cob 487 exam 1 rutherford

what is strategy

why is a company doing so well

time horizon

how much time you want to put into your goal

ex. 1 yr vs 100 yr perspecitive like patagonia

strategy is like a what?

jigsaw puzzle

strategy is an _____ process

integrated

ex. you can't be really good at one thing and terrible at the other

different ways to compete

differentiation, low cost leadership, dual competitive advantage

examples of competiting by differentiation

Apple, Grey Goose, luxury brands

examples of competing by low cost leadership

Dunkin vs Starbucks, Walmart, Aldi, Southwest

the golden circle

why, how, what

start with the why and then the how then the what

they dont buy bc of what the company does, they buy bc of the why they do it

example of competiting by dual competitive advantage

costco

strategy process model

mission vision values --> goals & objectives --> internal & external environment --> corporate strategy --> business strategy --> functional level strategy --> strategy implementation --> results

swot analysis is similar to what levels on the strategy process model

SWOT analysis

corporate level strategy

big huge change on a major business level ; mergers and acquisitions take place on this level

ex. Amazon changing their strategy from selling books to now prime and all items

business level strategy

how will we compete - differentiation, dual comp adv, low cost leadership

the model with the cost, value, consumer surplus

functional level strategy

department level; so like the strategy for hr, marketing, financial, etc. more specialized strategy

strategy implementation

how it is put to action in structures, culture, leadership, etc.

a company's mission

why we exist

a company's vision

where we are going

a company's values

what behaviors are rewarded/reflects the culture of the company

mission statements

short, simple, memorable

serves as a guide to employee actions

strategic mission statements

focuses on what they do

ex. Google

motivational mission statement

focuses on why it matters

ex. JMU

motivational and strategic mission statement

focuses on what they do and why it matters

ex. Patagonia

vision statement

forward looking, goal oriented, inspirational

ex. JFK's vision statement on space exploration

value statement

entraps the culture; can be very impactful if done well

mizberg's emergent strategy model

intended strategies don't always lead to the realized strategy things can emerge and change along the way; it is very hard to predict the future

intended strategy

what the plan is going in, what you intend to do in the upcoming situation

unrealized strategy

An intended strategy a firm does not actually implement

deliberate strategy

a plan of action that an organization chooses and implements to support specific goals

emergent strategy

consists of reactive strategy elements that emerge as changing conditions warrant

realized strategy

combination of intended and emergent strategy; what actually ends up happening

5 p's of strategy

Plan, Ploy, Pattern, Position, Perspective

5 p's of strategy - plan

90% of the time, used to figure out steps, you need to be able to adapt

ex. D-day planning vs what actually happened

5 p's of strategy - ploy

sometimes the strategy is to mislead a competitor; be secretive

ex. Apple developing the iphone without people knowing

5 p's of strategy - position

a firm's place in the industry relative to its competitors

ex. Marriott's Courtyard vs JW - they are all the mariott brand but different levels based on location and customer base

5 p's of strategy - pattern

their strategy over time; like how the company is consistent in what they do

5 p's of strategy - perspective

the want for people to buy into the reasoning; the "why" behind things

blue ocean strategy

when no one else is doing it so you do it and get the competitive advantage over others

only one out there, innovative, mostly made by companies that already exist

examples of blue ocean strategy

nuuly, cirque de soieli, uber

red oceans

where there is lots of competition in the market, reduced brand loyalty just going for whatever is cheapest, threat of new entry

this is where most companies are at

earnings equation

earnings = profits = net income

what does firm performance mean

financials, employee satisfaction, environment footprint

measures of financial performance that are good to use

stock price, accounting measures, return on sales

problems with net income as a measure of performance

doesn't take into account liquidity, # of stores, size of the company in relation to profit, and there are a lot of things included in net income that make it complicated

2 approaches to firm performance

shareholder approach & stakeholder approach

shareholder approach

goal is to maximize owner's profit & is very owner focused

stakeholder approach

prioritize everyone equally (owners, employees, customer, enviornment, etc.)

this is now the standard but it was shifted recently

3 environments that impact firm performance

macro environment, industry environment, the firm

PESTEL analysis

Political

Economic

Socio-cultural

Technological

Environmental

Legal

PESTEL analysis - political

when politics can impact businesses;

Brexit, board of supervisor decisions

PESTEL analysis - economic

federal reserve lowering interest rates, exchange rates, unemployment

PESTEL analysis - social

demographics, birth rates decline, tastes of the consumers

PESTEL analysis - technology

how its everchanging, chat gpt and AI and the impact that it has, new drugs)

PESTEL analysis - environment

natural disasters, temperature rising

PESTEL analysis - legal

laws passed, court cases and their impacts

porters 5 forces

*Rivalry among competitors;

*Threat of new entrants;

*Threat of substitute products;

*Bargaining power of buyers;

*Bargaining power of suppliers;

traditional view of strategic fit

when performance is determined by the degree of fit in the market

companies need to be able to adapt and change with the market or else they won't fit in the market for a while and will die out

paradox of fitness

being fit to the environment is partially true to sucess but has to deal w organizational inertia

how to overcome the paradox of fitness

firms should seek minimal... & need to be ambidextrous

- consistency

- consensus

- contentment

- affluence

- rationality

- faith

how else can firms lose competitive advantage

imitation (can someone make the exact thing)

substitution (product that meets the same demand - claritin, allegra & zyrtec)

hold up (buyer and supplier power - HP has to deal with suppliers taking forever and the sellers taking time to make sales)

too much slack (too many resources - hires that do nothing, M&As, too much marketing)

types of resources

financial, physical, human, and technological

VRIO analysis

Value, Rarity, Inimitability, Organization

need ALL 4 things to provide a compeitive advantage

sources of not being able to imitate

path dependence

social complexity

causal ambiguity

uniqueness

must be no substitutes

sources of not being able to imitate - path dependence

menaing that it was created in the past during some historical event

ex. Pfizer and the covid vaccines

sources of not being able to imitate - social complexity

the resource belongs to the company but is in control of others

ex. employee morale, brand loyalty

sources of not being able to imitate - causal ambiguity

uncertain how the resource was created

ex. JMU's culture - no one else can get it

sources of not being able to imitate - uniqueness

literally there is only one of them

ex. employees, Nick Saban, trademark, physical space

Traditional Value Chain

input --> process --> output

porter's value chain

need to know how the process differs between companies

porter's generic strategies

common sources of differentiation

the attributes of the product itself: Product features, timing of release, location, complexity

The relationship between the firm and customers: marketing, reputation, customization

Linkages within or between firms: Product mix, alliances between firms, service, distribution channels.

common drivers of low cost leadership

- Economies of Scale

- Economies of learning

- Input costs (location, differential access to inputs)

economies of scale

the more you make the cheaper the cost will be per unit & the more you buy the cheaper each unit will be

economies of learning

companies who have been around for a long time have figured out how to make things cheaper