GMS 200 Final Exam Notes

  • competitive advantage - what you do that gives you an edge: cost of production, access to resources, even gov. policy (provides license to monopolize)

  • sustainable competitive advantage - an approach that is different for competitors to replicate

    • depends on the market structure; barriers, #of producers

  • strategy - something that will provide a competitive advantage

    • keep innovating

  • oligopoly (e.g. airline industry, barrier to entry due to the price) :

    • few players directly competing against each other

    • long term competitive advantage in defined market segment

  • you don’t have to be a single player to behave like a monopoly; if you have 60% of the market you can still control it

  • hypercompetition (no barriers to entry):

    • several players directly competing

    • competitive advantage is temporary

  • strategy formulation

    • the process of creating a strategy

    • assessing existing strategies, organization, and environment to develop new strategies and strategic plans capable of delivering future competitive advantage.

  • strategic questions for strategy formulation:

    • what is the business mission?

    • who are our customers?

    • what do customers consider value?

    • what have been our results?

    • what is our plan

  • mission statement:

    • identifies customers, products/services, location and underlying philosophy

    • explains why the business exists

  • class discussion

    • lithium ion battery - grew 10 folds between 2005-2015; electric vehicles were not popular during that time

    • there has been an electrification of transportation; electric scooters, skateboards, cars

    • green economy promotes the use of batteries

    • battery makes will displace oil giants

    • only 2 players when it comes to charging, we lack infrastructure in terms of charging stations/electric vehicles:

      • flo

      • sun country highway

    • R&D has resulted in a decrease in the cost of battery production

    • the gap between lithium-ion and lead batteries are closing

    • ICE vehicles - lead based battery, powered by gasoline

    • elements in batteries are lithium, nickel, cobalt, and manganese

    • 60% of cobalt is from DRC

    • lithium batteries are mostly refined in china

      • china will have a monopoly power impacting the competitive advantage

    • sodium batteries are not that scarce whereas lithium ones are since they require cobalt and nickel which are scarce

      • cost of sodium is lower than lithium

    • sodium batteries are heavier whereas lithium is lighter

    • leading electric vehicle companies

      • tesla

      • bdv

    • canadian gov gave tax credits to individuals who used electric vehicles to further increase the green economy, and reduce noise and air pollution

    • there will be 5 levels of autonomous vehicles

      • waymo

  • it’s necessary to have a strategy with suppliers

  • it’s important to make your organization give value to a community and become part of a community

  • objectives in a business strategy should not be vague

    • to do that you need to understand your internal and external environment through SWOT ( strengths, weaknesses, opportunities, threats)

      • change and fix the internal environment, adapt to the external

  • assessment of macro environment:

    • technology

    • government

    • social/demographic structures

    • global economy

    • natural environment

  • analysis of industry environment:

    • resource suppliers

    • competitors

    • customers

  • strategic forces to be examined in conducting industry analysis:

    • industry competitors

    • new entrants

    • suppliers

    • buyers

    • substitutes

  • web based business models

    • brokerage models

    • advertising model

    • merchant model

    • subscription model

    • infomediary model

    • community model

      • internet can be used for anything

  • sustainable competitive advantage:

    • cost + quality

    • knowledge and speed

    • barriers to entry

    • financial resources

  • barriers to entry exist in an oligopolistic market

  • porters generic strategies - do r&d to fit/adjust to a particular market

    • differentiation strategy

    • cost leadership

    • focused differentiation

      • smartphones specifically for developing countries

    • focused cost leadership strategy

  • portfolio planning approach

    • allocating resources to maximize profits and minimizing costs

  • BCG matrix

    • ties strategy formulation to analysis of business opportunities according to

      • the matrix uses market growth rate as a proxy for industry attractiveness, and relative market share to measure how well a product is positioned against competitors

      • compares how well its doing in industry/company and market

  • types of adaptive strategies:

