MGMT 449 CSUF Final

Tasks involved in crafting corporate strategy.

1. Picking new industries to enter and deciding on the means of entry
2. Pursuing opportunities to leverage cross-business value chain relationships, where there is strategic fit, into competitive advantage.
3. Establishing investment priorities and steering corporate resources into the most attractive business units.
4. Initiating actions to boost the combined performance of the corporation's collection of businesses.

Reasons for diversification

opportunity limits in mature industries, declining markets, advancement in technologies, substitute products, fast-shifting buyer preferences, and intense competition.

When a company should diversify

when there will be added long-term economic value for shareholders.

The 3 tests of diversification -

1. The industry attractiveness - structurally attractive (in terms of five forces), resource requirements that match parent company offer good prospects for growth and profitability.
2. The cost of Entry Test - the cost of entering the target industry must not be so high as to exceed the potential for good profitability
3. The better off test - there should be good synergy. The whole is greater than the sum of its parts 1 +1 = 3

Strategies for diversification into new industries.

• Acquisition of an existing business - buying an existing company in set market.
• Internal development (Corporate Venturing) - starting a new business. subsidiary from scratch
• Joint Venture- 2 or more companies work together.

Related Business

possess competitively valuable cross-business value chain and resource commonalities. They are alike in how they perform, and the resources/capabilities each one needs to perform their activities. Strategic fit.

Unrelated business

have dissimilar value chains and resource requirements, with no competitively important cross-business commonalities at the value chain level.

Definition of business ethics

deals with the application of general ethical principles to the actions and decisions of businesses and the conduct of their personnel. NOT MATERIALY DIFFERENT FROM ETHICAL PRINCIPLES IN GENERAL.

Ethical Universalism

holds that the most fundamental conceptions of right and wrong are universal and apply to members of all societies, all companies, and all businesspeople. (ONE SIZE FITS ALL)

Ethical Relativism

local ethical standards take precedence over what the ethical standards may be in a company's home market. That different religious beliefs, customs, and behavioral norms across countries and cultures give rise to multiple sets of standards concerning what is ethically right or wrong. Business actions are right or wrong depending on local ethical standards. (ONE SIZE DOES NOT FIT ALL)

Social Contracts

a mix of both. 1 - there are limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on all situations and 2 - the circumstances of local cultures, traditions, and values that further explains what is ethically permissible behavior. Also first-order ethical norms should take precedence over local or second-order norms like paying bribes

Bribery

pay bribes to win contracts, license permits, or facilitate an administrative ruling. Usually paying local officials

Kickbacks

are given to customers to gain their business or retain their business.

Reasons for unethical behavior and how to manage them

In some countries if bribes or kickbacks are not done those companies can lose business to competitors. Some companies rationalize the behavior by saying it's sort of a tip like you leave at restaurants. The Foreign Corrupt Practices Act, FCPA, prohibits U.S companies from paying bribes. It is enforced by the OECD - The organization for Economic Cooperation and Development.

Importance of an ethical strategy. How to develop social responsibility strategies.

1. Is what we are proposing to do fully compliant with our code of ethical conduct? Are there any areas of ambiguity that may be of concern?
2. Is it apparent that this proposed action is in harmony with our code? Are any conflicts or potential problems evident?
3. Is there anything in the proposed action that could be considered ethically objectionable?

Components of implementation process

All managers have strategy executing responsibility in their areas of authority, and all employees are active participants in the strategy execution process.

Meaning of building a capable organization

1. Staffing the organization - a talented management team and employees with experience, skills and intellect
2. Acquiring, developing, and strengthening strategy supportive resources and capabilities
3. Structuring the organization and work effort

Good practices in recruiting and retaining capable people.

1. Spending considerable effort on screening and evaluating job applicants
2. Providing employees with training programs that continue throughout their careers
3. Offering promising employees challenging, interesting, and skill-stretching assignments
4. Rotating people through jobs that span functional and geographic boundaries
5. Making the work environment stimulating and engaging so that employees will consider the company a great place to work
6. Encourage employees to challenge existing ways of doing things.
7. Striving to retain talented, high performing employees via promotions etc
8. Coaching average performers to improve their skills and capabilities, while weeding out underperformers.

Characteristics of capability-building process (core competencies).

1. Developing capabilities internally.
2. Acquiring capabilities through mergers and acquisitions.............
3. Accessing capabilities via collaborative partnerships.

Simple structure

- a central executive handles all major decisions and oversees the operations of the organization with the help of a small staff.

Functional structure

organized into functional departments, with departmental managers who report to the CEO and small corporate staff. Also known as departmental structures

Multidivisional structure

is decentralized structure consisting of a set of operating divisions organized alone either business, product, customer group, or geographic lines and a central corporate headquarters that allocates resources, provides support functions and monitors divisional activities.

Matrix structure

a combination structure that overlays one type of structure onto another type with multiple reporting relationships.

Importance of resource allocation to strategy execution.

A company's operating budget must be strategy driven. It must drive how capital allocations are made and the size of each unit's operating budget

Role played by policies and procedures

1. By providing top-down guidance regarding how things need to be done
2. By helping ensure consistency in how execution of critical activates are performed
3. By promoting the creation of a work climate that facilitates good strategy execution.

Business Process Reengineering

involves radically redesigning and streamlining how an activity is performed, with the intent of achieving quantum improvements in performance

Total Quality Management

entails creating a total quality culture, involving managers and employees at all levels, bent on continuously improving the performance of every value chain activity.

Six Sigma Programs-

utilize advanced statistical methods to improve quality by reducing defects and variability in the performance of business processes.

Role of info and operation systems

to improve the performance of strategy-critical activities and thereby enhance strategy execution

Role of rewards and incentives

a properly designed reward structure is management's single most powerful tool for mobilizing employee commitment to successful strategy execution and aligning efforts throughout the organization with strategic priorities.

Corporate culture

refers to the shared values, ingrained attitudes, core beliefs, and company traditions that determine norms of behavior, accepted work practices, and styles of operating.

Strong Corporate Culture

deeply rooted values and norms of behavior are widely shared and regulate the conduct of the company's business

Unhealthy Corporate Culture

presence of counterproductive cultural traits that adversely impact the work climate and company performance.

Importance of fit between culture and strategy

They can be a powerful aid to strategy execution. They assist in 3 ways
• By focusing employee attention on the actions that are most important in the strategy execution effort
• By inducing peer pressure for employees to contribute to the success of the strategy execution effort.
• By energizing employees, deepening their commitment to the strategy execution effort, and increasing the productivity of their efforts.

Remedies for a problem culture - needs to be changed as rapidly as it can be changed.

1. Step 1 identify facets of the present culture that are dysfunctional and impede good strategy execution
2. Specify clearly what new actions, behaviors, and work practices should characterize the new culture,
3. Talk openly about problems with the current culture and make a persuasive case for cultural reform
4. Follow with visible, forceful actions, both substantive and symbolic to ingrain a new set of behaviors, practices and norms