part of the external analysis when conducting a strategic analysis or doing market research, and gives an overview of the different macroenvironmental factors that the company has to take into consideration. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. The growing importance of environmental or ecological factors in the first decade of the 21st century have given rise to green business and encouraged widespread use of an updated version of the PEST framework. STEER analysis systematically considers Socio-cultural, Technological, Economic, Ecological, and Regulatory factors.
- PEST analysis method and examples, Businessballs.com
- PESTLE analysis factsheet, Chartered Institute of Personnel and Development (CIPD)
Porter's five forces analysis is a framework for industry analysis and business strategy development formed by Michael E. Porter of Harvard Business School in 1979. It draws upon industrial organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition", in which available profits for all firms are driven to normal profit.
Three of Porter's five forces refer to competition from external sources. The remainder are internal threats.
Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally, requires a business unit to re-assess the marketplace given the overall change in industry information. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their core competencies, business model or network to achieve a profit above the industry average. A clear example of this is the airline
industry. As an industry, profitability is low and yet individual companies, by applying unique business models, have been able to make a return in excess of the industry average.
Porter's five forces include - three forces from 'horizontal' competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers.
This five forces analysis, is just one part of the complete Porter strategic models. The other elements are the value chain and the generic strategies.
Porter developed his Five Forces analysis in reaction to the then-popular SWOT analysis, which he found unrigorous and ad hoc.[1] Porter's five forces is based on the Structure-Conduct-Performance paradigm in industrial organisational economics. It has been applied to a diverse range of problems, from helping businesses become more profitable to helping governments stabilize industries.[2]
The value of an enterprise is made of physical assets, various financial assets and, finally, intangible assets, i.e., intellectual capital (IC). The term intellectual capital conventionally refers to the difference in value between tangible assets (physical and financial) and market value. [1]. [2]. Measuring the real value and the total performance of intellectual capital`s components is essential for any corporate head who knows how high the stakes have become for corporate survival in the knowledge and information age. So, the main point is how an organization can affect the firm's stock price using the leverage of intellectual assets.[3]
Classification
Intellectual Capital is normally classified as follows:
The value that the employees of a business provide through the application of skills, know how and expertise.[4] Human capital is an organization’s combined human capability for solving business problems. Human capital is inherent in people and cannot be owned by an organization. Therefore, human capital can leave an organization when people leave. Human capital also encompasses how effectively an organization uses its people resources as measured by creativity and innovation.
The supportive infrastructure, processes and databases of the organisation that enable human capital to function.[5] Structural capital includes such traditional things as buildings, hardware, software, processes, patents, and trademarks. In addition, structural capital includes such things as the organization’s image, organization, information system, and proprietary databases. Because of its diverse components, structural capital can be classified further into organization, process and innovation capital. Organisational capital includes the organization philosophy and systems for leveraging the organization’s capability. Process capital includes the techniques, procedures, and programs that implement and enhance the delivery of goods and services. Innovation capital includes intellectual properties and intangible assets.[6] Intellectual properties are protected commercial rights such as copyrights and trademarks. Intangible assets are all of the other talents and theory by which an organization is run.
Consists of more identifiable items such as trademarks, licences, franchises, but also the less definable, such as customer interactions and relationships. The notion that customer capital is separate from human and structural capital indicates its central importance to an organization’s worth.[7]
Financial analysis (also referred to as financial statement analysis or accounting analysis) refers to an assessment of the viability, stability and profitability of a business, sub-business or project.
It is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decisions.
- Continue or discontinue its main operation or part of its business;
- Make or purchase certain materials in the manufacture of its product;
- Acquire or rent/lease certain machineries and equipment in the production of its goods;
- Issue stocks or negotiate for a bank loan to increase its working capital;
- Make decisions regarding investing or lending capital;
- Other decisions that allow management to make an informed selection on various alternatives in the conduct of its business.
- [1] SFAF - the French Society of Financial Analysts
- [2] ACIIA - Association of Certified International Investment Analysts
- [3] EFFAS - European Federation of Financial Analysts Societies
- [4] OBKS (Outsourcing Bookkeeping Service)- Financial analysis allow users to focus on their main business activity.
A financial ratio (or accounting ratio) is a relative magnitude of two selected numerical values taken from an enterprise's financial statements. Often used in accounting, there are many standard ratios used to try to evaluate the overall financial condition of a corporation or other organization. Financial ratios may be used by managers within a firm, by current and potential shareholders (owners) of a firm, and by a firm's creditors. Security analysts use financial ratios to compare the strengths and weaknesses in various companies.[1] If shares in a company are traded in a financial market, the market price of the shares is used in certain financial ratios.
