Management Theory Review: August 2021

August 30, 2021

Corporate Diversification Strategy - Theory - Review Notes

Strategic Management Revision Articles - Chapter Summaries of Strickland and Thompson's Book

There are many companies that concentrated on a single business and achieved enviable business success over many decades - good examples include McDonald's, Southwest Airlines, Domino's Pizza, Wal-Mart, FedEx, Hershey, Timex, and Ford Motor Company. But there are successful diversified companies also. So long as a company has its hands full trying to capitalize on profitable growth opportunities in its present business, there is no urgency to pursue diversification. Diversification merits strong consideration whenever a single-business company is faced with diminishing market opportunities and stagnating sales in its present business.

The purpose of diversification is to build shareholder value. Diversification builds shareholder value when a diversified group of businesses can perform better under the auspices of a single corporate parent than they would as independent, stand-alone businesses—the goal is to achieve not just a 1 + 1 = 2 result but rather to realize important 1 + 1 = 3 performance benefits. Whether getting into a new business has potential to enhance shareholder value hinges on whether a company's entry into that business can pass the attractiveness test, the cost-of-entry test, and the better-off test.

Entry into new businesses can take any of three forms: acquisition, internal startup, or joint venture/strategic partnership. Each has its pros and cons, but acquisition is the most frequently used; internal start-up takes the longest to produce home-run results, and joint venture/strategic partnership, though used second most frequently, is the least durable.

There are two fundamental approaches to diversification—into related businesses and into unrelated businesses. The rationale for related diversification is strategic: Diversify into businesses with strategic fits along their respective value chains, capitalize on strategic-fit relationships to gain competitive advantage, and then use competitive advantage to achieve the desired 1 + 1 = 3 impact on shareholder value.

The basic premise of unrelated diversification is that any business that has good profit prospects and can be acquired on good financial terms is a good business to diversify into. Unrelated diversification strategies surrender the competitive advantage potential of strategic fit in return for such advantages as (1) spreading business risk over a variety of industries and (2) providing opportunities for financial gain (if candidate acquisitions have undervalued assets, are bargain-priced and have good upside potential given the right management, or need the backing of a financially strong parent to capitalize on attractive opportunities). However, the greater the number of businesses a company has diversified into and the more diverse these businesses are, the harder it is for corporate executives to select capable managers to run each business, know when the major strategic proposals of business units are sound, or decide on a wise course of recovery when a business unit stumbles.

Analyzing how good a company's diversification strategy is a six-step process:

Step 1: Evaluate the long-term attractiveness of the industries into which the firm has diversified. Industry attractiveness needs to be evaluated from three angles: the attractiveness of each industry on its own, the attractiveness of each industry relative to the others, and the attractiveness of all the industries as a group.

Step 2: Evaluate the relative competitive strength of each of the company's business units. Again, quantitative ratings of competitive strength are preferable to subjective judgments. The purpose of rating the competitive strength of each business is to gain clear understanding of which businesses are strong contenders in their industries, which are weak contenders, and the underlying reasons for their strength or weakness. The conclusions about industry attractiveness can be joined with the conclusions about competitive strength by drawing an industry attractiveness–competitive strength matrix that helps identify the prospects of each business and what priority each business should be given in allocating corporate resources and investment capital.

Step 3: Check for cross-business strategic fits. A business is more attractive strategically when it has value chain relationships with sister business units that offer potential to (1) realize economies of scope or cost-saving efficiencies; (2) transfer technology, skills, know-how, or other resource capabilities from one business to another; (3) leverage use of a well-known and trusted brand name; and (4) to build new or stronger resource strengths and competitive capabilities via cross-business collaboration. Cross-business strategic fits represent a significant avenue for producing competitive advantage beyond what any one business can achieve on its own.

Step 4: Check whether the firm's resource strengths fit the resource requirements of its present business lineup. Resource fit exists when (1) businesses add to a company's resource strengths, either financially or strategically, (2) a company has the resources to adequately support the resource requirements of its businesses as a group without spreading itself too thin, and (3) there are close matches between a company's resources and industry key success factors. One important test of financial resource fit involves determining whether a company has ample cash cows and not too many cash hogs.

Step 5: Rank the performance prospects of the businesses from best to worst and - determine what the corporate parent's priority should be in allocating resources to its various businesses. The most important considerations in judging business-unit performance are sales growth, profit growth, contribution to company earnings, and the return on capital invested in the business. Sometimes, cash flow generation is a big consideration. Normally, strong business units in attractive industries have significantly better performance prospects than weak businesses or businesses in unattractive industries. Business subsidiaries with the brightest profit and growth prospects and solid strategic and resource fits generally should head the list for corporate resource support.

Step 6: Crafting new strategic moves to improve overall corporate performance. This step entails using the results of the preceding analysis as the basis for devising actions to strengthen existing businesses, make new acquisitions, divest weak- performing and unattractive businesses, restructure the company's business lineup, expand the scope of the company's geographic reach multinationally or globally, and otherwise steer corporate resources into the areas of greatest opportunity.

Once a company has diversified, corporate management's task is to manage the collection of businesses for maximum long-term performance. There are five different strategic paths for improving a diversified company's performance: (1) stick with the existing business lineup, (2) broadening the firm's business base by diversifying into additional businesses, (3) retrenching to a narrower diversification base by divesting some of its present businesses, (4) restructuring the company's business lineup with a combination of divestitures and new acquisitions to put a whole new face on the company's business makeup, and (5) pursuing multinational diversification and striving to globalize the operations of several of the company's business units.

Ud 30.8.2021
Pub 25.5.2013

Ethics,Corporate Social Responsibility, Stakeholder Responsibility and Strategic Management

Strategic Management Revision Articles - Chapter Summaries of Strickland and Thompson's Book

Milton Friedman on Ethics

"There is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits so long as it stays within rules of the game, which is to say engages in free and open competition, without deception or fraud."

Was Friedman against Ethics?

No. Friedman recommends ethical behavior from businessmen. They have to allow free and open competition. They should not do fraud. They should not deceive customer, competitors or social organizations. He clearly say businessmen have to be within rules of the games. Ethics are part of the rules of the game.

Strategy and Ethics

Ethics involves concepts of right and wrong, fair and unfair, moral and immoral. Beliefs about what is ethical serve as a moral compass in guiding the actions and behaviors of individuals and organizations. Ethical principles in business are not materially different from ethical principles in general. In this chapter, we study how notions of moral and immoral translate into judging management decisions regarding the strategies and actions of companies in business.

The authors talked of three types persons in managerial jobs: The moral managers - follows ethical or moral guidelines, The immoral managers - he is against the moral and ethical ideas, The amoral managers - They ignore either by thinking business is equal to war and they have to survive somehow and ethics are only handicaps or by not even bother to know ideas of morals and ethics.

Business Ethics in the Global Business

There are three schools of thought about ensuring a commitment to ethical standards for companies with international operations:

According to the school of ethical universalism, the same standards of what's ethical and what's unethical resonate with peoples of most societies regardless of local traditions and cultural norms; hence, common ethical standards can be used to judge the conduct of personnel at companies operating in a variety of country markets and cultural circumstances.

