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74 Cards in this Set
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Strategic Management Cycle |
Formulation Development Implementation Evaluation |
Four phases |
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What happens during Formulation? |
Gather and analyze internal and external information to determine the org’s current position and capabilities, opportunities and constraints. |
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What happens during the Development phase? |
Orgs strategies will be selected. How orgs will compete in its industry and where it will compete. |
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What happens during the implementation phase? |
Strategies are translated into specific action plans and resources are allocated by strategic priority. |
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What happens during the Evaluation phase? |
Performance data is analyzed against agreed metrics. The success of the strategic initiatives is reported to management who may opt to persist with, adjust, or shift the strategic plan. |
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Information gathering and analysis will identify constraints. |
Factors that will make a chosen strategy more difficult to achieve. Ex. Organization culture doesn’t align with goals. |
Strategy |
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Strategic levers |
Organizational characteristics or industry conditions that will enhance the chances of achieving strategic goals. |
Strategy |
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Organization life cycle |
Introduction Growth Maturity Decline |
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Introduction phase |
Vision, innovation and energy are critical to getting the organization off the ground and on its way to competing successfully. |
Org lifestyle |
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Growth phase |
As an enterprise grows, so does demand and the enterprise must become more disciplined. HR should focus on finding the most efficient structure and standardize the org’s processes to manage the workforce for peak efficiency |
Org lifestyle |
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Maturity phase |
Organizations must wring efficiency out of every aspect of business. More ways to streamline processes and deliver services more efficiently. |
Org lifestyle |
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Decline phase |
Organizations must be able to adapt to change to redefine themselves. Requires culture change. |
Org lifestyle |
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Environmental scanning |
A process that involves a systematic survey and interpretation of relevant data to identify external opportunities and threats and to assess how these factors affect the organization currently and how they are likely to affect the organization in the future |
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Purpose for environmental scanning |
Lessen the randomness of information flowing into the organization and provide early warnings for managers of changing external conditions |
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PEST stands for? |
Political Economic Social Technological |
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PEST can be conducted on what levels? |
Entire enterprise Individual units and functions Specific activities |
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PEST Analysis |
Assemble list of possible events or trends Identify potential impacts on the organization Research the impacts more thoroughly to understand possible causes, dimensions, and connections with other events or trends Assess their importance based on strength of the data |
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SWOT Analysis |
A simple and effective process for accessing an organization’s strategic capabilities in comparison to threats and opportunities identified during environmental scanning. |
It can also be used to analyze strengths and weaknesses if parts of an organization, products or services and individual initiatives |
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SWAT analysis involves answering four basic questions |
S - what are the organization’s internal strength W - What are the organization’s internal weaknesses O - What external opportunities might the organization be able to take advantage of T - what external threats must the organization except or manage in order to succeed |
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SWOT parts |
Strengths and weaknesses refer to internal environment Strengths and opportunities can be leveraged Weaknesses and threats are problems that must be solved Opportunities and threats come from external environment |
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Mission statement |
Specifies what activities the organization intends to pursue and what course management has charted for the future. Concise statement of its strategy. |
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Benchmarking |
Compares performance levels and/or processes of one entity with those of another to identify performance gaps and set goals aimed at improving performance |
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Balance sheet |
One indicator of the organization’s financial health |
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Assets |
What an organization owns including investments the company has made |
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Accounts receivable |
Money an organization’s customers owe the organization |
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Vision statement |
Guiding image of the organization’s desired future. Future it hopes to attain through its strategy. It’s meant to inspire and motivate. |
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Organizational values |
Beliefs that are important to an organization and often dictate employee behavior. |
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Value drivers |
Actions, processes, or results that are needed to deliver a desired value |
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Balanced scorecard |
Organizations use this approach to identify their key performance indicators (KPI) and to make sure that the objectives used to measure performance are strategically aligned to the various sources of value to the organization and are balanced |
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KPIs Key Performance Indicators |
Finance - productivity rates Customers - provide quality goods and services and satisfy its customers Internal business processes- business results that lead to financial success and satisfied customers Learning and growth - future organization for success |
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Balance scorecard purpose |
Balance in between: Financial and non financial indicators of success Internal and external constituents in the org Lagging and leading indicators of performance |
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Leading indicator |
Predictive performance rather than lagging indicators |
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Lagging indicators |
Describes effects that have already occurred and cannot be changed |
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What makes a performance objective effective? |