Ratios can be expressed as a decimal value, such as 0.10, or given as an equivalent percent value, such as 10%. Some ratios are usually quoted as percentages, especially ratios that are usually or always less than 1, such as earnings yield, while others are usually quoted as decimal numbers, especially ratios that are usually more than 1, such as P/E ratio; these latter are also called multiples. Given any ratio, one can take its reciprocal; if the ratio was above 1, the reciprocal will be below 1, and conversely. The reciprocal expresses the same information, but may be more understandable: for instance, the earnings yield can be compared with bond yields, while the P/E ratio cannot be: for example, a P/E ratio of 20 corresponds to an earnings yield of 5%.
- Sources of data for financial ratios
- Purpose and types of ratios
- Accounting methods and principles
- Abbreviations and terminology
- Ratios
Activities
Image: The arithmetic involved in using ratio analysis is easy - you are allowed to use a calculator, but make sure you know what the result on the screen actually means! Copyright: Piet Pens
The value chain, is a concept from business management that was first described and popularized by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance.[1]
- Firm Level
- Requirements of value chain
- Industry Level
- Significance
- SCOR
- Value Reference Model
- References
- Beneficiation
- Business unit
- Buzzword
- Calculating Demand Forecast Accuracy
- Delta Model
- Demand chain
- Industry information
- Marketing strategy
- Porter 5 forces analysis
- Porter generic strategies
- Strategic management
- Value grid
- Value
- Value migration
- Value network
- Value shop
http://www.brighthub.com/office/project-management/articles/51759.aspx
SWOT analysis (alternately SLOT analysis) is a strategic planning method used to evaluate the Strengths, Weaknesses/Limitations, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favourable and unfavourable to achieve that objective. The technique is credited to Albert Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data from Fortune 500 companies.
Setting the objective should be done after the SWOT analysis has been performed. This would allow achievable goals or objectives to be set for the organization.
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- Strengths: characteristics of the business, or project team that give it an advantage over others
- Weaknesses (or Limitations): are characteristics that place the team at a disadvantage relative to others
- Opportunities: external chances to improve performance (e.g. make greater profits) in the environment
- Threats: external elements in the environment that could cause trouble for the business or project
Identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs.
First, the decision makers have to determine whether the objective is attainable, given the SWOTs. If the objective is NOT attainable a different objective must be selected and the process repeated.
The SWOT analysis is often used in academia to highlight and identify strengths, weaknesses, opportunities and threats.[citation needed] It is particularly helpful in identifying areas for development.
- Matching and converting
- Internal and external factors
- Use of SWOT analysis
- Criticism of SWOT
- SWOT - landscape analysis
- Corporate planning
- Enterprise planning systems
- Six Forces Model
- VRIO
- Porter's Four Corners Model
- Programme Evaluation and Review Technique
- References
Activity
Image copyright: Andy Culpin
Review Questions
Why must managers be aware of a firm's external environment?
What is gathering and analysing competitive intelligence and why it is important for firms to engage?
Describe how the five forces can be used to determine the average expected profitability in an industry.
Explain how the general environment and industry environment are highly related. How can such interrelationships affect the profitability of a firm or industry?
The benefits and limitations of SWOT analysis in conducting an internal analysis of the firm.
The primary and support activities of a firm’s value chain.
How value-chain analysis can help managers create value by investigating relationships among activities within the firm and between the firm and its customers and suppliers.
The usefulness of financial ratio analysis as well as its inherent limitations.
How to make meaningful comparisons of performance across firms.
The value of recognizing how the interests of a variety of stakeholders can be interrelated.
Strategy Formulation
Lectures and Tutorials
- Business-Level Strategy: Creating and Sustaining Competitive Advantages
- Corporate-Level Strategy: Creating Value Through Diversification
- International Strategy: Creating Value in Global Markets
- The Internet
and E-Commerce: Creating Value through E-Business Strategies
Readings
Diversification is a form of corporate strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets. Diversification can occur either at the business unit level or at the corporate level. At the business unit level, it is most likely to expand into a new segment of an industry that the business is already in. At the corporate level, it is generally very interesting entering a promising business outside of the scope of the existing business unit.
Diversification is part of the four main growth strategies defined by the Product/Market Ansoff matrix:
Ansoff pointed out that a diversification strategy stands apart from the other three strategies. The first three strategies are usually pursued with the same technical, financial, and merchandising resources used for the original product line, whereas diversification usually requires a company to acquire new skills, new techniques and new facilities.