According to the school of ethical relativism different societal cultures and customs have divergent values and standards of right and wrong—thus, what is ethical or unethical must be judged in the light of local customs and social mores and can vary from culture or nation to another.

According to integrated social contracts theory, universal ethical principles or norms based on the collective views of multiple cultures and societies combine to form a "social contract" that all individuals in all situations have a duty to observe. Within the boundaries of this social contract, local cultures can specify other impermissible actions; however, universal ethical norms always take precedence over local ethical norms.

Three categories of managers stand out with regard to their prevailing beliefs in and commitments to ethical and moral principles in business affairs: the moral manager; the immoral manager, and the amoral manager. By some accounts, the population of managers is said to be distributed among all three types in a bell-shaped curve, with immoral managers and moral managers occupying the two tails of the curve, and the amoral managers, especially the intentionally amoral managers, occupying the broad middle ground.

The moral case for social responsibility boils down to a simple concept: It's the right thing to do. The business case for social responsibility holds that it is in the enlightened self-interest of companies to be good citizens and devote some of their energies and resources to the betterment of such stakeholders as employees, the communities in which it operates, and society in general.

The apparently large numbers of immoral and amoral businesspeople are one obvious reason why some companies resort to unethical strategic behavior. Three other main drivers of unethical business behavior also stand out:

Overzealous or obsessive pursuit of personal gain, wealth, and other selfish interests.
Heavy pressures on company managers to meet or beat earnings targets.
A company culture that puts the profitability and good business performance ahead of ethical behavior.

The stance a company takes in dealing with or managing ethical conduct at any given time can take any of four basic forms:

The unconcerned or nonissue approach.

For these companies ethics is a nonissue. Companies adopting this approach are usually out to make the greatest possible profit at most any cost and the strategies they employ, while legal, amy well embrace elements that are ethically shady.

The damage control approach.

The companies following this approach may adopt a code of ethics even though in practice they do not use it.

The compliance approach.

Companies following this approach take actions to implement ethics codes.

The ethical culture approach.

In the companies following this approach, the top executive act as role models for ethical behavior. High ethical principles are deeply ingrained in corporate culture.

The term corporate social responsibility calls for companies to find balance between (1) their economic responsibilities to reward shareholders with profits, (2) legal responsibilities to comply with the laws of countries where they operate, (3) ethical responsibilities to abide by society's norms of what is moral and just, and (4) philanthropic responsibilities to contribute to the noneconomic needs of society. The menu of actions and behavior for demonstrating social responsibility includes:

Employing an ethical strategy and observing ethical principles in operating the business.

Why Should Company Strategies be Ethical?
(1) A strategy that is unethical in whole or in part reflects badly on the character of the company personnel involved. and
(2) An ethical strategy is good business and in the self-interest of shareholders.

Strategy and Social Responsibility

Making charitable contributions, donating money and the time of company personnel to community service endeavors, supporting various worthy organizational causes, and making a difference in the lives of the disadvantaged. Corporate commitments are further reinforced by encouraging employees to support charitable and community activities.

Protecting or enhancing the environment and, in particular, striving to minimize or eliminate any adverse impact on the environment stemming from the company's own business activities.

Creating a work environment that makes the company a great place to work.

Employing a workforce that is diverse with respect to gender, race, national origin, and perhaps other aspects that different people bring to the workplace.

There's ample room for every company to tailor its social responsibility strategy to fit its core values and business mission, thereby making its own statement about "how we do business and how we intend to fulfill our duties to all stakeholders and society at large."

Some companies use the terms corporate social responsibility and corporate citizenship interchangeably, but typically, corporate citizenship places expectations on companies to go beyond consistently demonstrating ethical strategies and business behavior by addressing unmet noneconomic needs of society. Corporate sustainability involves strategic efforts to meet the needs of current customers, suppliers, shareholders, employees, and other stakeholders, while protecting, and perhaps enhancing, the resources needed by future generations.

Updated 30.8.2021, 24 Mar 2016, 25 May 2013

Globallization Strategy - Review Notes

Strategic Management Revision Articles - Chapter Summaries of Strickland and Thompson's Book

Most issues in competitive strategy that apply to domestic companies apply also to companies that compete internationally. But there are four strategic issues unique to competing across national boundaries:

Whether to customize the company's offerings in each different country market to match the tastes and preferences of local buyers or offer a mostly standardized product worldwide.

Whether to employ essentially the same basic competitive strategy in all countries or modify the strategy country by country to fit the specific market conditions and competitive circumstances it encounters.

Where to locate the company's production facilities, distribution centers, and customer service operations so as to realize the greatest locational advantages.

How to efficiently transfer the company's resource strengths and capabilities from one country to another in an effort to secure competitive advantage.

Why Companies Expand into Foreign Markets?
1. To gain access to new customers.
2. To achieve lower costs and enhance the firm's competitiveness
3. To capitalize on its core competencies
4. To spread its business risk across a wider market base.

Strategy options for competing in world markets include maintaining a national (one-country) production base and exporting goods to foreign markets, licensing foreign firms to use the company's technology or produce and distribute the company's products, employing a franchising strategy, using strategic alliances or other collaborative partnerships to enter a foreign market or strengthen a firm's competitiveness in world markets, following a multicountry strategy, or follow a global strategy.

Strategic alliances with foreign partners have appeal from several angles: gaining wider access to attractive country markets, allowing capture of economies of scale in production and/or marketing, filling gaps in technical expertise and/or knowledge of local markets, saving on costs by sharing distribution facilities and dealer networks, helping gain agreement on important technical standards, and helping combat the impact of alliances that rivals have formed.

Multicountry competition refers to situations where competition in one national market is largely independent of competition in another national market—there is no "international market," just a collection of self-contained country (or maybe regional) markets. Global competition exists when competitive conditions across national markets are linked strongly enough to form a true world market and when leading competitors compete head-to-head in many different countries.

Once a company has chosen to establish international operations, it has three basic options: (1) a think-local, act-local approach to crafting a strategy; (2) a think-global, act-global approach to crafting a strategy; and (3) a combination think-global, act-local approach. A think-local, act-local strategy is appropriate for industries where multicountry competition dominates; a localized approach to strategy making calls for a company to vary its product offering and competitive approach from country to country in order to accommodate differing buyer preferences and market conditions. A think-global, act-global approach works best in markets that are globally competitive or beginning to globalize; global strategies involve employing the same basic competitive approach (low-cost, differentiation, best-cost, focused) in all country markets and marketing essentially the same products under the same brand names in all countries where the company operates. A think-global, act-local approach can be used when it is feasible for a company to employ essentially the same basic competitive strategy in all markets but still customize its product offering and some aspect of its operations to fit local market circumstances.

There are three ways in which a firm can gain competitive advantage (or offset domestic disadvantages) in global markets. One way involves locating various value chain activities among nations in a manner that lowers costs or achieves greater product differentiation. A second way involves efficient and effective transfer of competitively valuable competencies and capabilities from its domestic markets to foreign markets. A third way draws on a multinational or global competitor's ability to deepen or broaden its resource strengths and capabilities and to coordinate its dispersed activities in ways that a domestic-only competitor cannot.

