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Midterm Review BU1111.docx

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Wilfrid Laurier University
Sofy Carayannopoulos

Critical Success Factors -Every organization must follow ALL these factors in order to be successful -Strategy is about meeting your critical success factors Achieving Financial Performance profit -Need to be as profitable as competition or you will fall behind and lose investors Meeting Customer Needs customer satisfaction -Know what the customer needs and provide it -If you lose one customer, you will lose many and therefore lose profit Building Quality products and services -Customers need to find what they are looking for or they will not come back -Build a level of quality customers expect -Need consistency in your product -Need a good quality of product not necessarily the best Encouraging Innovation and Creativity -Keep changing what youre making or youll become obsolete. -Need continuous new products -Blackberry and how they have the final prototype but they just keep adding a new feature onto each new model until they get to the final one -By being innovative and creative you create customer needs Apple didnt think we needed an iPod Gaining Employee Commitment -Lifeline of business is employee commitment -Give employees incentive and they will work longer and harder and put in their 150% -Need your employees to want to go to work or else the business will fail. -Westjets employees are also share holders which makes them want to work hard Creating a Distinctive competitive advantage -Be unique in a valuable way -Aim for a monopoly (charge whatever price you want) and create a mini monopoly a feature other products like it do not have -Apple has a mini monopoly because of simplicity. Their products are user friendly Diamond-E Framework Management Preferences Organization Strategy Environment Resources -Identifies key variables to be considered in a strategic analysis -How things can be carried out within a company Management Preferences -No matter what, managers will be bias -The bias and attitudes of managers are important because they are the ones who make decisions -Ex. risk taker vs. non risk taker. Will they be willing to take chances on things for the company or will they be too scared? Organization -Culture, leadership, structure, and capabilities within a company -How a company does things -Capabilities to a certain degree are based on resources Resources -Financial, human, and capital resources -What you have at hand disposable to use in day-to-day decision making Strategy -Do we have the capabilities? If not, how do we attain them? -Do we have the resources? If not, can we get them? -What is needed in order to take action and how action will be implemented Management and Strategy -The type of strategy can fail or benefit. -Does management influence strategy? -Strategy must be followed -A manager can say they will do something, and then not carry it out. The action MUST be carried out Strategy and Environment -What do managers chase after, and what do they leave alone? -This is the critical linking factor in the environment -When stuff in the environment changes, you must make changes on your strategy. -Strategy must make sense given environment External Analysis -Process of scanning and evaluating the external environment -How managers determine opportunities and threats to the company -Firms face multiple environments: -General Environment affects all businesses. The economy as a whole. -Specific Environment affects industry participants. The industry you are in. How to do an External Analysis -General Environment -PEST model considers political, environmental, social/demographic, and technological factors -Identifies general trends and changes -Specific Environment -Porters Five forces analyzes five important sources of competitive pressure and intensity; predicts profitability of industry Benefits of External Analysis -Makes managers proactive -Provides information used in planning -Helps organizations get needed resources and cope with uncertainty -Improves consistency and performance -Need to analyze ahead and anticipate problem to be able to deal with it Challenges of External Analysis -Rapidly changing environment which is hard to keep up with -Time consuming -Forecasts and trends analyses imperfect -No incentives PEST Three most important issues facing Canadian business: 1. The Value of the Canadian dollar If Canadian dollar is weak, and selling to another country, you will be selling products cheap. If high Canadian dollar, imports are cheaper 2. A Skilled Labour Shortage Trying to fix with funding for universities 3. The Natural/Physical Environment Matters different to people. Saving the environment Questions to Answer from PEST 1. Do the economic conditions support my business? 2. What legal protection do I have or laws do I have to consider? 3. What demographic and social trends affect my business and how? 4. What technological forces affect me now and in the future? How do they assist of constrain? -What technology will help/hurt you 5. What opportunities or threats does the environment possess? Political Environment -Government can create incentives, constraints, or support/bail out when needed. It is cheaper to bail out than to deal with failure -Affects uncertainty, risk, and constraints/costs faced by firm Laws and Regulations -Determine what a company can and cannot do. -In Canada labels must be in French and English -Canada pays more for cell phones than other countries. This is because Canada regulates the cell phone companies, and restricts the opportunities that companies can take Taxes -Government needs to fund and provide services. -Taxes can create incentives - A high tax on smoking would discourage people from smoking Trade Agreements -Tariffs make it harder to get exports into a country, which lets it compete at an appropriate price with domestic products Political System -Capitalism vs. communism. -In a capitalist economy, let things freely happen. In a communist there is complete control -Businesses want a capitalist economy Political Stability -How certain it is -The more uncertainty, the more unpredictable -Businesses want certainty -Canadian government is fairly certain, whereas the Middle East is uncertain Economic Factors -Influences costs, potential sales, and financial uncertainty -Aggregate output total quantity of goods produced Economic Growth aggregate output, GDP, and standard of living -Want a growing economy because it is more money in consumers pockets that they spend on your product/service Trade Balance Importing vs. Exporting -Want to be exporting more than importing National Debt Government borrowing -Governments need to borrow to make ends meet -Businesses care because they then have to compete with the government to borrow money Economic Stability Inflation -Inflation creates an increase in price and our spending power goes down -Business costs go up and revenues go down -In Russia in times of high inflation. You would wait in line to buy bread. By the time you got to the front
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