Str. Management - Part (II)

8/11/2019 Str. Management - Part (II)

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Final Exam NotesCh 04, Ch 05 & Ch 07

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Lec : 06 Ch 04 "Internal Assesment"

InternalOrganization from within --- Distinctive competences

Core Cometenc! istincti#e cometenc!A thing that organization is doing

exceedingly well

$uch as:R&D !eams commitment

customer care distri"ution

channels

As the core competency # "etter

than others

$ %rm strength that cannot"ematched or imitated "y

competitors

'ources:

() *eritage

+) ,erger & acuisition

.) strategic alliance

/mpirical Indicators:

() Rare

+) *ard to imitate3. 0oteasilysu"stituta"le

%rani'ational $(ccess1!wo dimensions 'chools1

- IO 2industrial organization perspective 3 external is more important

- R45 2Resource "ased view 3 internal is more important

R45

2Organizational

success

/xternal 2IO Internal 2R45 6

+78 978

'ources of Distinctive ompetency

- ;hysical

- Organizational

- *R

)ra*itional $o(rces are the +olloin:

-. /ro*(ct ser#ice:

;roduct life cycle "ecame very short need for creativity new ideas 2*R

1. )echnolo!:

,4A - 'trategic ,anagement ourse 0otesAhmed ,) *assan

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!hose who sell the technology for you also sell it for your competitors

0ew !echnology =ho will operate>

=ho will maintain>

=ho will develop>

!echnology advancement reuire new s?ills 2intellectual capital

2. Economies o+ $cale:

- 4efore 1,ass production1 @ one %ts all

- 0ow 1,ass customization1 @ one on one

- 'pecial 0eeds for intellectual capital

4. /rotecte* 3arets:

- 0o protected mar?ets any more

- 4orderless mar?ets

- '?y is openneed for the culture of competition 2*R

Assets make things possible, People make things happen

'ee Internal Bactors /valuation 2IB/ example for Cateway computers in slide EFGit

is very nice

=e have three main elements in organization

- ;eople

- ;roduct

- ;rocess

Well done is better than well said

$(ccess +actor o+ orani'ations

/xternal Bactors Internal BactorsIO R45/Hectiveness /ciency 2outputinputs

Distinctive ompetency

2"e diHerent from

competitors

#ve or -ve

ulture De%nition J !he way we do things around here 2what is rightwrong

ulture J cultivate 2proper place to grow things

!here are three ways to do things around here:

() !he right way

+) !he wrong way

.) Our way 2the company way

"Culture is acquired not inherited"E!tian C(lt(re nee*s:

- ulture of completion

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- Bocus on uality

- /ncourage ethical practice

- ;ersonal accounta"ility

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Lec : 06 & 07: Ch 05 "$trateies in

Action"

-st3o#er A*#antae

- !he %rst "ird ta?es the worm) !he second mouse ta?es the cheese- In hessK the %rst mover forces the competitor to react to his moves 2reactive)

ran* strateies 2 irection 3o*el8

- Crowth

- 'ta"ility

- Retrenchment

roth $tailit! 9etrenchment

Adding new"usinesses

,aintain increase ,L! share ut into pieces2cut drop

"usinesses,ar?et still "ooming 2not

saturated0ew product 'ame product0ew mar?et 'ame mar?et*igh R&D Blat R&D

*igh Investment Blat investment*igh competition 'ta"le environment

,&AK IntegrationK'trategic AlliancesK

Moint ventures

mar?et penetration 4an?ruptcyK sell outKdivestK liuidation

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$(mmar! o+ "$trateies s< Cateories"

I Interation24uy ,anufacture sell

- Borward 2distri"ution

- *orizontal 2ompetitors

- 4ac?ward 2suppliers

- 'ee? a strategic %t J (#(N + synergy 2PQ STU VQW X

- Anti-trust laws JJ Against monopoly

II Intensi#e $trateies- ,ar?et penetration --- more considered to "e sta"ility strategy

- ,ar?et development --- 4orderless mar?ets

- ;roduct Development --- 'hort ;roduct Yife ycle 2;Y

IIIi#ersi=cation $trateies20ew prodK new ,L! Do not put all eggs in one "as?et:

- oncentric Diversi%cation --- 2expanding in the same line of "usiness

- onglomerate Diversi%cation --- 2holding company

- *orizontal Diversi%cation --- new unrelated to same customers

Ie+ensi#e $trateies- Retrenchment --- ost and asset reduction to reverse declining pro%ts 2wor?