Companies racing for global leadership have to consider competing in emerging markets like China, India, Brazil, Indonesia, and Mexico—countries where the business risks are considerable but the opportunities for growth are huge. To succeed in these markets, companies often have to (1) compete on the basis of low price, (2) be prepared to modify aspects of the company's business model or strategy to accommodate local circumstances (but not so much that the company loses the advantage of global scale and global branding), and/or (3) try to change the local market to better match the way the company does business elsewhere. Profitability is unlikely to come quickly or easily in emerging markets, typically because of the investments needed to alter buying habits and tastes and/or the need for infrastructure upgrades. And there may be times when a company should simply stay away from certain emerging markets until conditions for entry are better suited to its business model and strategy.

Local companies in emerging country markets can seek to compete against multinational companies by (1) developing business models that exploit shortcomings in local distribution networks or infrastructure, (2) utilizing understanding of local customer needs and preferences to create customized products or services, (3) taking advantage of low-cost labor and other competitively important qualities of the local workforce, (4) using economies of scope and scale to better defend against expansion-minded multinationals, or (5) transferring company expertise to cross-border markets and taking initiatives to compete on a global level themselves.

Updated 30.8.2021

Pub 25.5.2013

August 29, 2021

Strategy Choice Beyond Generic Product and Market Choices

Strategic Management Revision Articles - Chapter Summaries of Strickland and Thompson's Book

Generic Product and Market Choices

Porter termed them as generic choices and competitive choices. In product related choices, a firm can try to focus on specific functions or benefits that others are not able to provide and maintain leadership in the target market in need of that function or benefit. The other choice is to become cost leader in a target market where the focus of the company is much more on the production and distribution processes to develop productivity expertise and design value activities in the process or value chain that incur less cost.

In the market related choice, the firm can compete in a broad market or to choose a niche market segment. A firm focusing on niche market may not be visible in mass media that serves broad market audience. A niche market firm is targeting certain product attribute that are demanded by a relatively small target market. In market related niches, even geographical areas may become niche.

After the generic strategy is chosen, the firm still has to make more strategic choices to survive and grow and also to increase its profit margins. There strategic areas are:

1. Strategic Alliances and Collaborative Partnerships

2. Mergers and Acquisitions

3 Vertical Integration for Expansion of the Firm - Increasing the Firm's Scope in the Product Value Chain

4. Outsourcing: Contracting or Narrowing the Firm's Scope in the Product Value Chain

5. Offensive Strategies

6 Defensive Strategies

7. Internet Based Strategies

8. Functional Strategies

9. First-Mover Strategy

10. Globalization Strategy

11. Diversification of Product Portfolio

1. Why Are Strategic Alliances Formed?

Collaborative arrangements, such as strategic alliances, can help a company lower its costs or
gain access to needed expertise and capabilities.

Competitive advantage emerges when a company acquires valuable capabilities via alliances it could not obtain on its own, providing an edge over rivals

Firms often lack the resources and competitive skills to be successful in very demanding competitive races

Collaborative arrangements with foreign partners can be very helpful in pursuing opportunities in
unfamiliar national markets. Many companies use collaborations in foreign markets especially in the beginning to gain a foothold and acquire knowledge of the local market.

Why Alliances Fail?

Ability of an alliance to endure depends on choosing the right partner.
How well partners work together.
Success of partners in responding and adapting to changing conditions

Reasons for alliance failure include:

Diverging objectives and priorities of partners

Inability of partners to work well together

Marketplace rivalry between one or more allies

2. Merger and Acquisition Strategies

Merger - Combination and pooling of equals, with newly created firm often taking on a new name

Acquisition - One firm, the acquirer, purchases and absorbs operations of another, the acquired

Mergers and acquisitions

Are especially suited for situations where alliances do not provide a firm with needed capabilities or cost-reducing opportunities

Ownership allows for tightly integrated operations, creating more control and autonomy than alliances

Pitfalls of Mergers and Acquisitions

Combining operations may result in:

Resistance from rank-and-file employees.
Hard-to-resolve conflicts in management styles and corporate cultures.
Tough problems in combining and integrating the operations of the once-different companies.

Greater-than-anticipated difficulties in

Sharing of expertise
Achieving enhanced competitive capabilities

3. Vertical Integration Strategies

Vertical integration extends a firms competitive scope within same industry
Backward into sources of supply
Forward toward end-users of final product
Can aim at either full or partial integration

4. Pros and Cons of Integration vs. Outsourcing

Whether vertical integration is a viable or attractive strategy depends on:

How much it can lower costs, build expertise, increase differentiation, or otherwise enhance performance of strategy-critical activities

In recent days, there is research evidence that outsourcing certain activities and concentrating on core competence in value chain activities is a more sound strategy. Many companies now follow this prescription and decide that out-sourcing value chain activities are a better strategic option when it comes to lowering cost, improving their competitiveness, or gaining added operating flexibility.

Out-sourcing involves narrowing the scope of the firms operations, focusing on performing core
value chain activities and relying on outsiders to perform the remaining value chain activities

Pitfalls of Outsourcing

Farming out too many or the wrong activities, thus
Hollowing out capabilities (destroying distinctive competences)
Losing touch with activities and expertise that determine overall long-term success

5 & 6. Offensive and Defensive Strategies

Offensive Strategies

Used to build new or stronger market position and/or create competitive advantage

Defensive Strategies

Used to protect competitive advantage (rarely used to create advantage)

Types of Offensive Strategies

1. Initiatives to match or exceed competitor strengths
2. Initiatives to capitalize on competitor weaknesses
3. Simultaneous initiatives on many fronts
4. End-run offensives
5. Guerrilla offensives
6. Preemptive strikes

Many of these strategies are part of marketing.

Attacking Competitor Strengths

Objectives:
Whittle away at a rivals competitive advantage
Gain market share by out-matching strengths of weaker rivals

Challenging strong competitors will only be successful in the long-run if you can truly outcompete a rival at what they do best

Attacking Competitor Weaknesses

Objective:
Utilize company strengths to exploit a rivals weaknesses

Weaknesses to Attack

Customers that a rival is least equipped to serve
Rivals providing sub-par customer service
Rivals with weaker marketing skills
Geographic regions where rival is weak
Market segments a rival is neglecting

Launching Simultaneous Offensives on Many Fronts

Objective:
Launch several major initiatives to
Throw rivals off-balance
Splinter their attention
Force them to use substantial resources to defend their position

A challenger with superior resources can overpower weaker rivals by out-competing them across-the-board long enough to become a market leader.

End-Run Offensives

Objectives:
Maneuver around strong competitors
Capture unoccupied or less contested markets
This is useful for firms that have difficulty competing head-to-head against rivals

Guerrilla Offenses
Approach
Use principles of surprise and hit-and-run to attack in locations and at times where conditions are most favorable to initiator

Appeal
Well-suited to small challengers with limited resources and market visibility

Preemptive Strikes
Approach
Involves moving first to secure an advantageous position that rivals are foreclosed or discouraged from duplicating.

Defensive Strategy

Objectives:
Lessen risk of being attacked
Blunt impact of any attack that occurs
Influence challengers to aim attacks at other rivals

Approaches

Block avenues open to challengers
Signal challengers vigorous retaliation is likely

7. Strategic Alternatives for Using the Internet

Strategic Challenge – What use of the Internet should a company make in staking out its position in the marketplace?

