midterm sheet

midterm sheet - Chapter 1: Intro to Strategic Management:...

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Chapter 1: Intro to Strategic Management : Strategy – a set of related and consistent actions that managers take to increase their company’s performance relative to rivals. For most, if not all companies, achieving superior performance relative to rivals is the ultimate challenge. If a company’s strategy results in superior performance, it is said to have a competitive advantage. Competitive advantage (CA) – when a company’s profitability is greater than the average profitability and profit growth of other companies competing for same set of cust. (Above average ROIC) Strategic Management – the art and science of formulating, implementing, and evaluating strategies that will enable an organization to achieve a CA. 1. Business model 2. Strategy 3. Organizational design 4. Performance 5. Competitive advantage, Case analysis What are the 3 different levels of strategy and what role does each play in the strategic management process? Strategic leadership – how to effectively manage a company’s strategy-making process to create competitive advantage. Strategy formulation – the task of selecting strategies Strategy implementation – the task of putting strategies into action, which includes designing, delivering, and supporting products; improving the efficiency and effectiveness of operations; and designing a company’s organization structure, control systems, and culture. What are the different components of the strategic management process of strategy formulation and strategy implementation? Implementation: Structure: Wal-mart = functional Nordstrom = regional Control system – measurement systems (monitors activity) Wal-mart = efficiency, Nordstrom = effectiveness Culture – values, customer treatment: Wal-mart = chaos Nordstrom = luxury Centralized vs. Decentralized: Centralized approach to planning involves people in top management. Decentralized planning considers managers at all levels of the corporation. It is believed that the best planning should be done by business and functional managers who are closest to the facts. What are important characteristics of effective senior executives? Why? Ambitious , Innovative, Technical background, Risk-taker/follower 1. vision, consistent 2. articulation of a business model 3. commitment 4 being well informed; 5. willingness to delegate and empower; 6. astute use of power; 7. emotional intelligence ROIC = NOPLAT/IC = NOPLAT (Income Statement)/Equity + Debt (Balance Sheet) Profit Growth = NOPLAT t+1 – NOPLAT t /NOPLAT t ROIC = Net Profit/Revenue X Revenue/IC Return on Sales X Capital Turnover Return on Sales – measures how effectively a company converts revenue into profits Capital turnover – measures how effectively the company employs invested capital turnover Chapter 2: External Analysis- external forces (something that the company is not doing) that shape competition in the industry in which a company is based to determine what opportunities/threats impact performance. 1. Basic need
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midterm sheet - Chapter 1: Intro to Strategic Management:...

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