Note: The notion of diversification depends on the subjective interpretation of “new” market and “new” product, which should reflect the perceptions of customers rather than managers. Indeed, products tend to create or stimulate new markets; new markets promote product innovation.
- Market development
- Market penetration
- Product development
- Product proliferation
- Pure play (ant.)
- References
External links
- Strategic Development
- Strategic Method
- Life-cycle Approaches to Strategy Formulation
- Entry and Exit
- Global Factors influencing Business Strategy
Product life-cycle management (or PLCM) is the succession of strategies used by business management as a product goes through its life-cycle.[1] The conditions in which a product is sold (advertising, saturation) changes over time and must be managed as it moves through its succession of stages.
Product life-cycle (PLC) Like human beings, products also have a life-cycle. From birth to death, human beings pass through various stages e.g. birth, growth, maturity, decline and death. A similar life-cycle is seen in the case of products. The product life cycle goes through multiple phases, involves many professional disciplines, and requires many skills, tools and processes. Product life cycle (PLC) has to do with the life of a product in the market with respect to business/commercial costs and sales measures. To say that a product has a life cycle is to assert three things:
- Products have a limited life,
- Product sales pass through distinct stages, each posing different challenges, opportunities, and problems to the seller,
- Products require different marketing, financing, manufacturing, purchasing, and human resource strategies in each life cycle stage.
- Product management
- New product development
- Software product management
- Technology lifecycle
- Product lifecycle management
- Material selection
- Toolkits for user innovation
- Application lifecycle management
- Obsolescence
- Diminishing manufacturing sources and material shortages (DMSMS)
- Planned obsolescence
- Product teardown
- Notes
- References
The BCG matrix (aka B-Box, B.C.G. analysis, BCG-matrix, Boston Box, Boston Matrix, Boston Consulting Group analysis, portfolio diagram) is a chart that had been created by Bruce Henderson for the Boston Consulting Group in 1968 to help corporations with analysing their business units or product lines.[1] This helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis.[2] Analysis of market performance by firms using its principles has called its usefulness into question, and it has been removed from some major marketing textbooks. [3]
International Strategic Management (ISM) is an ongoing management planning process aimed at developing strategies to allow an organization to expand abroad and compete internationally. Strategic planning is used in the process of developing a particular international strategy.
An organization must be able to determine what products or services they intend to sell, where and how the organization will make these products or services, where they will sell them, and how the organization will acquire the necessary resources for these tasks. Even more importantly an organization must have a strategy on how it expects to outperform its competitors.
Electronic business, commonly referred to as "eBusiness" or "e-business", or an internet business, may be defined as the application of information and communication technologies (ICT) in support of all the activities of business. Commerce constitutes the exchange of products and services between businesses, groups and individuals and can be seen as one of the essential activities of any business. Electronic commerce focuses on the use of ICT to enable the external activities and relationships of the business with individuals, groups and other businesses.[1]
The term "e-business" was coined by IBM's marketing and Internet teams in 1996.[2][3]
Electronic business methods enable companies to link their internal and external data processing systems more efficiently and flexibly, to work more closely with suppliers and partners, and to better satisfy the needs and expectations of their customers.
In practice, e-business is more than just e-commerce. While e-business refers to more strategic focus with an emphasis on the functions that occur using electronic capabilities, e-commerce is a subset of an overall e-business strategy. E-commerce seeks to add revenue streams using the World Wide Web or the Internet to build and enhance relationships with clients and partners and to improve efficiency using the Empty Vessel strategy
Often, e-commerce involves the application of knowledge management systems.
E-business involves business processes spanning the entire value chain: electronic purchasing and supply chain management, processing orders electronically, handling customer service, and cooperating with business partners. Special technical standards for e-business facilitate the exchange of data between companies. E-business software solutions allow the integration of intra and inter firm business processes. E-business can be conducted using the Web, the Internet, intranets, extranets, or some combination of these.
Basically, electronic commerce (EC) is the process of buying, transferring, or exchanging products, services, and/or information via computer networks, including the internet. EC can also be beneficial from many perspectives including business process, service, learning, collaborative, community. EC is often confused with e-business.
- Subsets
- Models
- Electronic Business Security
Activities
Image: The Royal Mail has been
around a long time but what does
the future hold for the business?
Copyright: Craig Young, stock.xchng.
Image: Different coloured post-it notes.
