...asserts that many factors in the external environment cause a lot of turbulence and uncertainty for organizations. According to him the environment often imposes major constraints on the choices managers make for their organizations. To add to the above, Gareth & Hill (2008) also observed that since performance is the major objective of an organization, it is generally accepted that the structure and decision making in an organization is influenced by environmental complexity and volatility. There are many variables in a firm’s external environment which strategic managers must be aware of. First and foremost, a firm’s external environment consists of variables and trends that do not directly touch on the short run activities of the firm but can, and often do influence its long-run decisions. These trends are found in the firm’s societal environment; also known as the macro-environment and they include economic, technological, political-legal and socio-cultural forces that influence decision making in organizations. Secondly, there are variables in a firm’s external environment which directly affect the organization and are in turn affected by it. These are found in the task environment; also known as the micro-environment. Daft (2008) views the task environment as the sectors with which an organization interacts directly and that have a direct impact on the organizations ability to achieve its goals. A corporation’s task environment can be seen as the industry within which...
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...external environmental scan, focus should be drawn to two environmental variables: • Societal environment (macro-environment) – This is the general environment in which the business organization operates. It is characterized by those variables on which the business has no control. It does not directly touch on the short run activities of the firm but can, and often do influence its long-run decisions. • Task environment (micro-environment) – This is the industry within which the business organization operates. This environment is characterized by various players and stakeholders who affect a business enterprise, and are also affected by it. 2. According to Porter, what determines the level of competitive intensity in an industry? According to Porter, the level of competitive intensity is determined by 5 basic competitive forces namely: (1) Threat of new entrants to a market (2) Bargaining power of suppliers (3) Bargaining power of customers or buyers (4) Threat of substitute products and (5) Degree of competitive rivalry 3. What should be scanned in the task environment? There should be an analysis of relevant elements in the task environment such as: (1) Competitors (2) Suppliers (3) Regulators (4) Strategic Partners (5) Labor and (6) Customers. 4. Discuss how a development in a corporation’s societal environment can affect the corporation through its task environment. 5. How can managers identify external strategic factors? a. Environmental uncertainty ...
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...Makers: 1. The concept of social responsibility proposes that a private corporation has responsibilities to society that extend beyond making a profit. A. As shown in Figure 3-1, Archie Carroll proposes that the managers of business organizations have four responsibilities: economic, legal, ethical, and discretionary. 1. Economic responsibilities of a business organization’s management are to produce goods and services of value to society so that the firm may repay its creditors and shareholders. 2. Legal responsibilities are defined by governments in laws that management is expected to obey. (ie: U.S. business firms are required to hire and promote people based on their credentials rather than to discriminate on non-job-related characteristics such as race, gender, or religion). 3. Ethical responsibilities of an organization’s management are to follow the generally held beliefs about behavior in a society. (society generally expects firms to work with the employees and the community in planning for layoffs, even though no law may require this; because the affected people can get upset if an organization’s management fails to act according to generally prevailing ethical values). 4. Discretionary responsibilities are the purely voluntary obligations a corporation assumes. (such as philanthropic ontributions, training the hard-core unemployed, and providing day-care ...
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...monitoring, evaluating, and disseminating of information from the external environment to key people within the corporation. Answer: TRUE Difficulty: Easy Chapter Objective: Recognize aspects of an organization’s environment that can influence its long-term decisions 2) A corporation uses environmental scanning to avoid strategic surprise. Answer: TRUE Difficulty: Moderate Chapter Objective: Recognize aspects of an organization’s environment that can influence its long-term decisions AACSB: Analytical Thinking 3) Political-legal forces regulate the values, mores, and customs of society. Answer: FALSE Difficulty: Easy Chapter Objective: Recognize aspects of an organization’s environment that can influence its long-term decisions 4) The societal environment includes the economic, technological, political-legal, and sociocultural forces. Answer: TRUE Difficulty: Moderate Chapter Objective: Recognize aspects of an organization’s environment that can influence its long-term decisions 5) Industry analysis was popularized by Michael Porter. Answer: TRUE Difficulty: Moderate Chapter Objective: Recognize aspects of an organization’s environment that can influence its long-term decisions 6) In dynamic environments, the CEO's focus is on forces in the societal environment. Answer: FALSE Difficulty: Easy Chapter Objective: Recognize aspects of an organization’s environment that can influence its long-term decisions AACSB: Reflective Thinking ...
