Chapter on Strategic Management


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Chapter 1

1. Importance of Strategic Management

Strategic management is an important aspect of an organization which helps in becoming a successful firm. Furthermore, it also assists in making effective strategies and plans which will help the management to take appropriate decisions for the firm (Strategic Management, 2016). Through this, it will enhance profitability of the business.

2. Strategic management typically evolve in a corporation

Strategic management can be evolved in a corporation through assisting their specific knowledge and competencies. It will also solve the issues of corporation systematically. Moreover, it will give a chance to the firm to experiment with new approaches. Strategic management assists in spreading knowledge rapidly and expeditiously to all their employees.

3. Learning organization

Learning organization can be defined as the firm which is skilled at creating, acquiring, and transferring knowledge as well as reflecting new knowledge and insights of the business. (Laird-Magee and, 2015) Yes, this approach is better than the more traditional top–down approach because in that, all the decisions are taken by the top management and lower management can't able to take participate in it.

4. Strategic decisions different from other kinds of decisions

Strategic decisions are different from others because these deal with the long term future of the firm. These decisions are rare and typically have no precedent to follow. These decisions need commitment from all employees and significant resources. Strategic decisions are of directive which are set according to future action.

5. When is the planning mode of strategic decision making superior

At the situational analysis, the planning mode of strategic decision making is superior to the entrepreneurial and adaptive modes. It comprises of search for both the new opportunities and reactions for the existing issues. Making planning at the critical time will help in analysing deficits of the organization.

Chapter 2

1. When does a corporation need a board of directors

A corporation needs a board of directors at the time of setting corporate strategy, mission and vision. The other aspects can be controlling and monitoring the top management (Salem Khalifa, 2012). The directors can help in reviewing and approving the use of resources which are used in the organization. Moreover, they also care about the shareholder’s interests.

2. Who should and should not serve on a board of directors? Define environmentalists or union leaders

The directors should have relevant industry experience, strategic and problem-solving skills as well as other effective skills. The directors who do not constitute these types of skills so they cannot be served as a board of directors. The environmentalists and union leaders work for the economy to have good investment which caters more profitability.

3. Should a CEO be allowed to serve on another company’s board of directors

No, this can't be possible if CEO is serving another company's board of directors. This is because, CEO articulates a strategic vision for a firm which can't be set for other company. CEO has to deal with strategic management in which he has to provide executive leadership and effective vision for the organization (Bettis and, 2015). The other responsibility is managing the strategic planning process of the corporation.

4. What would be the result if the only insider on a corporation’s board were the CEO

Insider directors are the management directors which are typically the officers or executives who are employed by the corporation. According to the survey, if there are more insiders then there will be biased management performance objectively in the firm. If insiders are more preferable then they will be less effective in terms of interest, availability and competency.

5. Should all CEOs be Transformational Leaders

Transformational leaders can be defined as those who manage the regular operations and create strategy for the company's department. So, CEO should be transformational leaders so that he can be able to motivate and collaborate with staff to accomplish the organizational goals (Eden and Ackermann, 2013). To motivate the employees, management provides growth opportunities and incentives.

Chapter 3

1. How development in a corporation’s natural and societal environments can affected

Development in environmental scanning can be affected in long term to ensure that there should be good relationship between the environmental scanning and profitability. This influences long term decisions which help in different factors like economic, technological, political, legal and societal. These all factors help in short run activities which can influence the long run decisions.

2. What determines the level of competitive intensity in an industry

According to Porter, Competitive intensity in the particular industry is useful to characterize the various competitors for predictive purposes. The firm which is based on common strategic orientation and combination of culture, structure and processes with a consistent is known as competitive intensity (Swayne, Duncan and Ginter, 2012). At the time of hyper competition, this competency intensity level is required.

3. According to Porter’s discussion of industry analysis, is Pepsi Cola a substitute for Coca-Cola

Yes, Pepsi Cola can become the substitute for Coca-Cola because if the products are giving same features in same prices then people can take Pepsi cola as substitutes. Porter also states that Pepsi Cola has to analyse the industry situation and provides customers with better products to satisfy them.

4. How can a decision maker identify strategic factors in a corporation’s external international environment

Decision maker will be able to identify the strategic factors through analysing various aspects such as rivals, suppliers, regulations etc. In this, decision maker has to consider the present and future environmental opportunities as well as threats. This helps the managers to know about firm's feasibility and to create effective decisions for the firm.