Copyright: Ákos Rappay
Changing Markets, Changing Strategies: The Problem
Image: Is the telecommunications industry set for revival with the development
of new technology? Is this an appropriate strategic move for eBay?
Copyright: Dinos for Dino
Global Factors influencing Business Strategy
The traditional view of China - culturally, politically and socially quite a different
place to do business. Copyright: Bill Brad, stock.xchng
Review Questions
Explain why the concept of competitive advantage is central to the study of strategic management.
Briefly describe the three generic strategies: overall cost leadership, differentiation, and focus.
Describe some of the pitfalls associated with each of the three generic strategies.
Can firms combine the generic strategies of overall cost leadership and differentiation? Why or why not?
Explain why the industry life cycle concept is an important factor in determining a firm's business-level strategy.
Discuss how managers can create value for their firm through diversification efforts.
What are some of the reasons that many diversification efforts fail to achieve desired outcomes?
Discuss some of the various means that firms can use to diversify. What are the pros and cons associated with each of these?
Discuss some of the actions that managers may engage in to erode shareholder value.
What are some of the advantages and disadvantages associated with a firm's expansion into international markets?
There are three basic international strategies-global, multidomestic, and transnational. What are the advantages and disadvantages associated with each?
Describe the basic entry strategies that firms have available when they enter international markets. What are the relative advantages and disadvantages of each?
How do Porter's five competitive forces affect companies that compete primarily on the Internet?
Explain the difference between the effective use of technology and the technology itself in terms of achieving and sustaining competitive advantages.
Describe how the three competitive strategies can be combined to create competitive advantages when firms compete primarily by means of e-commerce.
Strategy Implementation
Lectures and Tutorials
- Strategic Control and Corporate Governance
- Creating Effective Organisational Designs
- Creating a Learning Organization and an Ethical Culture
Readings
The Balanced Scorecard (BSC) is a strategic performance management tool - a semi-standard structured report, supported by proven design methods and automation tools, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions.[1] It is perhaps the best known of several such frameworks (it is the most widely adopted performance management framework reported in the annual survey of management tools undertaken by Bain & Company, and has been widely adopted in English-speaking western countries and Scandinavia in the early 1990s). Since 2000, use of the Balanced Scorecard, its derivatives (e.g., Performance Prism), and other similar tools (e.g., Results Based Management) has also become common in the Middle East, Asia and Spanish-speaking countries.
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Corporate governance is a number of processes, customs, policies, laws, and institutions which have impact on the way a company is controlled.[1][2] An important theme of corporate governance is the nature and extent of accountability of people in the business, and mechanisms that try to decrease the principal–agent problem.[3]
Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed.[4][5] In contemporary business corporations, the main external stakeholder groups are shareholders, debtholders, trade creditors, suppliers, customers and communities affected by the corporation's activities. Internal stakeholders are the board of directors, executives, and other employees. It guarantees that an enterprise is directed and controlled in a responsible, professional, and transparent manner with the purpose of safeguarding its long-term success. It is intended to increase the confidence of shareholders and capital-market investors. [6]
A related but separate thread of discussions focuses on the impact of a corporate governance system on economic efficiency, with a strong emphasis on shareholders' welfare; this aspect is particularly present in contemporary public debates and developments in regulatory policy (see regulation and policy regulation).[7]
There has been renewed interest in the corporate governance practices of modern corporations since 2001, particularly due to the high-profile collapses of a number of large corporations, most of which involved accounting fraud. Corporate scandals of various forms have maintained public and political interest in the regulation of corporate governance. In the U.S., these include Enron Corporation and MCI Inc. (formerly WorldCom). Their demise is associated with the U.S. federal government passing the Sarbanes-Oxley Act in 2002, intending to restore public confidence in corporate governance. Comparable failures in Australia (HIH, One.Tel) are associated with the eventual passage of the CLERP 9 reforms. Similar corporate failures in other countries stimulated increased regulatory interest (e.g., Parmalat in Italy).
