strategic management seminar

What is corporate-level strategy?

Corporate- level strategies should promote the success of business-level strategies 

how does coporate level strategy relate to business models? Multi-business models?

• Business model 

  • Describe competitive positions, global, business-level, and funcitonal- level strategies for each business unit or division 

• Multibusiness model:

  • For diversified companies

  • Justified entry into different businesses/industries

  • Describes & integreates all the business models for each business unit 

 

how does multi- business models relate to coporate level strategy?

• For diversified companies

• Justified entry into different businesses/industries

• Describes & integreates all the business models for each business unit 

Define horizontal integration

• Acquiring or merging with competitors to achieve competitive advantages from increased size and scope

How is horizontal integration different from acquisitions & mergers in general?

• Acquisitions: The company uses capital resources to purchase another company

Merger: agreement between two companies to pool resources & operations and join together to better compete in an industry

 What are the advantages of horizontal integration?

• Benefits: 

  • Lower cost structure

  • May increase differentiation 

  • Reduces rivalry within the industry 

  • Increases bargaining power over suppliers and buyers 

 What are the disadvantages of horizontal integration?

• Problems:

  • Difficult to implements

  • Conflict with the Federal Trade Commission 

    • Abuse of market power

      • Lowered price competition

      • Crushing potential competitors/ new entrants 

Describe two instances of horizontal integration that have been reported in the media.

• Anheuser-Busch InBev

  • Inbev formed from the merger of Interbrew and Ambex, SAB agrees to uy miller from Phillip Morris 

Define vertical integration

• When a company expands its operations either backward or forward in an industry's value chain

what are the two types of vertical integration

• Backward vertical integration 

  • Produces inputs for the company's products

• Forward vertical integration

  • Uses, distributes, or sells the company's products 

What are the advantages of vertical integration?

• Benefits:

  • Vertical integration increases product differentiation, lowers costs, and reduces industry competition if:

    • Protects product quality

    • Facilitates investments in efficiency-enhancing specialized assets

    • Results in improved scheduling 

 What are the disadvantages of vertical integration?

• Problems:

  • Increase cost structure 

  • Complexities of rapid technology change

  • Disadvantages of unpredictable demand

  • Vertical disintegration:

    • The company exits industries forward or backward of the core industry to increase profitability 

Is vertical integration a form of diversification?

• Vertical integration increases product differentiation, lowers costs, and reduces industry competition if it:

  • Protects product quality

  • Facilitates investments in efficiency- enhancing specialized assets

  • Results in improved scheduling  

What are some questions that companies should consider before pursuing vertical integration?

• Questions 

  • Will vertical integration reduce costs or efficiency?

  • Will it create a competitive advantage

  • Do we ha eth expertise to manage the new operations? 

  • How much will it cost?

What alternatives can companies pursue as substitutes for vertical integration?

• Cooperative relationships

  • Quasi integrations: use of long-term relationships, or investment into some activities normally performed by suppliers or buyers (substitute for full ownership vertical integration) 

List some benefits and disadvantages for each substitute for competitive advantage

• Competitive bidding strategy

  • Independent suppliers compete to be chosen to supply a particular component

  • Short-term contracts- one year or shorter

    • No specialized investments

    • Signals a lack of long-term commitment to suppliers 

  • Strategic alliances- long-term agreements between 2+ companies to jointly develop new products or processes 

    • Avoids the bureaucratic costs of VI

    • Supplier benefit because their revenue grows as the companies they supply grow 

    • Creates commitment- symbolic relationships 

Identify primary types of ethical issues which companies face, and consider the responsibilities of businesses in regard to each issue.

Self-dealing, Information manipulation, Anticompetitive behavior , Substandard working conditions, Environment degradation, Corruption

• Self-dealing

• Mangers using company funds for personal use

• Information manipulation

• Managers use their control over corporate data to distort or hide information

  • To enhance their own financial situation & competitive position

• Anticompetitive behavior 

• Aimed at harming actual potential competitors to enhance the long-run prospects of the firm 

• Substandard working conditions

Managers invest in working conditions or pay employees below market rates

• Environment degradation

• A company's actions directly or indirectly result in pollution or other forms of environmental harm 

• Corruption

• Can arise when managers pay bribes to gain access to lucrative business contracts 

What is moral awareness? Why does it matter?

• Ability to recognize that a situation, decision, or action involves an ethical issue and may affect the well-being, rights or fairness experienced by others. 