Five Approaches

Use company web site solely to disseminate product information
Use company web site as a minor distribution channel for accessing customers and generating sales
Use company web site as one of several important distribution channels for accessing customers
Use company web site as primary distribution channel for accessing buyers and making sales
Use company web site as the exclusive channel for accessing buyers and conducting sales transactions

Using the Internet to Disseminate Product Information

Approach – Website used to provide product information of manufacturers or wholesalers
Relies on click-throughs to websites of dealers for sales transactions
Informs end-users of location of retail stores

Pursuing online sales

Pursuing online sales may

Signal weak strategic commitment to dealers
Signal willingness to cannibalize dealers’ sales
Prompt dealers to aggressively market rivals’ brands
Avoids channel conflict with dealers – Important where strong support of dealer networks is essential

Using the Internet as a Minor Distribution Channel

Approach – Use online sales to
Achieve incremental sales
Gain online sales experience
Conduct marketing research
Learn more about buyer tastes and preferences
Test reactions to new products
Create added market buzz about products
Unlikely to provoke much outcry from dealers

Brick-and-Click Strategies: Natural Evolution for Existing Firms

Sell directly to consumers and
Use traditional wholesale/retail channels

Reasons to pursue a brick-and-click strategy
Manufacturer’s profit margin from online sales is bigger than that from sales through traditional channels
Encouraging buyers to visit a firm’s website educates them to the ease and convenience of purchasing online
Selling directly to end users allows a manufacturer to make greater use of build-to-order manufacturing and assembly

Strategies for Online Enterprises

Approach – Use Internet as the exclusive channel for all buyer-seller contact and transactions
Success depends on a firm’s ability to incorporate following features:
Capability to deliver unique value to buyers
Deliberate efforts to engineer a value chain that enables differentiation, lower costs, or better value for the money
Innovative, fresh, and entertaining website
Clear focus on a limited number of competencies and a relatively specialized number of value chain activities
Innovative marketing techniques
Minimal reliance on ancillary revenues

8. Choosing Appropriate Functional-Area Strategies

Involves strategic choices about how functional areas are managed to support competitive strategy and other strategic moves

Functional strategies include:
Research and development
Production
Human resources
Sales and marketing
Finance

Tailoring functional-area strategies to support key business-level strategies is critical!

9. First-Mover Advantages

When a new product concept emerges, is it of strategic advantage to be the first firm to offer the product?

When to make a strategic move is often as crucial as what move to make

First-mover advantages arise because:

Pioneering helps build firms image and reputation
Early commitments to new technologies and distribution channels can produce cost advantage
Loyalty of first time buyers is high
Moving first can be a preemptive strike

First-Mover Disadvantages

Moving early can be a disadvantage (or fail to produce an advantage) due to reasons like:

Costs of pioneering are sizable and loyalty of first time buyers is weak
Innovator's products are primitive, not living up to buyer expectations
Rapid technological change allows followers to leapfrog pioneers

Updated on 30.8.2021, 9.7.2020

Managing Internal Organization and Operations for Better Strategy Execution - Review Notes

Strategic Management Revision Articles - Chapter Summaries of Strickland and Thompson's Book

Based on Chapter of Thompson and Strickland

Chapter Learning Objectives

Learn why resource allocation should always be based on strategic priorities.
Understand why policies and procedures should be designed to facilitate good strategy execution.
Understand why and how benchmarking, best-practices adoption, and tools for continuously improving the performance of value chain activities help an organization achieve operating excellence and superior strategy execution.
Understand the role of information and operating systems in enabling company personnel to carry out their strategic roles proficiently.
Learn how and why the use of well-designed incentives and rewards can be management’s single most powerful tool for promoting proficient strategy execution and operating excellence

Five Managerial Actions that facilitate the success of a company's strategy execution efforts.

1. Marshalling ample resources behind the drive for good strategy execution and operating excellence.
2. Instituting policies and procedures that facilitate strategy execution.
3. Adopting best practices and striving for continuous improvement in how value chain activities are performed.
4. Installing information and operating systems that enable company personnel to carry out their strategic roles proficiently.
5. Tying rewards and incentives directly to the achievement of strategic and financial targets and to good strategy execution.

Marshalling ample resources behind the drive for good strategy execution and operating excellence

Resourcing is an important function of management. I brought out the idea very strongly and telling it to my students.

The authors of this book write that managers implementing and executing a new or different strategy must identify the resource requirements of each new strategic initiative and provide these resources to various subunits that are involved in implementing strategic initiatives. This calls for strategy driven budgeting. A change in strategy always calls for budget reallocations and the operating units have to be specifically told not to extrapolate past budget figure but rework out budget figures in line with the new strategy. People and equipment may have to be reallocated.

Developing and Instituting Policies and Procedures to Facilitates Good Strategy Execution

Anytime a company alters its strategy, managers should review existing policies and operating procedures, proactively revise or discard those that are out of sync, and formulate new ones to facilitate execution of new strategic initiatives.

Prescribing new or freshly revised policies and operating procedures aids the task of strategy execution (1) by providing top-down guidance to operating managers, supervisory personnel, and employees regarding how certain things need to be done and what the boundaries are on independent actions and decisions; (2) by enforcing consistency in how particular strategy-critical activities are performed in geographically scattered operating units; and (3) by promoting the creation of a work climate and corporate culture (Behavior, procedures, and values) that promotes good strategy execution.

Adopting Best Practices and Continuous Improvement

Competent strategy execution entails visible, unyielding managerial commitment to best practices and continuous improvement. Benchmarking has to be done to discover and adopt best practices. The interest to do benchmarking has to be developed at the lowest levels.

Industrial engineering is the oldest discipline that has focus on improving technical and managerial processes. Business process reengineering, total quality management (TQM) and Six Sigma programs are relatively new methods with aim at improved efficiency, lower costs, better product quality, and greater customer satisfaction. These initiatives have to be promoted as part of strategy to develop, identify and adopt best practices.

Improvement of processes and related resources, competencies and capabilities is an important component of manufacturing/operations strategy. Improvement is requires in all functions of the organization.

Instituting Information and Operating Systems

Company strategies can't be implemented or executed well without a number of support systems to carry on business operations. Well-conceived state-of-the-art support systems not only facilitate better strategy execution but also strengthen organizational capabilities enough to provide a competitive edge over rivals. Real-time information and control systems further aid the cause of good strategy execution. In the current days information system field is coming out with new avenues to improve performance of organizations. Big data analytics and Internet of Things are the two recent initiatives from information systems field. Companies have to start using these new methods in pilot projects so that they understand the business potential of them and scale their application in a rapid manner to maintain the competitive advantage and increase it.

Tying Rewards and Incentives to Strategy Execution

Motivation

Strategy-supportive motivational practices and reward systems are powerful management tools for gaining employee commitment. The key to creating a reward system that promotes good strategy execution is to make strategically relevant measures of performance the dominating basis for designing incentives, evaluating individual and group efforts, and handing out rewards. Positive motivational practices generally work better than negative ones, but there is a place for both. There's also a place for both monetary and nonmonetary incentives.

