Reflection

Reflection

Complete the attached assignment using the attached notes.

In the Module 4 Reflective Discussion, please reflect on everything you have learned in this course, by addressing the following:

Paragraphs 1-3: Given the readings and assignments in the course, identify and discuss three important concepts applicable to your work experience, profession, and/or career plans for the future. Describe how each applies.

Paragraph 4: What part of the course (background materials, assignments, and so forth) opened your eyes or challenged the way you think?

Note: No outside research or citations are needed with your four paragraphs to the Reflective Discussion.

Module 4 – Background

PRINCIPLES OF STRATEGY

Strategy is a broad term that refers to how a company competes in the marketplace. A strategy reflects the firm’s values, its purpose for existing, and how it will compete. A strategy is not a detailed plan, but rather serves as a guide for how decisions should be made. Strategy provides direction.

There are 3 levels of strategy.

Corporate-level strategy. The corporate level answers the question “What business should we be in?” As an example, a conglomerate corporation like General Electric that competes in many industries or businesses – including aviation and financial services – must carefully consider its corporate strategy.

Business-level strategy. The business level focuses on how the firm will compete in a given industry. Will it try to crowd out the competition by offering multiple brands and dominating grocery store shelf space? Will it offer its products at a cut-rate price and make its profit on volume rather than margin?

Functional-level strategy. The functional level (e.g., financial strategy, marketing strategy, human resource strategy) defines activities and processes that support the firm’s corporate and business strategies.

Various models have been developed to assist strategic decision makers in arriving at the right strategy for their organization. We will review several important ones here:

The BCG Matrix

The Boston Consulting Group (BSG) matrix represents a portfolio approach to corporate strategic planning. Many of this popular models’ terms have become part of the everyday language. This approach recognizes that many firms have more than one product or line of services, and that not all of them should have the same strategies because each may face different competitive environments. Thus, a different strategy may be called for, depending largely on market share and marginal costs. Thus, a product with high market share and low marginal costs would generate a large amount of cash high ROI or return on investment) which could then be “milked” to fund other products or lines that had higher costs and/or smaller market share. The BCG matrix characterizes business into four types, depending on how much cash they generate vs. cash they use:

· Stars

· Cash cows

· Dogs

· Question marks

The following video offers an excellent overview on how the BCG matrix works:

Alanis Business Academy. (2016) Episode 96: How the Boston Consulting Group (BCG) Growth-Share Matrix Works. Retrieved from  https://www.youtube.com/watch?v=lc36fK38pLA

The following reading explains the BCG matrix in the context of overall strategic planning and decision-making. You can locate this book in the Trident Online Library, ebook collection.

Campbell, A., Alexander, M., & Goold, M. (2014). Some history: From Boston box to three logics that drive corporate action. Chapter 2. In Strategy for the corporate level: Where to invest, what to cut back and how to grow organisations with multiple divisions (2nd Ed.). pp 31-73. New York, NY: John Wiley & Sones. Available in the Trident Online Library.

Porter’s 5-Forces Model

Before a firm can settle on a specific strategy, it must have a good grasp of the competitive environment in which it operates and the possible approaches it might take to achieve growth. What follows is a description of three models commonly used to help strategic planners understand the competitive challenges faced by the organization.

A traditional approach to strategy has the industry or business as the focus of strategic analysis. The main method used to determine a competitive strategy is the “industry analysis”, and the primary tool used to conduct an industry analysis is renowned strategy scholar Michael Porter’s Five Forces Model. Porter’s model identifies five key forces that shape an industry’s competitive landscape:

1. The threat of substitutes

2. The threat of new entrants

3. Bargaining power of suppliers

4. Bargaining power of buyers

5. Degree of rivalry among existing firms

An analysis of these factors can give insight into concerns like the likelihood of price wars, the ease with which consumers can switch from one product to an alternative, the likelihood that the market could be flooded by competitors offering the same goods or services, etc. All these factors will have an impact on decisions about what products to sell, how to brand them, where to sell, at what price, and how much of a profit margin can be expected. The Harvard Business Review offers the following concise video introduction to Porter’s Model.