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...Essentials of Strategic Management Authors: David Hunger & Thomas. L. Wheelen Book Review by Asik Kathwala © www.hrfolks.com All Rights Reserved 1 The Essentials of Strategic Management “The Essentials of Strategic Management” provides us with a short, concise explanation of the most important concepts and techniques in strategic management. It is a rigorous explanation of many topics and concerns in strategic management. These concepts are clearly explained by citing various examples. Precisely the book deals with the following. • A strategic decision-making model based on the underlying process of environmental scanning, strategy formation, strategy implementation and evaluation and control. • Michael Porter’s approach to industry analysis and competitive strategy • Functional analysis and functional strategies. R & D and R & D strategies which emphasize the importance of technology to strategy and product-market decisions. • Executive leadership and succession, reengineering, total quality management, MBO and action planning. • Social responsibility in terms of its importance to strategic decision making. © www.hrfolks.com All Rights Reserved 2 Basics concepts of strategic management The study of strategic management Strategic management is the set of managerial decision and action that determines the long-run performance of a corporation. It includes environmental scanning (both external and internal), strategy formulation (strategic or long range planning)...
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... refers to possession and utilization of information about occasions, patterns, trends, and relationships within an organization’s internal and external environment, helps in identifying the threats and opportunities in the environment. Internal and External analysis should be considered. In external analysis, three correlated external environmental variables that should be scanned, studied, and analyzed — * immediate / industry environment * national environment * broader socio-economic environment / macro-environment 2. According to Porter, what determines the level of competitive intensity in an industry? Michael Porter's analysis of industries captures the complexity of industry competition in five underlying forces. These are, Threat of Entry, Threat of Substitutes, Supplier Power, Buyer Power, and degree of Rivalry. 3. What should be scanned in the task environment? Task environment is actually another term for the industry environment. The four main components that exert influence in industry are: Suppliers, Competitors and potential substitutes, Potential entrants, and Buyers. These four are the most important component that should be scanned in the task environment. 4. Discuss how a development in a corporation’s societal environment can affect the corporation through its task environment. 5. How can managers identify external strategic factors? a. Environmental uncertainty b. Issues priority matrix c. New entrants d...
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...of the planet. According to Impacts of a Warming Arctic: Arctic Climate Impact Assessment, a 2004 report by the eight-nation Arctic Council, the melting of the area’s highly reflective snow and sea ice is uncovering darker land and ocean surfaces, further increasing the absorption of the sun’s heat. Reductions in Arctic sea ice will drastically shrink marine habitats for polar bears, ice seals, and some seabirds. The warming of the tundra will likely boost greenhouse gases by releasing long-stored quantities of methane and carbon dioxide. Lawson Brigham, Alaska Office Director of the U.S. Arctic Research Commission and a former chief of strategic planning for the U.S. Coast Guard, examined how regional warming will affect transportation systems, resource development, indigenous Arctic peoples, regional environmental degradation and protection schemes, and overall geopolitical issues. From this, he proposes four possible scenarios for the Arctic in 2040: 1. Globalized frontier: In this scenario, the Arctic by 2040 has become an integral component of the global economic system, but is itself a semi-lawless frontier with participants jockeying for control. The summer sea ice has completely disappeared for a two-week period, allowing greater marine access and commercial shipping throughout the area. Rising prices for oil, natural gas, nickel, copper, zinc, and freshwater in conjunction with an easily accessible and less-harsh climate have made Arctic natural resource exploitation...