Incentives and Rewards

For an incentive compensation system to work well
(1) the monetary payoff should be a major percentage of the compensation package,
(2) the use of incentives should extend to all managers and workers,
(3) the system should be administered with care and fairness,
(4) the incentives should be linked to performance targets spelled out in the strategic plan,
(5) each individual's performance targets should involve outcomes the person can personally affect, (6) rewards should promptly follow the determination of good performance,
(7) monetary rewards should be supplemented with liberal use of nonmonetary rewards, and
(8) skirting the system to reward non-performers or subpar results should be scrupulously avoided.

Companies with operations in multiple countries often have to build some degree of flexibility into the design of incentives and rewards in order to accommodate cross-cultural traditions and preferences.

Updated 30 Aug 2021, 26 Feb 2021

24 Mar 2016, 7 June 2014

Building Resource Strengths and Organizational Capabilities - Review Notes

Strategic Management Revision Articles - Chapter Summaries of Strickland and Thompson's Book

Based on Thompson and Strickland's Book

Implementing and executing strategy involves technology organization, resource acquisition, people organization, staffing, management of people and business processes. The managerial emphasis is on converting strategic plans into actions and good results.

The starting point for managers to start in implementing and executing a new or different strategy is a list of activities which the organization has to do differently from now onwards to achieve the strategic goals in the time frame envisaged. Then, the necessary steps to make the internal changes have to be instituted as early as possible.

Top-level managers have to rely on the middle and lower managers to understand and develop their unit levels plans to support strategy and explain strategy changes and related business process changes to department members and see that the organization actually operates in accordance with the strategy at department levels. Every step in the organization has certain people questioning it and the middle and lower managers must have the understanding to explain and persuade people to follow strategy .

Thompson and Strickland described eight managerial tasks as cropping up repeatedly in company efforts to execute strategy:

1. Building an organization with the competencies, capabilities, and resource strengths to execute strategy successfully.
2. Marshaling people behind the drive for strategy execution.
3. Instituting policies and procedures that facilitate rather than impede strategy execution.
4. Adopting best practices and pushing for continuous improvement in both marketing and operations activities.
5. Installing information and operating systems that enable company personnel to carry out their strategic roles proficiently.
6. Tying rewards directly to the achievement of strategic and financial targets.
7. Shaping the work environment and corporate culture to fit the strategy.
8. Exercising management control to drive execution forward, keep improving on the details of execution, and achieve operating and marketing excellence as rapidly as feasible.

In the book three chapters are devoted strategy execution. One chapter (that is this chapter) deals with developing the organization. Developing the organization involves plan of organizations and acquiring the resources indicated in the plan. The second chapter is concerned with topics 2 to 6. The third chapter deals with topic 7 and 8 related to culture change and leadership.

Building a Capable Organization

Successful strategy execution depends on competent personnel, better than adequate customer satisfying and competitive capabilities, and effective internal organization that facilitates communication and control.

Building an organization capable of good strategy execution involves three dimensions:

(1) Acquiring adequate Resources and Staff: Appropriate infrastructure, adequate equipment and a talented, can-do team with the needed experience, technical skills, and intellectual capital;
(2) Building core competencies and competitive capabilities
(3)Structuring the organization and work effort - Organizing value chain activities and business processes and developing communication and authority delegation lines that complete the tasks assigned to them after required operational planning with effectiveness and efficiency.

Staffing the Organization

Assembling a capable senior management team is a cornerstone of the organisation - building task. The personal chemistry among the members of the team needs to be right, and the competencies of the need to be appropriate for the chosen strategy. People of the senior management team have to be persons who can be counted on to get things done. Sometimes the existing management team is suitable; at other times it may requires changes.

Even at other levels, the organization must have a recruitment and selection procedure that gives best of the available persons to the organization. The organization must have training and development processes that convert the average performers into competent persons.

Building Core Competencies and Competitive Capabilities

Building core competencies and competitive capabilities is a time-consuming development activity that involves three stages:

(1) Developing the ability to do something as novice act as a team.

(2) Learning from the initial performances, and developing methods to perform the activity consistently well at marketable and profitable costs, setting the stage to transform the ability into a tried-and-true business getting competence or capability; and

(3) Continuing to polish and refine the organization's know-how and otherwise sharpen performance such that it becomes better than competitors at performing the activity, and make efforts to raise it to the core competence level (or capability) or to the rank of a distinctive competence (or competitively superior capability) thus opening an avenue to competitive advantage. Many companies manage to get through stages 1 and 2 but comparatively few achieve sufficient proficiency to qualify for the third stage. The idea of top three in any industry illustrates this idea of many not being able to develop that superiority in competitive scenario.

Four ideas regarding the process of developing core competencies or capabilities

1. Core competencies grow out of combined efforts of many in the department. Core capabilities grow out of the combined efforts of cross-functional work groups.

2. A core competence and capability emerges incrementally out of company efforts to strengthen skills that contributed to successful customer related outcomes.

3. Only by concentrating more effort and talent than rivals in deepening the knowledge and skills that a company develops core competence and capability.

4. Evolving changes in customer needs and competitor successes demand changes in competencies and the organization has to recognize the change in the environment and determine the new competencies required and start taking steps to put into motion the three steps - Do as novice - Make it market acceptable - Develop it into competency and then into core competency.

Competitive Advantage

While competitors can readily duplicate some strategy features, core competencies and capabilities are very difficult or costly for imitations and they give durable competitive edge. They become difficult to imitate when they are based on research and development inside an organization.

Developing Organization Structure Matched to Strategy

Outsourcing of Value Chain Activities

Partnering for Value Chain Activities

Pure functional departments are impeding strategy execution.

Determining the Degree of Authority and Independence to Give Each Unit and Each Employee

Contingency theory of management is applicable here.

Providing for Internal Cross-Unit Coordination

Supply Chain Development based Partnership Model

Organizational Structures of the Future

Five new ideas are being emphasized in organization:

1. Empowered managers and workers.
2. Reengineering of work processes.
3.Self directed work teams
4. Rapid incorporation of internet.
5. Networking with outsiders to improve existing organization capabilities.

Resources, Competencies and Capabilities

Competence

Competence is the quality or state of being functionally adequate or having sufficient knowledge, strength and skill. Competence is another word for an individual’s knowhow or skill. When we are asking whether we have the right competencies aren’t we really asking, “Who knows how?” and

“How well do they know?” Booz, Allen and Hamilton (one of the first management consulting

firms) used competence as an essential principle when they recognized that management and leadership are all about getting the right people in the right place at the right time.

Capability

Capability is a collaborative process that can be deployed and through which individual competences can be applied and exploited. The relevant question for capability is not “who knows how?” but “How can we get done what we need to get done?” and “How easily is it to access, deploy or

apply the competencies we need?”

Capacity
Capacity is really about “amount” or “volume.” of competencies or capabilities. The relevant question related to capacity is “Do we have enough?” and the related question, “How much is needed?”

