BU111 Study Guide - Midterm Guide: Switching Barriers, Business Cycle, Canadian Business

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8 Feb 2013
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BU111 Exam notes
1
The relationship between the firm and its external environment
- the external environment consists of everything outside an organization that
might affect it
- managers must understand the key features of the external environment, and
strive to operate and compete within it
- managers should not react to changes in the external environment; rather they
should be proactive and at least try to influence their environment
- elements of the external environment include:
economic conditions
technology
political-legal considerations
social issues
the global environment
issues of ethical and social
responsibility
the business environment itself
emerging challenges and opportunities
Organizational Boundary: that which separates the organization from its
environment
Economic Environment: conditions of the economic system in which an
organization operates
Critical Success
Factors
Notes
Achieving Financial
Performance
- profits: revenue > expenses
- growth in the company with steady cash flow
- avoiding competition and bankruptcy
Meeting Customer
Needs
- demands need to be satisfied
- expand number of customers
- anticipate, understand, and deliver needs
- understand consumers are the source of revenue
- customers need to come back in order to earn continuous revenue
Building Quality
Products and Services
- best quality- people pay for quality
- identify target customer and delivers such quality products
- consistency is key reputation
Encouraging
Innovation and
Creativity
- as technology grows, customer needs change, therefore innovation required
- putting something new out there to capture the customers’ attention
- anticipating trends
- not just about what you give the customers but about how you create the
product
Gaining Employee
Commitment
- employees should be proud of their business, know that its “cool”
- keep employees so they do not switch to competitors
- enthusiasm= better business
- happy employees will do more than what they are paid for
Creating a Distinctive
Competitive Advantage
- businesses want monopoly
-by providing something that other companies don’t, consumers are willing to
pay more for that specific product you can set your own process (not easy
with competition)
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BU111 Exam notes
2
Critical success factors are those that must go well to ensure success for a manager
or an organization, and, therefore, they represent those managerial or enterprise
areas, that must be given special and continual attention to bring about high
performance. CSFs include issues vital to an organization's current operating
activities and to its future success.
Diamond- E framework:
Key variables:
Management
Preferences
Environment
Resources
Organization Strategy
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BU111 Exam notes
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Double headed arrows mean that everything influences each other
Internal Variables:
1) MANAGERS: make decisions (management preferences)- they are humans to
therefore can be bias and can have bias approaches, desires, and can be aggressive
2) ORGANIZATION: soft and hard things, structure, capability, leadership
3) RESOURCES: 3 categories: human, capital, financial
External would be strategy
Strategy- Environment linkage:
- Strategy: what opportunities the business is pursuing
- determines the resources, organizational capabilities, and the management
preferences
- The critical linking variable in the model any variable can either drive or
constrain strategy
- Principal Logic- consistency or alignment
- strategy must be consistent with internal workings of company
(preferences, resources, etc)
- strategy must align with the external environment; you may have the best
strategy but it may not be right for that environment environment is
changing, so strategy must be shifting
- absolute alignment is not realistic- can either limit or be advantageous to
other factors
- First task: deal with strategy-environment linkage assesses forces at work, and
their implications
Organization influences…
- organization refers to culture, leadership, structure, and capabilities (CLSC)
- STRATEGY: you have to have the right CLSC in order to have the right strategy
you may not have the leadership/structure/etc appropriate for the strategy you
prefer
Management Preferences influence….
- they are the biases & preferences within organization bias creeps into
everything
- ENVIRONMENT: there should be a double headed arrow between management
preferences and environment because how the managers view the environment
influences their preferences
- STRATEGY: your strategy must satisfy your personal preferences you lean
toward a strategy
Resources Influence…
- resources are the financial, capital and human resources of the organization
- ORGANIZATION: resources determine the capabilities, investments and how we
spend money, type of human resources (culture) and hence organization
- STRATEGY: you have to have the right resources to do certain things
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