    • prospector strategy

      • pursuing innovation in face of risk for growth

    • defender strategy

      • protecting market share by emphasizing products without seeking growth

    • analyzer strategy

      • maintaining existing operations and keeping efficiency, adopt successful innovations from competitors

    • reactor strategy

      • merely responding to competition to keep afloat

  • failure of substance - inadequate attention to major strategic planning elements

  • failures of process - lack of participation, goal displacement error

  • critical tasks of strategic leadership

    • guardian of trade-offs

    • create a sense of urgency

    • everyone understands strategy

    • teacher / be inspiring

    • be a great communicator

  • corporate strategy - what businesses are we in

  • business strategy - how do we compete in each of our major businesses

  • functional strategy - how do we best support each of our business strategies; finance, hr, marketing

  • types of growth strategies:

    • concentration strategy

    • diversification strategy

      • related diversification

      • unrelated diversification - westjet restaurants

      • vertical integration - owning the supply chain

  • retrenchment

    • correcting weaknesses of operations

    • liquidation

    • restructure

    • downsizing/rightsizing

    • divesting - moving resources from businesses

  • globalization - standardize product as much as possible, world is one large market, ethnocentric in the sense that the product is not customized to fit that country’s culture

  • multidomestic strategy - polycentrism (adapting product), for instance, nestle

  • transnational strategy - standardized but try to incorporate some local values, mcdonalds, balance efficiencies in global operations and responsiveness to local markets

  • sources of managerial power

    • position power - power based on you are still there

      • reward power - ill reward u if u do x

      • coercive power - i will punish you

      • legitimate power - bcs i am boss, you must do so

    • personal power - based on how you are viewed by others

      • expert power - a source of special knowledge/expertise

      • referent power - others like to identify with this

  • leaders can be (based off of blake and moutons leadership):

    • task oriented - based on scientific management, interested in the output

    • people concerns - cares about the people

  • classic leadership styles:

    • autocratic

      • tasks over pppl, authority, control, keeps information, acts in a uniletal command-and-control fashion

    • laissez-faire

      • little concern, lets group make decisions, do the best you can, don’t bother me

    • democratic

      • sharing information, encouraging, helping

  • Fidler's contingency model- good leadership depends on match between leadership and situational demand, there's an understanding that good leadership is dependent on personality

    • low list preferred coworker - shows that you are a task motivated leader

    • high list preferred coworker - relationship motivated leadership

    • situational control

  • hersey-blanchard situational leadership model

  • house’s path goal leadership

    • effective leadership deals with the paths through which followers can achieve goals

  • vroom-jago leader-participation theory - depends on the nature of the problem situation to decide how to lead

  • characteristics of transformational leaders:

    • vision, charisma, symbolism, empowerment, intellectual stimulation, integrity.

  • issues in leadership:

    • EI

    • gender and leadership

  • entrepreneurship - strategic thinking + risk-taking behaviour, creating new opportunities, error correction

    • characteristics:

      • internal locus of control; contingence, whatever you do is beyond you

      • high energy level

      • need for achievement

      • self-confidence

      • tolerance for ambiguity

      • passion and action-oriented

      • self-reliance

      • flexible

  • economics > taught to move towards equilibrium > this is unrealistic bcs corporations want to maximize profit in the free market

  • personal agency belief (entrepreneurship) = self efficacy * locus of control

  • background of entrepreneurs

    • parents were entrepreneurship or self-employed

    • families encouraged responsibility, initiative, and independence

    • have tried more than one business venture

    • relevant career/personal experience

    • strong interests in creative production and enterprise control

    • seek independence and sense of mastery

  • entrepreneurship can exist in both collectivistic and individualistic societies

  • entrepreneurship people

    • kirner > no such thing as equilibrium, BUT we have equilibrium tendencies, when you discover opportunities > arbitrage (selling stuff cheap for high), you don’t need money to be an entrepreneurship you need to have an idea, entrepreneurship is error correction