Differentiating Competence, Capability and Capacity
by Lanny Vincent
http://www.innovationsthatwork.com/images/pdf/June08newsltr.pdf

Edith Penrose

The firm, she said, is “both an administrative organization and a collection of productive resources, both human and material” (p. 320). The services rendered by these resources are the primary inputs into a firm’s production processes and are firm specific in the sense that they are a function of the knowledge and experience that the firm has acquired over time. When services that are currently going unused are applied to new lines of business, these services also function as a growth engine for the firm. Learning enables the organization to use its resources more efficiently. As a result, even firms that maintain a constant level of capital may nevertheless be able to grow as services are freed up for new uses as a result of organizational learning.

The dynamic capability perspective follows Hayek (1945) (and the behavioral and evolutionary theorists) in emphasizing that coordination as an economic problem only occurs because of change. In a static environment a short period of “set up” would be required to organize economic activity; but absent change in consumer tastes or technology, economic agents (both traders and managers) would sort out the optimal flows of goods and services (together with methods of production). Thereafter, there would be no need for their services.

In an economic system, principals and/or their agents must design and implement processes to manage change, must direct the reinvestment of cash flow, and must configure asset portfolios, including allocating resources between exploitation and exploration (March, 1991, 1994). They must also stand ready to reconfigure them as circumstances change. In a strict evolutionary views of the world, there is no specific agent and no hierarchy responsible for regulating the evolutionary process (Cohendet, Llerena and Marengo 2000).

Strategic Management and Entrepreneur (and leader-)ship However, in a less evolutionary view of the world, there is room for a managerial and entrepreneurial function.

The manager/entrepreneur need not be an individual; in the modern corporation it is a function. As Schumpeter (1949) noted: “The entrepreneurial function may be and often is filled cooperatively – in many cases, therefore, it is difficult or even impossible to name an individual that acts as “the entrepreneur.” (pp. 71-72).

The manager/entrepreneur must articulate goals, set culture, build trust, and play a critical role in the key strategic decisions. Clearly the role of the entrepreneur and the manager overlap to a considerable extent and in some contexts they refer to the same person.

The manager/entrepreneur plays a key role in achieving asset-resource selection and the “coordination” of economic activity, particularly when complementary assets/resources must be assembled. The manager/entrepreneur has to search for people willing to sell the required asset and has to bargain and negotiate and buy or sell or swap investments/assets, orchestrate internal assets (intrapreneurship) and transact with the owners of external assets (entrepreneurship).

He needs to have strong skills in working out new “business models”, which define the architecture of new businesses. The astute performance of this function will help achieve what Porter (1996) calls “strategic fit”, not just with internally controlled assets, but with the assets of alliance partners. The manager/entrepreneur also has to shape learning processes with the firm. These are not functions which can be achieved by markets divorced from managers/entrepreneurs.

Thus the entrepreneur/manager function in the dynamic capabilities framework is in part Schumpeterian (the entrepreneur introduces novelty and seeks new combinations) and in part evolutionary (the entrepreneur endeavors to promote and shape learning). Whether intrapreneur or entrepreneur, the function senses new opportunities and leads the organization forward to seize them. The entrepreneur/ manager must therefore lead. These are roles not recognized by economic theory; Management theory develops them. These roles are the essence of dynamic capabilities. They are also part of the theory of strategic management.

Paper
Conceptual Framework for Modeling Business Capabilities

Updated 30 Aug 2021, 26 Feb 2021

26 August 2016, 24 Mar 2014, 19 Dec 2011

Analysis of Firm's Internal Capabilities

Strategic Management Revision Articles - Chapter Summaries of Strickland and Thompson's Book

There are five key questions to consider in analyzing a company's own particular competitive circumstances and its competitive position vis-à-vis key rivals:

How well is the present strategy working?

This involves evaluating the strategy from a qualitative standpoint (completeness, internal consistency, rationale, and suitability to the situation) and also from a quantitative standpoint (the strategic and financial results the strategy is producing). The stronger a company's current overall performance, the less likely the need for radical strategy changes. The weaker a company's performance and/or the faster the changes in its external situation (which can be gleaned from industry and competitive analysis), the more its current strategy must be questioned.

What are the company's resource strengths and weaknesses, and its external opportunities and threats?

A SWOT analysis provides an overview of a firm's situation and is an essential component of crafting a strategy tightly matched to the company's situation. The two most important parts of SWOT analysis are (1) drawing conclusions about what story the compilation of strengths, weaknesses, opportunities, and threats tells about the company's overall situation, and (2) acting on those conclusions to better match the company's strategy, to its resource strengths and market opportunities, to correct the important weaknesses, and to defend against external threats.

A company's resource strengths, competencies, and competitive capabilities are strategically relevant because they are the most logical and appealing building blocks for strategy; resource weaknesses are important because they may represent vulnerabilities that need correction. External opportunities and threats come into play because a good strategy necessarily aims at capturing a company's most attractive opportunities and at defending against threats to its well-being.

The final piece of SWOT analysis to support crafting strategy is to translate the diagnosis of the company's situations into actions for improving the companies strategy to improve business prospects.

Are the company's prices and costs competitive?

One telling sign of whether a company's situation is strong or precarious is whether its prices and costs are competitive with those of industry rivals. Value chain analysis and benchmarking are essential tools in determining whether the company is performing particular functions and activities cost-effectively, learning whether its costs are in line with competitors, and deciding which internal activities and business processes need to be scrutinized for improvement.

Value chain is a concept that looks at company as a collection of value activities. Value chain analysis teaches that how competently a company manages its value chain activities relative to rivals is a key to building a competitive advantage based on either better competencies and competitive capabilities or lower costs than rivals.

Is the company competitively stronger or weaker than key rivals?

The key appraisals here involve how the company matches up against key rivals on industry key success factors and other chief determinants of competitive success and whether and why the company has a competitive advantage or disadvantage. Quantitative competitive strength assessments indicate where a company is competitively strong and weak, and provide insight into the company's ability to defend or enhance its market position. As a rule a company's competitive strategy should be built around its competitive strengths and should aim at shoring up areas where it is competitively vulnerable. When a company has important competitive strengths in areas where one or more rivals are weak, it makes sense to consider offensive moves to exploit rivals' competitive weaknesses. When a company has important competitive weaknesses in areas where one or more rivals are strong, it makes sense to consider defensive moves to curtail its vulnerability.

What strategic issues and problems merit front-burner managerial attention?

This analytical step zeros in on the strategic issues and problems that stand in the way of the company's success. It involves using the results of both industry and competitive analysis and company situation analysis to identify a "worry list" of issues to be resolved for the company to be financially and competitively successful in the years ahead. The worry list always centers on such concerns as "how to . . . ," "what to do about . . . ," and "whether to . . ."—the purpose of the worry list is to identify the specific issues/problems that management needs to address. Actual deciding on a strategy and what specific actions to take is what comes after the list of strategic issues and problems that merit front-burner management attention is developed.

Good company situation analysis, like good industry and competitive analysis, is a valuable precondition for good strategy making. A competently done evaluation of a company's resource capabilities and competitive strengths exposes strong and weak points in the present strategy and how attractive or unattractive the company's competitive position is and why. Managers need such understanding to craft a strategy that is well suited to the company's competitive circumstances.

There are five key questions to consider in analyzing a company's own particular competitive circumstances and its competitive position vis-à-vis key rivals:

How well is the present strategy working?

What are the company's resource strengths and weaknesses, and its external opportunities and threats?

Are the company's prices and costs competitive?