outJ loosing fat- Divestiture ---- use Mac? =elsh ,atrix 2C/

- Yiuidation ---- 'elling company assets in parts

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etails o+ "$trateies s< Cateories"

ertical Interation $trateies2Cain ontrol Over: Distri"utorsK 'uppliersK and

ompetitors

1. Forar* Interation ain Control %#er ...istri(tors, 9etailers8

(i*elines:o urrent distri"utors 3 expensive or unrelia"le

o Availa"ility of uality distri"utors 3 limited

o Birm competes in industry expected to grow mar?edly

o Birm has "oth capital & *R to manage new "usiness of distri"ution

o urrent distri"utors have high pro%t margins

1< >acar* Interation %nershi or Control .. Firm?s s(liers8

(i*elines:

o urrent suppliers 3 expensive or unrelia"leo of suppliers is smallZ competitors is large

o *igh growth in industry sector

o Birm has "oth capital & *R to manage new "usiness

o 'ta"le prices are important

o urrent suppliers have high pro%t margins

2< @ori'ontal Interation %nershi or Control ..Firm?s cometitors8

(i*elines:

o Cain monopolistic characteristics wo federal government challengeo ompetes in growing industry

o Increased economies of scale 3 ma[or competitive advantages

o Baltering due to lac? of managerial expertise or need for particular

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Intensi#e $trateies:Improve competitive position with existing products

-< 3aret /enetration Increase* 3aret $hare8

- ;resent productsservices

- ;resent mar?ets

- Creater mar?eting eHorts

(i*elines:

o urrent mar?ets not saturated

o \sage rate of present customers can "e increased signi%cantly

o 'hares of competitors decliningZ industry sales increasing

o Increased economies of scale provide ma[or competitive advantage

1< 3aret e#eloment Ne 3arets .. /resent ro*(ctsser#ices to ne

eorahic areas8

(i*elines:

o 0ew channels of distri"ution 3 relia"leK inexpensiveK good uality

o Birm is successful at what it does

o \ntappedunsaturated mar?ets

o /xcess production capacity

o 4asic industry rapidly "ecoming glo"al

2< /ro*(ct e#elomentIncrease* $ales .. Imro#in resent

ro*(ctsser#ices, e#eloin ne ro*(ctsser#ices8

(i*elines:

o ;roducts in maturity stage of life cycle

o Industry characterized "y rapid technological development

o ompetitors oHer "etter-uality products ] compara"le prices

o ompete in high-growth industry

o 'trong R&D capa"ilities

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i#ersi=cation $trateies 2Yess ;opular -- ,ore dicult to manage diverse

"usiness activities

-< Concentric i#ersi=cation Ne & relate* ro*(ctsser#ices8

(i*elines:

o ompete in noslow growth industry

o 0ew & related products increases sales of current products

o 0ew & related products oHered at competitive prices

o urrent productsGdecline stage of product life cycle

o 'trong management team

2. Conlomerate i#ersi=cation Ne & (nrelate* ro*(ctsser#ices8

(i*elines:

o Declining annual sales & pro%ts

o apital & managerial a"ility to compete in new industry

o Binancial synergy "etween acuired and acuiring %rms

o urrent mar?ets for present products 3 saturated

3. @ori'ontal i#ersi=cation Ne & (nrelate* ro*(ctsser#ices +or c(rrent

c(stomers8

(i*elines:

o Adding new productsservices would signi%cantly increase revenues

o *ighly competitive andor no-growth industryZ low margins & returns

o urrent distri"ution channels can "e used

o 0ew products have counter cyclical sales patterns

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e+ensi#e $trateies

-< 9etrenchment 9ero(in , Cost & asset re*(ction to re#erse *eclinin

sales & ro=t8

(i*elines:

o Bailed to meet o"[ectives & goals consistencyZ has distinctive competencies

o Birm is one of wea?er competitors

o IneciencyK low pro%ta"ilityK poor employee moraleK pressure for

stoc?holders

o 'trategic managers have failed

o Rapid growth in sizeZ ma[or internal reorganization necessary

1< i#estit(re $ellin a *i#ision or art o+ an orani'ation8

(i*elines:

o Retrenchment failed to attain improvements

o Division needs more resources than are availa"le

o Division responsi"le for %rm^s overall poor performance

o Division is a mis-%t with organization

o Yarge amount of cash is needed and cannot "e raised through other sources

2< Li(i*ation $ellin , Coman!?s assets, in arts, +or their tanile

orth8

(i*elines:

o Retrenchment & divestiture failed

o Only alternative is "an?ruptcy

o ,inimize stoc?holder loss "y selling %rm^s assets

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Lec : 0B Ch 07 "Imlementin

$trateies: 3anaement & %erations Iss(es"Chanes in $trate! %+ten 9e(ire Chanes in $tr(ct(re

() hanges in strategy often reuire changes in the way an organization is

structured for two ma[or reasons:

a) FirstK structure largely dictates how o"[ectives and policies will "e

esta"lished) Bor exampleK o"[ectives and policies esta"lished under a

geographic organizational structure are couched in geographic terms)

O"[ectives and policies are stated largely in terms of products in an

organization whose structure is "ased on product groups) !he structural

formula for developing o"[ectives and policies can signi%cantly impact all

other strategy-implementation issues)