SMART Specific Measurable Attainable Relevant Timebound |
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Liabilities |
What an organization owes. Includes rent, loans, wages, benefits |
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Accounts payable |
Money an organization owes its vendors and suppliers |
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Equity |
It is combined with liabilities in the balance sheet because it represents what a company owes to either its owner or its shareholders |
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Assets = |
Liabilities + Equity |
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Net Income = |
Revenues - Expenses |
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Income statement |
Compares revenues, expenses, and profits over a specified period of time |
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Gross profit margin = |
Gross profit + net sales |
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Net profit margin = |
Net income / Net sales |
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Cash flow statement |
Illustrates the effect of all organizational activities. Shoes how much money is flowing into and out of the organization through operations, investments, and financing over a period of time. |
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Ways an organization can create competitive advantage? |
1st involves change in the external environment: customer demand, prices, technology 2nd involves change inside the organization itself |
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Merger/acquisition |
A firm purchases the assets of local firm outright, resulting in expanding the acquiring company’s employees base and facilities |
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Franchising |
Trademark, product, or service is licensed for an initial fee and ongoing royalties. Fast food industry |
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Licensing |
A local firm is granted the rights to produce or sell a product. |
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Contract manufacturing |
A firm arranged for a local manufacturer to produce components or products as the means of lowering labor costs |
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Management contract |
Another company is brought in to manage and run the daily operations of the local businesses. Decisions about financing and ownership reside with the host county owners |
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Turnkey operation |
An existing facility and its operations are acquired and run by the purchaser without major changes |
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Greenfield operation |
A company builds a new location from the ground up. |
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Brownfield operation |
Company repurposes, through expansion or redevelopment, an abandoned, closed or underutilized or commercial properly |
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Due diligence |
An intensive investigation of all factors surrounding a business decision to ensure that all risks are understood and that a risk management strategy is developed, accepted, and implemented |
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Steps for divestiture |
Identify the candidate for divestiture Identify a target buyer Restructure Execute the deal |
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Blue ocean strategies |
Extreme examples of creating competitive advantage through innovation. Unknown market space, untainted by competition |
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Growth share matrix |
Analysts can place a business unit, a product or service, or a branch in one of four grids. Market growth rate and market share. Stars, dogs, question mark, cash cows |
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Stars |
Highly productive or value generating employees, programs, or processes |
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Dogs |
Produce little results and satisfy few needs |
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Question marks |
They are not producing the desired results although the need persists and may be increasing |
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Cash cows |
Have done and continue to do well, but their market is mature and their growth potential is limited |
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Nine box matrix |
Used when HR professionals must direct scarce resources to workforce management |
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Business case |
A presentation to management that establishes that a specific problem exists and argues that the proposed solution is the best way to solve the problem in terms of time, cost efficiency, and probability of success |
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Statement of need |
Condition or change impelling the function’s action |
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Recommended solutions |
The objectives for an ideal solution are defined, and the proposed action is described in sufficient detail to show how it meets these objectives |
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Risks and opportunities |
Risks should include outcomes that could decrease the project’s chance for success, outcomes that could present new opportunities that would require action, and the risks of doing nothing at all |
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Porter’s Competitive Strategies |
Two types of competitive advantage strategies: cost leadership and differentiation principles to an industry or market segment |
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Cost leadership |
Firms that pursue strategy of cost leadership aim at capturing market share within their industry by virtue of lowest price. Like IKEA transferring some activities to the customers to reduce cost. |
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Differentiation |
Firms that pursue a strategy of differentiation from competition aim for being able to charge a higher price and therefore create more value by offering something different or by offering the same thing in different way from other competitors in their industry or market |
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Focus |
Focus strategies apply cost leadership or differentiation within a narrow industry segments or niches |
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Growth strategy |
way in which an organization intends to grow |
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Strategic alliance |
Companies agree to share assets such as technology or sales capabilities |
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Joint venture |
Two or more companies invest together in forming a new company that is jointly owned |
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Equity partnership |
One firm acquires partial ownership through purchase shares. Partnership agreements define such issues as leadership and division of profits and losses |
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Estimated costs and time frame |
The project budget should include all foreseeable elements plus a reserve for the unforeseeable based on the project’s risks |
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