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...Lisnandani M. Firdaus Ivadaputra 19010112 Risky Adha Kayom Nursalim Hanny Aqmarina Hartini Soraya 1. Identify and explain the Opportunities and Threats of the assigned external forces. Opportunities * Cooperation with a number of other national companies. The company, PT Len Industri for the development and production of inverters, battery management system, charging system and DC-DC converter electric cars. Threat 2. Discuss how a development in a corporation's societal environment can affect the corporation through its task environment. 3. According to Porter, what factors determine the level of competitive intensity in an industry? Costs Among his factors that affect competitive intensity, Porter mentions a few cost-related factors. These include high fixed costs, high storage costs and low switching costs. When companies invest significantly in fixed costs, they generally compete mightily to sell enough products to cover those costs. High costs of storage prompt companies to compete to make sales quickly. When customers have free mobility to change providers it forces more intense competitive rivalry. Many Firms, Flat Market One of the more obvious reasons for high competitive intensity within an industry is more companies competing. And, the more limited the market available, the more intensely those companies have to compete. Porter noted that especially in industries where the market has been largely saturated, companies...
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...perspective and the technology of information age is telescoping the time it takes to communicate and make decision. Strategic management takes a panoramic view of this changing corporate terrain and attempts to show how large and small firms can be more effective and efficient not only in today's world but tomorrow as well. Strategic management is the set of managerial decisions and action that determines the way for the long-range performance of the company. It includes environmental scanning, strategy formulation, strategy implementation, evaluation and control. It emphasizes the monitoring and evaluation of external opportunities and threats in light of corporation’s strength and weakness. Business policy has a general management orientation and tends primarily to look inward with its concern for properly integrating the corporations many functional activities. But strategic management as a field of study integrates the business policy with the environmental opportunities and threats. Therefore strategic management has tended to replace business policy as the preferred name of the field. Indian Institute of Technology Madras Management Science I Prof. M.Thenmozhi Why Strategic Management? Strategic management provides the route map for the firm. It lends a framework, which can ensure that decisions concerning the future are taken in a systematic and purposeful way. Strategic management also serves as a hedge...
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...more global perspective and the technology of information age is telescoping the time it takes to communicate and make decision. Strategic management takes a panoramic view of this changing corporate terrain and attempts to show how large and small firms can be more effective and efficient not only in today's world but tomorrow as well. Strategic management is the set of managerial decisions and action that determines the way for the long-range performance of the company. It includes environmental scanning, strategy formulation, strategy implementation, evaluation and control. It emphasizes the monitoring and evaluation of external opportunities and threats in light of corporation’s strength and weakness. Business policy has a general management orientation and tends primarily to look inward with its concern for properly integrating the corporations many functional activities. But strategic management as a field of study integrates the business policy with the environmental opportunities and threats. Therefore strategic management has tended to replace business policy as the preferred name of the field. Management Science I Prof. M.Thenmozhi Why Strategic Management? Strategic management provides the route map for the firm. It lends a framework, which can ensure that decisions concerning the future are taken in a systematic and purposeful way. Strategic management also serves as a hedge against uncertainty, a hedge against totally unexpected...
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...is MOST concerned about which of the following? A) maintaining its brand share B) fostering customers' emotional connections with their product C) advertising their product's benefits D) comparing the effectiveness of their product to other brands E) incorporating consumer-generated marketing in the marketing mix Answer: B 3) According to management guru Peter Drucker, "The aim of marketing is to ________." A) create customer value B) identify customer demands C) make selling unnecessary D) set realistic customer expectations E) sell products Answer: C Diff: 2 Page Ref: 5 Skill: Concept 4) ________ is defined as a social and managerial process by which individuals and organizations obtain what they need and want through value creation and exchange. A) Selling B) Advertising C) Bartering D) Marketing E) Negotiating Answer: D Diff: 2 Page Ref: 5 Skill: Concept 5) Which steps of the five-step marketing process are about understanding customers, creating customer value, and building strong customer relationships? A) the first two only B) the first three only C) the first four only D) the last three only E) the last four only Answer: C Diff: 2 Page Ref: 5 AACSB: Communication Skill: Concept 6) When marketers set low expectations for a market offering, the biggest...