- Principles of corporate governance
- Corporate governance models around the world
- Regulation
- History - United States
- Parties to corporate governance
- Mechanisms and controls
- Systemic problems of corporate governance
- Executive remuneration/compensation
- International Corporate Governance Network
- Arthur and Toni Rembe Rock Center for Corporate Governance at Stanford University
- Chartered Institute of Personnel and Development (CIPD) resources on corporate governance
- Corporations, Governance & Society Research Group at The Australian National University
- European Corporate Governance Institute (ECGI)
- Global Corporate Governance Forum
- The Harvard Law School Program on Corporate Governance
- Institute of Directors
- International Journal of Governance
- Kozminski Center for Corporate Governance at Kozminski University, Poland
- The Millstein Center for Corporate Governance and Performance at the Yale School of Management
- The Samuel and Ronnie Heyman Center on Corporate Governance Benjamin N. Cardozo School of Law
- Standard & Poor's Governance Services (GAMMA Governance Scores)
- United States Proxy Exchange
- UTS Centre for Corporate Governance at the University of Technology Sydney, Australia
- Weinberg Center for Corporate Governance University of Delaware
- World Bank Corporate Governance Reports
Organization design can be defined narrowly, as the process of reshaping organization structure and roles, or it can more effectively be defined as the alignment of structure, process, rewards, metrics and talent with the strategy of the business. Jay Galbraith and Amy Kates have made the case persuasively (building on years of work by Galbraith) that attention to all of these organisational elements is necessary to create new capabilities to compete in a given market. This systemic view, often referred to as the "star model" approach, is more likely to lead to better performance.
Organization design may involve strategic decisions, but is properly viewed as a path to effective strategy execution. The design process nearly always entails making trade-offs of one set of structural benefits against another. Many companies fall into the trap of making repeated changes in organization structure, with little benefit to the business. This often occurs because changes in structure are relatively easy to execute while creating the impression that something substantial is happening. This often leads to cynicism and confusion within the organization. More powerful change happens when there are clear design objectives driven by a new business strategy or forces in the market that require a different approach to organizing resources. The organization design process is often defined in phases. Phase one is the definition of a business case, including a clear picture of strategy and design objectives. This step is typically followed by "strategic grouping" decisions, which will define the fundamental architecture of the organization - essentially deciding which major roles will report at the top of the organization. The classic options for strategic grouping are to organize by:
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Each of the basic building block options for strategic grouping brings a set of benefits and drawbacks. Such generic pros and cons, however, are not the basis for choosing the best strategic grouping. An analysis must be done completed relative to a specific business strategy.
Subsequent phases of organization design include operational design of processes, roles, measures and reward systems, followed by staffing and other implementation tasks.
The field is somewhat specialized in nature and many large and small consulting firms offer organization design assistance to executives. Some companies attempt to establish internal staff resources aimed at supporting organization design initiatives. There is a substantial body of literature in the field, arguably starting with the work of Peter Drucker in his examination of General Motors decades ago. Other key thinkers built on Drucker's thinking, including Galbraith (1973), Nadler, et al. (1992) and Lawrence & Lorsch (1967).
Organization design can be considered a subset of the broader field of organization effectiveness and organization development, both of which may entail more behaviourally focused solutions to effectiveness, such as leadership behaviours, team effectiveness and the like. Many organisational experts argue for an integrated approach to these disciplines, including effective talent management practices.
Activity
Image: If a company aims to reduce its impact
on the environment how will it measure its performance?
Copyright: Kenn Kiser
Image: Would a gamble on the horses be the best way of raising the money? Copyright: Zoban Raftik
Review Questions
Why are effective strategic control systems so important in today's economy?
Why is it important to avoid a "one best way" mentality concerning control systems? What are the consequences of applying the same type of control system to all types of environments?
What is the role of effective corporate governance in improving a firm's performance? What are some of the key governance mechanisms that are used to ensure that managerial and shareholder interests are aligned?
Discuss the relationship between a firm's strategy and its structure.
What are the relative advantages and disadvantages of the types of organisational structure-simple, functional, divisional, matrix-discussed in the chapter?
Briefly describe the three different types of boundaryless organizations: barrier-free, modular, and virtual.
What are the advantages and disadvantages of the three types of boundaryless organizations: barrier-free, modular, and virtual?
The knowledge a firm possesses can be a source of competitive advantage. Describe ways that a firm can continuously learn to maintain its competitive position.
What are the benefits to firms and their shareholders of conducting business in an ethical manner?
Firms that fail to behave in an ethical manner can incur high costs. What are these costs and what is their source?
The importance of opportunity recognition in the venture development process.
How strategic concepts contribute to the competitive advantages of new ventures and small businesses.
The role of product champions and autonomous strategic behaviours in internal corporate venturing.
How corporations develop an internal environment that promotes entrepreneurial development.
How an entrepreneurial orientation can enhance a firm's efforts to develop promising new venture initiatives.
The pitfalls associated with new venture strategies and corporate entrepreneurship.
Case Analysis
Lectures and Tutorials
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