Aleem, Q. (2016, March 22). Porter’s 5 Forces Model in just 2 minutes. Harvard Business Review. Retrieved from  https://www.youtube.com/watch?v=ZWQMwnCFIj0

For somewhat more, here is an interview with Professor Michael Porter. He discusses several examples of how the five forces work in several industries including airlines, soft drinks, the internet, and others:

The Five competitive forces that shape strategy. (2008). Harvard Business Review. Retrieved from  https://www.youtube.com/watch?v=mYF2_FBCvXw

The Value Chain and Integration

Depending on the characteristics of the industry, the firm must find a way to establish a competitive advantage. One way to think about establishing this advantage is to think of a firm in terms of its value chain. At each step in the manufacture and delivery of a product or service, value is added. So, if you start with a raw material, like ore, that material is then processed, for example into steel. Then the steel is further processed into machinery, which is then distributed to wholesalers, and then retailers, who sell to consumers. You can see how at each step, value is added.

A company can operate at any step in this chain. The degree to which the company performs operations at multiple levels in the process is called Integration. There is forward and backward integration, depending on whether the firm moves closer to the source materials or the end consumer. Integration can eliminate or ameliorate some of the negative competitive forces identified above. A firm can reduce buyer power, for example, by purchasing the outlets where the product is sold. Think of the farmer who sells his produce directly to consumers at a farmers’ market rather than selling to a grocery store. The farmer no longer has to settle for the price the supermarket is willing to pay – he has alternatives.

The following video offers an introduction to Value Chain analysis as conceptualized by Michael Porter:

MindToolsVideos. (2017, March 6). Porter’s Generic Value Chain Model. Retrieved at  https://www.youtube.com/watch?v=aeshYi6lj2Y

Also, read this short description of integration and be sure to view the video there that gives some examples of how this might work and provide a firm with strategic advantages:

Kenton, W. (2019, February 19). Backward Integration. Investopedia. Retrieved from  http://www.investopedia.com/terms/b/backwardintegration.asp

Li, W., & Chen, J. (2017, March 2). Backward integration strategy in a retailer Stackelberg supply chain. Omega, 75, 118-130. Available in the Trident Online Library.

Generic Strategies

Once a company understands its competitive environment and its options for growth, it is time to generate some plans for action. Most plans for action can be characterized as one of three basic generic strategies. They are called generic, because they apply to a number of industries: from manufacturing, to service, to education, to health care. Porter’s three original generic strategies were:

· Cost Leadership

· Differentiation

· Focus or Niche

The following video does a good job of explaining the different generic strategies and offers examples:

https://tlc.trident.edu/content/enforced/134083-BUS502-2019OCT14FT-1/DW4Mod%20-%20Codes/EMPTY%204-MODULE%20HTML%20DOCS/Modules/Module4/PastedImage_nj3h9tkg1cny37c6s67xej1gj91pjhw800112282805.png?_&d2lSessionVal=MUDAdziKxoNTssiweXBIMkWZs&ou=134083

The five competitive forces that shape strategy. (2008, June 30). Harvard Business Review. Retrieved from  https://www.youtube.com/watch?v=mYF2_FBCvXw . Standard YouTube License.

The following excellent article describes these three strategies and shows how each calls for different types of tactics to address the competitive forces identified in the Industry Analysis (e.g., entry barriers, threat of substitutes, etc.).

Woodruff, J. (2018, December 17) Four generic strategies that strategic business units. Chron. Retrieved from  https://smallbusiness.chron.com/four-generic-strategies-strategic-business-units-use-496.html

Resource-Based View of the Firm

Another approach to analyzing and contemplating a firm’s strategy is the resource-based view of the firm. In the resource-based view, the focus of strategic analysis is not the industry or business and the generic strategy a firm will pursue, but rather the corporation or firm itself and the resources, capabilities, and core competencies that the firm possesses.

The following video explains the resource-based view and contextualizes the theory in strategic management theory:

Academi lib. (2015, August 2). The Resource-Based View (RBV) of the Firm. Retrieved from  https://www.youtube.com/watch?v=E-7wB1kild4.  Standard YouTube License.