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...Instructions to Students Open Book, Take Home Exam This exam is an open book exam. You may use any material to answer the test. Materials might be: • your notes • readings, reference materials or textbooks • equipment like calculators, drafting tools etc. • Company data available through the Internet. Etc… Questions in the open book test The questions in the test evaluate your ability to think critically, and your understanding of the subject. You are not being tested for your ability to memorize and recite, but your ability to find and use information, and submit and defend your arguments. Exam Time The exam question is posted 30 November 2013, Your preliminary answers must be submitted by email by Friday 6th December for discussion and review during the normal lecture time on Saturday 7th December.. . Show us your answers and ask questions. . . We will review in detail the work done then you will have until Saturday 14 December to submit your report. Any test papers submitted after the limit set above will not be considered. Hints Read all the questions carefully Before you start the exam, read all the questions carefully and understand what it is you are being asked to do. Look for the Clue Words in the questions. Use the exam time wisely Answer the 'easy' questions first. Starting with the 'hard' questions (questions you are unsure of) slows you down and can leave you with insufficient time to address the others that you can do well in...
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...Organizational Structure & Culture Organizational Structure What is Organizational Structure? Defines how job tasks are formally – Divided – Grouped – Coordinated Six key elements – – – – – – Work specialization Departmentalization Chain of command Span of control Centralization & decentralization Formalization Controls, coordinates & motivates employees Work Specialization Degree to which tasks in organization are subdivided into separate jobs Efficiency gains – Payment related to skill-level required skill– Increase in performance in specific task – Encouraging creation of special inventions Efficiency losses – – – – – Boredom Fatigues Stress Poor quality High absenteeism & turnover Productivity specialization Departmentalization The basis by which jobs are grouped together Possible ways – By functions performed E.g., engineering, accounting, personnel…. – By type of product E.g., fuel, waxes, chemicals – On basis of geography E.g., western, southern, midwestern, eastern… – On basis of process E.g., Casting, press, tubing, finishing, inspect, pack, ship…. – By type of customer E.g., Service retail, wholesale, government customers Large companies might combine the forms! The Chain of Command & Span of Control Chain of command – Line of authority from top of the organization to lowest part – Specifies who reports to whom – Each managerial position is given its place & degree of authority – Unity of command principle...
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...Organizational Structure & Culture Organizational Structure What is Organizational Structure? Defines how job tasks are formally – Divided – Grouped – Coordinated Six key elements – – – – – – Work specialization Departmentalization Chain of command Span of control Centralization & decentralization Formalization Controls, coordinates & motivates employees Work Specialization Degree to which tasks in organization are subdivided into separate jobs Efficiency gains – Payment related to skill-level required skill– Increase in performance in specific task – Encouraging creation of special inventions Efficiency losses Boredom Fatigues Stress Poor quality High absenteeism & turnover Productivity – – – – – specialization Departmentalization The basis by which jobs are grouped together Possible ways – By functions performed E.g., engineering, accounting, personnel…. – By type of product E.g., fuel, waxes, chemicals – On basis of geography E.g., western, southern, midwestern, eastern… – On basis of process E.g., Casting, press, tubing, finishing, inspect, pack, ship…. – By type of customer E.g., Service retail, wholesale, government customers Large companies might combine the forms! The Chain of Command & Span of Control Chain of command – Line of authority from top of the organization to lowest part – Specifies who reports to whom – Each managerial position is given its place & degree of authority – Unity of command principle preserves unbroken line of command Span...
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...and enterprise strategy of the development in 1979 by Harvard business school of Michael porter. Upon industrial organization economics to five forces that determine the competition intensity and attractiveness of a market. In this respect the attraction, an unattractive industry is in one of the combination of these five forces role to drive down overall profitability. A very small industry will be a close to "perfect competition", which to all of the profits of the business was driven to normal profit. They consist of those forces close to the company that affect the ability to service and make the profit. A change in any of the forces normally requires a business unit to reassess the marketplace given the overall change in industry information. The company is able to apply their own core competitiveness, business model or network to achieve a profit above the industry average. Bargaining power of suppliers The suppliers mainly through its raise prices of input factors and reduce the capacity of the unit value of quality to affect the profitability of existing enterprises in the industry and the competitiveness of their products. The strength of the suppliers forces depends mainly on what they provide to the buyer is input factors constitute a large proportion of the total cost of the purchaser product, when the value of the input factors provided by the supplier, the buyer of the production process is very important or seriously affect the quality of the buyer of the...
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