Is the company competitively stronger or weaker than key rivals?

What strategic issues and problems merit front-burner managerial attention?

Ud 30.8.2021

Pub 25 May 2013

Analysis of Firm's External Environment for Strategy Making

Online MBA Management Theory Handbook

Strategic Management Revision Articles - Chapter Summaries of Strickland and Thompson's Book

External environment includes customers, competitors, government regulations, and social trends. Analysis of external environment needs to have intelligence related to each of these principal component systems.

Analysis of a company's external situation involves finding answers to the following seven main aspects or questions:

1. What are the industry's dominant economic features?

Industries differ significantly on such factors as market size and growth rate, the number and relative sizes of both buyers and sellers, the geographic scope of competitive rivalry, the degree of product differentiation, the speed of product innovation, demand–supply conditions, the extent of vertical integration, and the extent of scale economies and experience/learning curve effects. For each industry, its dominant economic features are to be identified.

The relative size of buyers needs customer analysis. One has to know his needs and wants and his payment ability. His preference for the products currently available from various competitors and his happiness - unhappiness measures for the various features offered by various products and brands has to be assessed. (KNR)

In addition to setting the stage for the analysis to come, identifying an industry's dominant economic features also promotes understanding of the kinds of strategic moves that industry members are likely to employ (Question 5).

2. What kinds of competitive forces are industry members facing, and how strong is each force?

Porter's five force analysis is the basis for this step.

The strength of competition is a composite of five forces:
(1) competitive pressures stemming from the competitive maneuvering among industry rivals,
(2) competitive pressures associated with the market inroads being made by the sellers of substitutes, (3) competitive pressures associated with the threat of new entrants into the market,
(4) competitive pressures stemming from supplier bargaining power and supplier–seller collaboration, and
(5) competitive pressures stemming from buyer bargaining power and seller–buyer collaboration.

The nature and strength of the competitive pressures associated with these five forces have to be examined force by force to identify the specific competitive pressures they each comprise and to decide whether these pressures constitute a strong or weak competitive force.

The next step in competition analysis is to evaluate the collective strength of the five forces and determine whether the state of competition is conducive to good profitability.

Working through the five-forces model step by step not only aids strategy makers in assessing whether the intensity of competition allows good profitability but also promotes sound strategic thinking about how to better match company strategy to the specific competitive character of the marketplace. Effectively matching a company's strategy to the particular competitive pressures and competitive conditions that exist has two aspects: (1) pursuing avenues that shield the firm from as many of the prevailing competitive pressures as possible, and (2) initiating actions calculated to produce sustainable competitive advantage, thereby shifting competition in the company's favor, putting added competitive pressure on rivals, and perhaps even defining the business model for the industry.

3. What forces are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability?

In this step, variables in the economy that are driving the industry variables are analyzed.

Industry and competitive conditions change because forces are in motion that create incentives or pressures for change. The first phase is to identify the forces that are driving change in the industry; the most common driving forces include changes in the long-term industry growth rate, globalization of competition in the industry, emerging Internet capabilities and applications, changes in buyer composition, product innovation, technological change and manufacturing process innovation, marketing innovation, entry or exit of major firms, diffusion of technical know-how, changes in cost and efficiency, growing buyer preferences for differentiated versus standardized products (or vice versa), reductions in uncertainty and business risk, regulatory influences and government policy changes, and changing societal and lifestyle factors. The second phase of driving-forces analysis is to determine whether the driving forces, taken together, are acting to make the industry environment more or less attractive. Are the driving forces causing demand for the industry's product to increase or decrease? Are the driving forces acting to make competition more or less intense? Will the driving forces lead to higher or lower industry profitability?

4. What market positions do industry rivals occupy—who is strongly positioned and who is not?

This is a competitor position analysis most focused on individual players.

Strategic group mapping is a valuable tool for understanding the similarities, differences, strengths, and weaknesses inherent in the market positions of rival companies. Rivals in the same or nearby strategic groups are close competitors, whereas companies in distant strategic groups usually pose little or no immediate threat. The lesson of strategic group mapping is that some positions on the map are more favorable than others. The profit potential of different strategic groups varies due to strengths and weaknesses in each group's market position. Often, industry driving forces and competitive pressures favor some strategic groups and hurt others.

5. What strategic moves are rivals likely to make next?

This competitor strategy analysis.

This analytical step involves identifying competitors' strategies, deciding which rivals are likely to be strong contenders and which are likely to be weak, evaluating rivals' competitive options, and predicting their next moves. Scouting competitors well enough to anticipate their actions can help a company prepare effective countermoves (perhaps even beating a rival to the punch) and allows managers to take rivals' probable actions into account in designing their own company's best course of action. Managers who fail to study competitors risk being caught unprepared by the strategic moves of rivals.

6. What are the key factors for competitive success?

An industry's key success factors (KSFs) are the particular strategy elements, product attributes, competitive capabilities, and business outcomes that spell the difference between being a strong competitor and a weak competitor—and sometimes between profit and loss. KSFs by their very nature are so important to competitive success that all firms in the industry must pay close attention to them or risk becoming an industry also-ran. Correctly diagnosing an industry's KSFs raises a company's chances of crafting a sound strategy. The goal of company strategists should be to design a strategy aimed at stacking up well on all of the industry KSFs and trying to be distinctively better than rivals on one (or possibly two) of the KSFs. Indeed, using the industry's KSFs as cornerstones for the company's strategy and trying to gain sustainable competitive advantage by excelling at one particular KSF is a fruitful competitive strategy approach.

7. Does the outlook for the industry present the company with sufficiently attractive prospects for profitability?

If an industry's overall profit prospects are above average, the industry environment is basically attractive.

If industry profit prospects are below average, conditions are unattractive.

Conclusions regarding industry attractiveness are a major driver of company strategy, both for companies presently operating in the industry and companies that have the potential to enter the industry. When a company decides an industry is fundamentally attractive, a strong case can be made that it should invest aggressively to capture the opportunities it sees and to improve its long-term competitive position in the business. When a strong competitor concludes an industry is relatively unattractive, it may elect to simply protect its present position, investing cautiously if at all and looking for opportunities in other industries. A competitively weak company in an unattractive industry may see its best option as finding a buyer, perhaps a rival, to acquire its business. On occasion, an industry that is unattractive overall is still very attractive to a favorably situated company with the skills and resources to take business away from weaker rivals.

A competently conducted industry and competitive analysis generally tells a clear, easily understood story about the company's external environment. Different analysts can have different judgments about competitive intensity, the impacts of driving forces, how industry conditions will evolve, how good the outlook is for industry profitability, and the degree to which the industry environment offers the company an attractive business opportunity. However, while no method can guarantee a single conclusive diagnosis about the state of industry and competitive conditions and an industry's future outlook, Managers become better strategists when they know the answers given to the questions posed by experienced professionals. There's no substitute for doing cutting-edge analysis of company's external situation—anything less weakens managers' ability to craft strategies that are well matched to industry and competitive conditions.

The analysis may point out the need for strategic renewal.