") $econ*ma[or reason why changes in strategy often reuire changes in

structure is that structure dictates how resources will "e allocated)

+) hanges in strategy lead to changes in organizational structure) 'tructure

should "e designed to facilitate the strategic pursuit of a %rm andK thereforeK

follow strategy) !he "elow illustrates a structure seuence repeated as

organizations grow and change over time)

.) !here is not [ust one optimal organizational design or structure for a given

strategy or type of organization)

)he F(nctional $tr(ct(re

() !he most widely used structure is the functional or centralized type "ecause

this structure is the simplest and least expensive of the seven alternatives)

2. A functional structure group_s tas?s and activities "y "usiness function such as

productoperationsK mar?etingK %nanceaccountingK R&DK and computer

information systems)

a. Advantages: 4esides "eing simple and inexpensiveK a functional structure

also promotes specialization of la"orK encourages eciencyK minimizes

the need for an ela"orate control systemK and allows rapid decision-ma?ing)

#. Disadvantages: 'ome disadvantages of a functional structure are that it

forces accounta"ility to the topK minimizes career development

opportunitiesK and is sometimes characterized "y low employee morale)

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)he i#isional $tr(ct(re

() !he divisional or decentralized structure is the second most common type used

"y American "usinesses)

+) !he divisional structure can "e organized in one of four ways: "y geographic

areaK product or serviceK customerK or process) =ith a divisional structureK

functional activities are performed "oth centrally and in each separate division)

a) Advantages:A divisional structure has some clear advantages) BirstK and

perhaps foremostK is accounta"ility) Other advantages of the divisional

structure are that it creates career development opportunities for

managersK allows local control of local situationsK leads to a competitive

climate within an organizationK and allows new "usinesses and products

to "e added easily)

") Disadvantages:;erhaps the most important limitation is that a divisional

structure is costly)

.) A divisional structure "y geographic area is appropriate for organizations whose

strategies need to "e tailored to %t the particular needs and characteristics of

customers in diHerent geographic regions)


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)he $trateic >(siness nit $>8 $tr(ct(re

1. !he '4\ structure group_s similar divisions into strategic "usiness units and

delegate authority and responsi"ility for each unit to a senior executive who

reports directly to the /O)

a) Advantages: !his change in structure can facilitate strategy

implementation "y improving coordination "etween similar divisions andchanneling accounta"ility to distinct "usiness units)

") Disadvantages: !wo disadvantages of an '4\ structure are that it reuires

an additional layer of managementK which increases salary expensesK and

the role of the group vice president is often am"iguous)

)he 3atrix $tr(ct(re

() It is the most complex of all designs "ecause it depends upon "oth vertical

and horizontal ows of authority and communication)

a) It can result in higher overhead "ecause it creates more managerial

positions)

") It also creates dual lines of "udget authorityK dual sources of reward and

punishmentK shared authorityK and dual reporting channels)

c. Advantagesare that pro[ect o"[ectives are clearK there are many channels

of communicationK wor?ers can see visi"le results of wor?K and pro[ects

can "e shut down easily)

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9estr(ct(rin, 9eenineerin

9eshain Cororate Lan*scae

() RestructuringK also called downsizingK rightsizingK or

delayeringK involves reducing the size of the %rm in

terms of num"er of employeesK divisions or unitsK

and hierarchical levels in the %rm^s organizationalstructure)

+) !he Internet is ushering in a new wave of "usiness transformations)

.) Reengineering is concerned more with employee and customer well-"eing

than with shareholder well-"eing)

9estr(ct(rin() Birms often employ restructuring when various ratios appear out of line with

competitorsK as determined through "enchmar?ing exercises)

a) !he primary "ene%t sought from restructuring is cost reduction) !he

downside of restructuring can "e reduced employee commitmentK

creativityK and innovation that accompanies the uncertainty and trauma

associated with pending and actual employee layoHs)

9eenineerin

() In reengineeringK a %rm uses information technology to "rea? down

functional "arriers and create a wor? system "ased on "usiness processesK

productsK or outputs rather than on functions or inputs)

+) A "ene%t of reengineering is that it oHers employees the opportunity to see

more clearly how their particular [o"s impact the %nal product or service

"eing mar?eted "y the %rm)

.) ReengineeringK also called process managementK process innovationK or

process redesignK involves recon%guring or redesigning wor?K [o"sK andprocesses for the purpose of improving costK ualityK serviceK and speed)

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3anain resistance to chane

9esistance to Chane

() Resistance to change can "e considered the single

greatest threat to successful strategy implementation)

+) It may ta?e on such forms as sa"otaging production

machinesK a"senteeismK %ling unfounded grievancesK

and unwillingness to cooperate)

.) Resistance to change can emerge at any stage or level of the strategy-

implementation process)

Documents

Str. Management - Part (II)