5. Comparing and contrasting trend extrapolation with the writing of scenarios as forecasting techniques

There are various techniques which are used for forecasting the future situations in the forecasting techniques. The extrapolation can be referred as the extension of present trends into the future. This technique has assumption that there is consistency in the work and which changes according to the short term process (Compare and contrast forecasting methods, 2016). Whereas, it is depended on the historical aspects in which there are different variables that change the direction of trend.

Chapter 4

1. What is the relevance of the resource-based view of the firm to strategic management

It is necessary to have a resource based view in the firm because it identifies and classifies the firm's resources in terms of strengths and weaknesses. Secondly, it converts strengths into capabilities and core competencies. Thirdly, to select the strategy which matches the best with the external opportunities, it analyses the resource gaps and invests more on upgrading weaknesses.

2. How can value-chain analysis help identify a company’s strengths and weaknesses

Value chain analysis helps in identifying a firm's strengths and weaknesses available in the profit margin at that time. By analysing the whole product, there are various types of level of expertise which help in identifying the strengths and weaknesses of the business enterprise (Apenko, 2014).

3. In what ways can a corporation’s structure and culture be internal strengths or weaknesses

Corporation's structure and culture play an important role in the organization. If there are effective structure then firm can effectively allocate tasks at given time frame. The culture should be feasible so that staff will be able to communicate with each other and share their views as well as ideas for the betterment of the company.

4. The pros and cons of management’s using the experience curve to determine the strategy

The experience curve shows the relationship between the production cost and cumulative production quantity. The pros of this curve are labour efficiency, standardization, technology driven learning, utilization of equipment, product redesign, cost effective etc. On the other hand, the cons of experience curve is economies of scale which can't able to differentiate by the scale of production and it is very risky (Sarros, and, 2011).

5. How might invest in current known technology? What factors might encourage or discourage

There should be an investment in current known technology and also in new technology because it will help in designing and managing the flow of information which will improvise in productivity and decision making. Furthermore, it will enhance performance of the company and will encourage employees to remain motivated and provide better productivity.

Chapter 5

1. What industry forces might cause a propitious niche to disappear

There are some forces which may cause a propitious niche to disappear and several core competencies which take advantages of a particular market opportunity. This is the need which is currently unsatisfied and not challenged by the internal and external environment. The other forces can be quality culture, financial position, global positioning and international orientation (Qin and, 2013).

2. Is it a cost leadership strategy and a differentiation strategy runs simultaneously? Why?

Yes, both strategies can run simultaneously in the company and this is because both the strategies are focussing on broad mass market so they are able to incur the revenues as well as provide unique products. The only difference between these is focusing on two different aspects that are pricing and variations in the products respectively.

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3. Is it possible for a company to have a sustainable competitive advantage in hyper-competitive

It is difficult to have sustainable competitive advantage in the hyper-competitive world for the long term. This is because market stability comprises of short product life cycle, product designs, new technologies which require lot of continuous improvement. In hyper-competitive market, it will not enough to have the lowest cost competitor (Pesonen and Horn, 2013).

4. What are the advantages and disadvantages of being a first-mover

The company who firstly sells a new product or service is known as first mover. Advantage of this is to establish reputation as an industry leader, cost leader etc. Whereas, disadvantages are temporarily high profits, lack of technology etc. Example of first mover firm is Netscape and late mover of this is Internet Explorer. Yes, both were successful in their times but evolving of technology changed the perceptions of customers.

5. Why are many strategic alliances temporary

Many of the strategic alliances are temporary because to obtain or learn new capabilities, to obtain access to specific markets, to reduce financial risk and helpful in reducing the political risk. These are the reasons which state that strategic alliances are made on temporary basis.

Chapter 6

1. How does horizontal growth differ from vertical growth as a corporate strategy

Horizontal growth is all about extending its operations in other geographic locations with different products and customers. On contrary to this, vertical growth can be accomplished by taking over a function previously provided by supplier which may help in reducing the costs, gaining control over scarce resources, accessing to potential customers etc. (Price, 2012). Whereas, concentric diversification is the strategy which is used for strong competitive position but industry attractiveness is low.