• Matters: 

  • Foundation of ethical decision- making 

  • Helps prevent unethical behavior 

What is moral disengagement?

• Rationalizing away the unethical nature of behavior to feel better about our own morality 

What are the mechanisms of moral disengagement? 

Moral justification, Euphemistic labeling, Advantageous comparison, Displacement of responsibility, Diffusion of responsibility, Distortion of consequences, Dehuminization, Attribution of blame

Moral justification

• Reframing unethical behavior to suggest that it serves a higher purpose

  • Therefore not unethical and is worth the risk/consequences

Euphemistic labeling

•  Labeling unethical behaviors with terms that sound innocuous to shroud the moral problem 

Advantageous comparison

• Diminishing the problematic nature of behavior by comparing it with an even worse behavior, which is more obviously unethical 

Displacement of responsibility

• Attributing the responsibility for a behavior to an authority figure, instead of the actor him/herself 

Diffusion of responsibility

• Attributing the responsibility for a behavior to a group, instead of an individual 

Distortion of consequences

Belittling the potential effects of an unethical behavior to make it seem more acceptable

Dehuminization

• Characterizing potential victims as being inconsequential and or not worthy of consideration. This can include labelling potential victims as outgroup members

Attribution of blame

• Blaming the victim for the unethical behavior, and/or suggesting that they deserve whatever ill effects befall them 

What can businesses do to promote an ethical organizational climate and minimize the number of unethical business decisions that occur?

• Measures & rewards

• Adopt a code of ethical conduct

• management - by example; ethical leadership 

• Ethical leadership

  • Shows that leaders care about ethics

  • Display commitment to a code of ethics

  • Promote moral awareness

  • Confront difficult issues head- on

  • Do not tolerate sleazzy behavior

  • Do the right thing when the stakes are high 

What is confirmation bias? How could it come into play for strategic management? 

Based on what you've heard or read, has the testimony and evidence presented during the impeachment inquiry made you:

 How can we combat cognitive bias?

• See informations, Seek informations, Share information

Define competitive advantage

• Occurs when a company profitability is greater than the average profitability of firms in its industry 

describe each of the building blocks of competitive advantage.

efficiency, quality, innovation, customer responsiveness,
-lower costs that competitors and diffrentitaiton that customers value

What is corporate-level strategy?

should enable a company or one or more of its business divisions or units to perform value chain functional activities, at a lower cost and or in a way that results in increased differentiation.

How does coporate level strategy relate to business-level strategies?

increase profitability, helps a company reduce industry rivalry by reducing the threat of damaging price competition. chosen to promote the success of its business level strategy to acheive a competitive advantage leading to higher profitability.

Explain the five primary ways in which diversification can increase profitability.

• Transfer competencies between business units in different industries

• Leverage competencies to create business units in new industries

• Share resources & capabilities between business units to realize synergies or economies of scope 

• Use product bundling

• Utilize general organizaitonal competencies that improve performance 

SWOT

• strengths, weaknesses, opportunities, threats. Purpose to exploit external opportunities, counter threats, build on and protect company strengths, and eradicate weaknesses 

 Functional-level strategies

• improving the efficiency and effectiveness of operations within a company. Like manufacturing, marketing, materials management, and product development

Business-level strategies:

• a business's overall competitive theme, the way it positions itself in the marketplace to gain a competitive advantage, and the different position strategies that can be used in different industry settings 

Corporate level strategy

• what businesses should we be in to maximize the long-run profitability and profit growth of the organization 

explain how each of the components of strategic management relate to one another and ultimately work towards the goal of having a competitive advantage.

A functional-level strategy should support business-level strategies. When combined, the various strategies pursued by a company should constitute a complete, viable business model. 

Describe the relationship between functional-level and business-level strategies

• Functional strategies support and help implement the broader competitive goals established at the business level. 

Resources

 employees, technology, equipment. Functional areas manage and allocate these resources in ways that support he companies business level

Capabilities

• refer to a company's ability to effectively coordinate and use its resources. Develop over time through experience, processes, and organizational knowledge 

Distinctive competencies

capabilities or strengths that a company performs especially well compared to competitors. They are often difficult for competitors to imitate and became a major source of competitive advantage.

What is a Porter’s Forces analysis?

• isk of entry, bargaining power of buyers, power of complement providers, threats of substitutes, bargaining power of suppliers, rivalry among established firms in the industry

purpose of porters forces

• analyzing competitive forces within the industry environment  to identify opportunities and threats