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Lecture 7

GMS 200 Lecture 7: GMS 200 Week 8 Notes

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Ryerson University
Global Management Studies
GMS 200

Introduction to Global Management Week 8 Lecture/Textbook Notes Strategic Management • create above average returns for investors • competitive advantage - operating with an attribute or set of attributes that allow an organization to outperform its rivals • sustainable competitive advantage - an advantage that is difficult for competitors to imitate competitive advantage comes from: - cost and quality - operating efficiency and product or service quality - knowledge and speed - innovation and speed of delivery to market for new ideas - barriers to entry - creating a market stronghold that is protected from entry by others - financial resources - investments Strategy and Strategic Intent • strategy - a comprehensive action plan that identifies long-term direction for an organization and guides recourse utilization to accomplish organizational goals with sustainable competitive advantage • strategic intent - focusing all organizational energies on a unifying and compelling goal • corporate strategy - sets long-term direction for the total enterprise • business strategy - identifies how a division or strategic business unit will compete in products or services • functional strategy - guides activities within one specific area of operations Strategic Management Process • strategic management - the process of formulating and implementing strategies strategic analysis - the process of analyzing the organization, environment and • organization’s competitive position and current strategies • strategy formulation - the process of crafting strategies to guide the allocation of resources; revise objectives and select new strategies; Drucker’s strategic questions 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 out plan?) • strategy implementation - the process of putting strategies into action; evaluate control and governance, renew strategic management process Essentials of Strategic Analysis • mission statement - expresses the organization’s reason for existence in society; how well it serves the organization’s stakeholders • core values - broad beliefs about what is or is not appropriate behaviour; organizational culture reflects the dominant value system of the organizational identity, give character to the organization in the eyes of employees and external stakeholders, back up mission statement, guide the behaviour of organization members in meaningful and consistent ways • operating objectives - specific results that organizations try to accomplish - profitability - operating with a new profit - financial health - acquiring capital and earning positive returns - cost efficiency - using resources that will operate at low cost - customer service - meeting customer needs and maintaining loyalty - product quality - producing high-quality goods or services - market share - gaining a specific share of possible customers - human talent - recruiting and maintaining a high-quality workforce - innovation - developing new products and processes - social responsibility - making a positive contribution to society • core competency - a special strength that gives an organization a competitive advantage; use SWOT analysis; potential core competencies include special knowledge, expertise, superior technology, efficient manufacturing approaches and unique product distribution systems • Porter’s 5 Forces Model - a framework for competitive industry analysis 1. Industry competition - the intensity of rivalry among firms in the industry and the ways they behave competitively toward one another 2. New entrants - the threat of new competitors entering the market, based on the presence or absence of barriers to entry 3. Substitute products or services - the threat of substitute products or services, based on the ability of consumers to find what they want from other sellers 4. Bargaining power of suppliers - the ability of resource suppliers to influence the price that one has to pay for their products or services 5. Bargaining power of customers - the ability of consumers to influence the price that they will pay for a firm’s products or services Grand or Master Strategies growth strategies - seek an increase in size and the expansion of current operations; • includes concentration strategics, and diversification strategies (related diversification, unrelated div
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