2. What are the trade-offs between an internal and an external growth strategy

Internal growth strategy considers external acquisitions, mergers, and strategic alliances. While an external strategy is done on the basis of competitors and environmental analysis. For international entry strategy, external strategies are suited as the best because the internal strategy has failed in satisfying the customers.

3. Is stability really a strategy or just a term for no strategy

Stability is a strategy because it helps in predicting the environment and providing success to the firms. This strategy is helpful in short term but it can be dangerous if it is followed for long term (Matheson, 2011.). These stability strategies comprise of caution strategy, no change strategy and profit strategy.

4. Comparing and contrasting SWOT analysis with portfolio analysis

SWOT analysis is all about designing the product and market segmentation that helps in analysing the opportunities and strengths, identifying the market environment and making strategy according to that. However, Portfolio analysis encourages top management to evaluate and set the objectives, graphic depiction etc. that are done for the communication.

5. How is corporate parenting different from portfolio analysis

Corporate strategy can be defined as an examination of business unit in terms of strategic factors, performance improvisation and analysing of the parent corporation which fits in the business unit. Whereas, portfolio is all about developing, monitoring, coordinating and establishing the alliances in a firm. Yes, corporate parenting is a useful concept in the global industry.

Chapter 7

1. Are functional strategies interdependent, or can they be formulated independently of other functions

Functional strategy is the concept which is independent in nature and assists in maximizing resources productivity (Humphrey, 2014). This can be formulated independently by emphasizing on the quality assurance, high level of production, skilled workforce etc. Hence, this will result in low cost competitive strategy.

2. Why is penetration pricing more likely than skim pricing to raise profits

Skim pricing is all about the opportunity which has high demand with high prices and people avoid to buy the products. However, penetration pricing offers products with low prices. Through this, penetration will be able to make more profits then skim pricing.

3. How does mass customization support a business unit’s competitive strategy

Mass customization will support strategy in the product life cycle in which it requires people, process, technology etc. so that they can be able to provide products to the customers as per their needs and requirements. For continuous improvisation, it requires flexibility and quick responsiveness (Phillips and Zhdanov, 2013).

4. When should a corporation or business unit outsource a function or an activity

A corporation should use outsource in decision making, increasing efficiency and quality function or activity so that they can be able to provide good quality standards at low cost. The other certain activities in outsourcing are product, human resource management, marketing, finance etc.

5. What is the relationship of policies to strategies

Strategies are made on the policies and in the organization, it is necessary to have some policies. An effective policy helps in managing the corporate culture and has the right to oblige strategic options in the organization. Moreover, the policies only help in implementing the specific strategies easier.

Chapter 8

1. How should a corporation attempt to achieve synergy among functions and business units

Achieving synergy among functions and business units can be reorganized after acquisition (Hull, 2012). Synergy can be of six types and they are shared know- how, coordinated strategies, shared tangible resources, economies of scale, pooled negotiating power, new business venture.

2. How should an owner-manager prepare a company for its movement from Stage I to Stage II

There are several aspects in which simple structure can convert into functional structure and these factors can be some challenges, objectives, strategy, key performance indicators, reward punishment system and other aspects which grow one structure from one stage to another.

3. How can a corporation keep from sliding into the Decline stage of the organizational life cycle

Product life cycle is an important approach which is followed by the organization in which first product is introduced at birth stage. Secondly, the product grows then it comes on maturity level and because of the substitutes, the product starts to decline which leads to disappear in the market.

4. Is reengineering just another management fad, or does it offer something of lasting value

Reengineering is the process which achieves the profits in perfect time along with the cost and service. It is not the structure, it is a strategy (Salem Khalifa, 2012). Yes, it offers lasting value for long term by organizing task, directing rules and policies as well as providing effective results.

5. How is the cellular/modular structure different from the network structure

Here, the cellular structure is different from the network structure because former is easier than latter. The network structure is vast and has various network internationally from where the departments control their all branches of the organization. For the multinational, network structure is the best for the firm.

Chapter 9

1. What skills should a person have for managing a business unit following a differentiation strategy

To manage business, there should be experienced people with the necessary skills that are needed for the promotion of newly created managerial positions. By this, it is able to control and monitor the business effectively, flexible management style, knowledge of acquiring company, a willingness to work independently etc. (Bettis and, 2015). Company can give the responsibility to highly graded employees to manage

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