    • schumpeter > entrepreneurship process is about creating and destructing,

    • harper > created locus of control, cornerstone hypothesis > he criticized it > [ Harper's Cornerstone Hypothesis highlights the value of focusing on critical, interconnected components rather than viewing a system’s parts as equally influential. ]

    • baumd > there is such thing as productive and unproductive entrepreneurship, societies can make ppl unproductive bcs that is how they make money > need some ppl with the low paying jobs not innovating

  • process of entrepreneurship > service, organics, hand made, artisanal, bespoke (customized), made to order, tailor made

  • facts abt entrepreneurs:

    • entrepreneurs are MADE, not born

    • entrepreneurs take CALCULATED RISKS, they are NOT gamblers

    • ideas > money

    • you don’t need to be young

    • you don’t need a degree

  • characteristics of a small business

    • <100 employees

    • independently owned + operated

    • 50% of labour force works in small businesses

    • entrepreneurship + the internet

    • intl. business entrepreneurship

    • family business

  • small-business are established by;

    • starting a new business

    • buying a small business

    • buying and running a franchise

  • reasons for failure of small business:

    • no leadership

    • poor planning

    • unexpected accelerated growth

    • bad strategy

    • ethical failure > quantity over quality

    • insufficient commitment

    • no experience

  • start ideas, have a strategy, have a competitive advantage, outcompete competitors > how to start a new venture

  • life cycle of a new venture - stages of lifecycle

    • birth - establishment, getting customers, finding money; fighting for survival

    • breakthrough - working on finances, becoming profitable, growth; coping with growth

    • maturity - refining strategy, continuing growth, managing success; investing and staying flexible

  • forms of legal ownership

    • sole proprietorship

    • partnership

      • general partnership - equal liability and rights to decision process

      • limited partnership - different roles in management, proportionate to investment, different limits of liability

      • limited liability partnership - provides limited liability to all partners; protection

    • corporation - publicly owned but managed by company

    • limited liability corporation (LLC)

    • PLC - listed on the s&p

  • financing ventures

    • debt financing - borrowing money, loans, pay back regardless of financial performance

    • equity financing - typical investment, take equity of business and receive dividends which can be diluted, no obligation to pay dividends

    • venture capitalists - big private equity investment focusing on start-ups/small companies with long term

    • initial public offerings - organization enters stock exchange

    • angel investors - well-off individuals who invest in small companies

  • promoting entrepreneurship:

    • in larger corporations

      • intrapreneurship

      • skunkworks - a group within an organization given a high degree of autonomy and unhampered by bureaucracy, with the task of working on advanced or secret projects

    • business incubators

    • small business development centers

  • functional structures

    • similar skills + tasks grouped together

    • ppl work in areas of expertise

    • not limited to business

    • works well from smaller organizations

  • divisional structures

    • groups of ppl who have the same tasks, customers, location

    • common in complex organizations

    • avoids problems encountered with functional structures

  • matrix structure

    • combines functional and divisional

  • new developments in organization structures

    • horizontal structures

      • organization focus on processes not functions

      • ppl in charge of core processes

      • more teams less hierarchy

      • empowerment to increase performance

      • use IT

      • multiskilling and multi competencies

      • openness, collaboration, performance commitment

    • boundaryless organizational structure

      • a combination of team and network structures with addition of temporariness

      • absence of hierarchy

      • empowerment of members

      • use of technology

      • acceptance of impermanence

    • network structures

      • a central core linked through networks with outside contractors and suppliers of essential services

      • own only core components and use strategic alliances/outsourcing for other resources

    • problems with outsourcing:

      • outsourcing activities part of core

      • outsourcing to untrustworthy vendors

      • no contracts

      • overlooking impact on existing employees

      • losing control to vendors

      • overlooking costs

      • failing to anticipate the need to change vendors

  • contemporary organizing trends

    • shorter chains of command

    • less unity of command

    • more delegation

    • more empowerment

    • centralization mixed with decentralization

    • reduced use of staff