Summary

Analysis of a company's external situation involves finding answers to the following seven main aspects or questions:

1. What are the industry's dominant economic features?

2. What kinds of competitive forces are industry members facing, and how strong is each force?

3. What forces are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability?

4. What market positions do industry rivals occupy—who is strongly positioned and who is not?

5. What strategic moves are rivals likely to make next?

6. What are the key factors for competitive success?

7. Does the outlook for the industry present the company with sufficiently attractive prospects for profitability?

Updated on 30 August 2021, 2 July 2020
24 Nov 2014

Strategic Management - Review Chapter Notes - Strickland and Thompson

PART ONE Concepts and Techniques for Crafting and Executing Strategy

Section A: Introduction and Overview

Chapter 1: What Is Strategy and Why Is It Important? Key Points of the Chapter

The Strategic Management Process - Review Notes

Chapter 2: Charting a Company’s Direction: Vision and Mission, Objectives, and Strategy - Key Points of the Chapter

Section B: Core Concepts and Analytical Tools

Chapter 3: Evaluating a Company’s External Environment - Key Points of the Chapter

Chapter 4: Evaluating a Company’s Resources, Capabilities, and Competitiveness - Key Points of the Chapter

Section C: Crafting a Strategy

Chapter 5: The Five Generic Competitive Strategies: Which One to Employ? - Key Points of the Chapter

Cost Leadership Competitive Strategy - Differentiation Competitive Strategy

Chapter 6: Strategy Choice Beyond Generic Product and Market Choices

Chapter 7:Tailoring Strategy to Fit Specific Company - Industry Situation - Review Notes:

Chapter 8: Strategies for Competing in International Markets - Key Points of the Chapter

Chapter 9: Corporate Strategy: Diversification and the Multibusiness Company - Key Points of the Chapter

Chapter 10: Ethics, Corporate Social Responsibility, Environmental Sustainability, and Strategy - Key Points of the Chapter

Section D: Executing the Strategy

Chapter 11: Building an Organization Capable of Good Strategy Execution: People, Capabilities, and Structure - Key Points of the Chapter

Chapter 12: Managing Internal Operations: Actions That Promote Good Strategy Execution - Key Points of the Chapter

Chapter 13: Corporate Culture and Leadership: Keys to Good Strategy Execution - Key Points of the Chapter

Updated on 30.6.2021

Pub 24.6.2014

August 25, 2021

BOWERSOX, D.J. & CLOSS, D.J.: Logistical Management: The Integrated Supply Chain Perspective - 1996 - Book Information

BOWERSOX, D.J. & CLOSS, D.J.:

Logistical Management: The Integrated Supply Chain Process

McGraw-Hill, Inc., New York, 1996.

Preview in: https://books.google.co.in/books?id=yfvCk-Pd6vEC

Happy to notice today (24.8.2021) that I taught the course on logistics using this book in 1996-97 session.

The main book used might be "Business Logistics Management" by Ronald H. Ballou (1973).

But I have transparencies containing material from Bowersox and Closs's Book also in the course notes, that I came across today as part of my going through all papers in my office room to shift some papers to my house as part of post-retirement vacating of the office room.

Table of Contents

1. Logistics

2. Logistical Operations Integration --

3. Customer Service --

4. Supply Chain Relationships

5. Global Logistics --

Case A: Integrated Logistics --

Case B: Whitmore Products: Time-Based Logistics at Work --

Case C: Zwick Electrical: Developing a Global Logistics Strategy --

6. Information --

7. Forecasting --

Problem Set A: Information-Forecasting --

8. Inventory Strategy --

9. Inventory Management --

Problem Set B: Inventory --

10. Transportation Infrastructure --

11. Transportation Regulation --

12. Transportation Management --

Problem Set C: Transportation --

13. Warehouse Management --

14. Material Handling --

15. Packaging --

16. Logistics Positioning --

17. Integration Theory --

18. Planning and Design Methodology --

19. Planning and Design Techniques --

Case D: Westminster Company: A System Design Assessment --

Case E: Alternative Distribution Strategies --

Case F: Michigan Liquor Control Commission --

20. Organization. 21. Planning, Costing, and Pricing --

22. Performance Measurement and Reporting --

23. Dimensions of Change: A Seminar Focus --

Case G: Woodson Chemical Company --

Case H: Performance Control --

Case I: Managing Change in Wholesaling: The Case of Wilmont Drug Company.

1. Logistics

Logistics involves the integration of information, transportation, inventory, warehousing, materials handling, and packaging.

Business logistics is the study of how management can best provide a profitable level of distribution service to customers through effective planning, organizing and controlling of the move-store activities that facilitate product flow.

Cost - A Very Important Issue in Logistics Management

Observe the following statements.

1. The operation responsibility of logistics is the geographical positioning of raw materials, work-in-process, and finished inventories where required at the lowest cost possible.

2. The overall goal of logistics is to achieve a targeted level of customer service at the lowest possible total cost.

3. Logistical competency is a relative assessment of a firm's capability to provide competitively superior customer service at the lowest possible total cost,

4. The challenge in logistics is to balance service expectations and cost expenditures in a manner that achieves business objectives.

5. In today's operating environment of logistics, the limiting factor is economics, not technology.

6. Extreme service commitment might constitute a sales manager's dream, but it would be costly and typically is not necessary to support marketing and manufacturing operations.

7. In final analysis, logistical service is a balance of service priority and cost.

8. The typical enterprise seeks to develop and implement an overall logistical competence that satisfies key customer expectations at a realistic total-cost expenditure.

9. Formulation of sound logistics strategy requires a capability to estimate cost required to achieve alternative service levels.

Chapter 4. Supply Chain Relationships

The objective of this chapter is to develop an understanding of the importance of supply chain relationships. Attention is directed to supply chain competitiveness; the relationship of risk, power and leadership; and the characteristics of successful supply chain management.

Business Logistics/supply Chain Management: Planning, Organizing, and Controlling the Supply Chain

Ronald H. Ballou, Samir K. Srivastava

Pearson Education India, 2007 - Business logistics - 800 pages

This book covers the planning, organizing, and controlling of activities such as transportation, inventory maintenance, order processing, purchasing, warehousing, materials handling, packaging, customer service standards, and product scheduling. It is specifically designed to help learners solve the actual problems that they will encounter in today's market place. It provides the basic decision making tools and concepts used for finding cost reduction and strategic opportunities.

Preview in:

https://books.google.co.in/books?id=4cyN3lVFe-UC

------------

Supply Chain Logistics Management

2011

https://books.google.co.in/books?id=VvSLP_QsDp0C

Supply Chain Logistics Management

5th Edition

By Donald Bowersox and David Closs and M. Bixby Cooper

ISBN10: 0078096642

ISBN13: 9780078096648

Supply Chain Logistics Management presents Logistics in the context of integration within a firm’s supply chain strategy and operations.

A framework of Supply Chain Management is presented first to create a foundation for in-depth study of the five logistical operations components.

Connect is an easy-to-use homework and learning management solution that embeds learning science and award-winning adaptive tools to improve student results.

Table of Contents

1) 21st Century Supply Chains

2) Supply Chain Information Technology

3) Logistics

4) Customer Accommodation

5) Integrated Operations Planning

6) Procurement and Manufacturing

7) Inventory

8) Transportation

9) Warehousing, Materials Handling and Packaging

10) Global Supply Chain

11) Network Design