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Chapter 7 GMS.docx

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Global Management Studies
GMS 200
Louis Pike

Chapter 7 Environments and competitive advantage  Monopoly  Only one player and no competition  Creates absolute competitive advantage  Oligopoly  Few players not directly competing against each other  Long term competitive advantage in defined market segment  Hyper competition  Several players directly competing against each other  Any competitive advantage is only temporary Strategic Management + Competitive Advantage: is the ability to do something s well that one outperforms competitors  Cost and quality : where strategies drives an emphasis on operating efficiency and product or service quality  Knowledge and speed : where strategy drives an emphasis on innovation and speed of delivery to market new ideas  Barriers to entry : --- creating a market stronghold that is protected from entry by others  Financial resources: --- on investments or loss absorption that competitors cant match. Sustainable competitive advantage : is the ability to outperform rivals in ways that are difficult or costly to imitate + Strategy and Strategic Intent Strategy: is a comprehensive plan guiding resource allocation to achieve ling term organization goals Strategic Intent: focuses and applies organizational energies on a unifying and compelling goal + Levels of strategy 1. Corporate level strategy : directs the organization as a whole toward sustainable competitive advantage. Sets long term direction for the total enterprise 2. Business level strategy: is the strategy for a single business unit or production. o Identifies how a division or strategic business unit will compete in its product or service domain o Business strategy decisions: choices of product and service mix, facilities locations, new technologies, and the like. Strategic business unit (SBU) is often used to describe a single business firm with larger enterprise. Whereas the enterprise as a whole will have a corporate strategy, each SBU will have its own business strategy. 3. Financial Strategy: guides the use of organizational resources to implement business strategy. Guides activities within one specific area of operations. Level of strategy: focuses on activities within specific functional area such as marketing, manufacturing, finance, or human resources. + The Strategic Management Process  Is the process of formulating and implementing strategies to accomplish long term goals and sustain competitive advantage Process begin with : 1. Strategic analysis: is the process of analyzing the organization, the environment, and the organization`s competitive position and current strategies. 2. Strategy formula: is the process of crafting strategies to guide the allocation of resources. 3. Strategy Implementation: is the process of putting strategies into action. Strategy formulation  The process of creating strategy  Involves assessing existing strategies, organizations and environment to develop new strategies and strategic plans capable of delivering future competitive advantage Strategy question for strategy formulation  What is our business mission?  Who are our customers?  What do our customers consider value?  What have been our results?  What is our plan? Strategy implementation  The process of allocating resources and putting strategies into action  All organizational and management systems must be mobilized to support and reinforce the accomplishment of strategies Essential tasks for strategy implementation  Identify organizational mission and objectives  Asses current performance vis-a-vis mission and objectives  Create strategic plans to accomplish purpose and objectives  Implement the strategic plans  Evaluate results; change strategic plans and/or implementation processes as necessary Essentials of Strategic Analysis Analysis of mission, values, and objectives Mission: statement expresses the organization’s reason for existence in society. 1. Mission and Stakeholders Stakeholders: are individuals and groups directly affected by the organization and its strategic accomplishments A strategic constituencies analysis: assess interest of stakeholders and how well the organization is responding to them. 2. Core Values  Are board beliefs about what is or is not appropriate behaviour. Organizational Culture: is the predominant value system for the organizations as a whole The presence of strong core values helps build organizational identity, giving a sense of character to the organization in the eyes of its employees and external stakeholders. Core values also back up the mission by helping guide the behaviour of organization members in meaningful and consistent ways. 3. Objectives - Operating objectives are specific results that organizations try to accomplish. o Profitability : operating with a net profit o Financial health : acquiring capital; earning positive returns o Cost efficiency : using resources well to operate at low cost o Product quality : producing high quality goods or services o Market share : gaining a specific share of possible customers o Human talent L recruiting and maintaining a high quality workforce o Innovation : developing new products and processes o Social responsibility : making a positive contribution to society SWOT analysis of organization and environment SWOT analysis: examines organizational strengths and weaknesses and environmental opportunities and threats 1. Organizational Strengths and Weaknesses - A SWOT analysis begins with a systematic evaluation of the organization`s resources and capabilities – its basic strengths and weaknesses - Core competencies: is a special strength that gives and organization a competitive advantage. They are rare, costly to imitate and cannot be substituted, become potential sources of competitive advantage. - The goal is assessing weaknesses is to identify things that inhibit performance and hold the organization back from fully accomplishing its objectives. 2. Environmental Opportunities and Threats. - Environmental threats may be such things as the emergence of new competitiors, resource scarcities. Changing customer tastes, new government regulations, and a weak economy. Analysis of industry and environment  Assessment of macro environment  Technology  Government  Social structures and population demographics  Global economy  Natural environment  Analysis of industry environment  Resource suppliers  Competitors  Customers Strategic forces to be examined in conducting an industry analysis 1. Porter`s five forces model: - Industry competition: the intensity of rivalry among firms in the industry and they ways they behave competitively toward one another - New entrants : the threat of new competitors entering the market, based on the presence or absence of barriers to entry - Substitute products or services : the threat of substit
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