The following reading gives an excellent overview of the resource-based view:

Assensoh-Kodua, A. (2019). The resource-based view: A tool of key competency for competitive advantage. Problems and Perspectives in Management, 17(3), 143-152. doi:10.21511/ppm.17(3).2019.12. Open Access article. Available in the Trident Online Library.

Videos

Academi lib. (2015, August 2). The Resource-Based View (RBV) of the Firm. Retrieved from  https://www.youtube.com/watch?v=E-7wB1kild4.  Standard YouTube License.

Alanis Business Academy. (2013, March 7) Episode 96: How the Boston Consulting Group (BCG) Growth-Share Matrix Works. Retrieved from  https://www.youtube.com/watch?v=lc36fK38pLA.  Standard YouTube License.

Aleem, Q. (2016). Porter’s 5 Forces Model in just 2 minutes. Harvard Business Review. Retrieved from  https://www.youtube.com/watch?v=ZWQMwnCFIj0.  Standard YouTube License.

Kryscynski, D. (2015, January 5). What is Strategy? Retrieved from  https://www.youtube.com/watch?v=TD7WSLeQtVw.  Standard YouTube License.

MindToolsVideos. (2017, March 6). Porter’s Generic Value Chain Model. Retrieved at  https://www.youtube.com/watch?v=aeshYi6lj2Y.  Standard YouTube License.

Porter’s Generic Strategies. (2013, July 15). Education Unlocked. Retrieved from  https://www.youtube.com/watch?v=9wXVnBrpZ-U.  Standard YouTube License.

The five competitive forces that shape strategy. (2008). Harvard Business Review. Retrieved from  https://www.youtube.com/watch?v=mYF2_FBCvXw.  Standard YouTube License.

Required Reading

Assensoh-Kodua, A. (2019). The resource-based view: A tool of key competency for competitive advantage. Problems and Perspectives in Management, 17(3), 143-152. doi:10.21511/ppm.17(3).2019.12. Open Access article. Available in the Trident Online Library.

Backward Integration. (2015). Investopedia. Retrieved from  http://www.investopedia.com/terms/b/backwardintegration.asp

The following reading explains the BCG matrix in the context of overall strategic planning and decision-making. You can locate this book in the Trident Online Library, ebook collection.

Campbell, A., Alexander, M., & Goold, M. (2014). Some history: From Boston box to three logics that drive corporate action. Chapter 2. In Strategy for the corporate level: Where to invest, what to cut back and how to grow organizations with multiple divisions (2nd ed., pp 31-73). New York, NY: John Wiley & Sons. Available in the Trident Online Library.

Hummel. (2018, April 13). Danish sportwear major Hummel International forays into India. Asian News International. Available in the Trident Online Library.

Kenton, W. (2019, February 19). Backward integration. Investopedia. Retrieved from  http://www.investopedia.com/terms/b/backwardintegration.asp

Kunc, M. (2019) “Chapter 4 – Industry Dynamics”. Strategic Analytics: Integrating Management Science to Strategy. New York, NY: John Wiley & Sons. Available from Skillsoft database in Trident Online Library.

Li, W., & Chen, J. (2017, March 2). Backward integration strategy in a retailer. Stackelberg supply chain. Omega, 75, 118-130. Available in the Trident Online Library.

Manktelow, J., & Carlton, A. (2015). Porter’s Five Forces: Assessing the balance of power in a business situation. Retrieved from  https://goenglishlive.com/index.php/case10/case10-2.

McGinley, D. (2018). Cable providers in the US. IBIS World Industry Report 51711a. IBISWorld. Available in IBIS World database in the Trident Online Library.

Woodruff, J. (2018) Four generic strategies that strategic business units. Chron. Retrieved from  https://smallbusiness.chron.com/four-generic-strategies-strategic-business-units-use-496.html

Optional Reading

Charan, R. (2014). It’s time to split HR. Harvard Business Review. Retrieved from  https://hbr.org/2014/07/its-time-to-split-hr

Lawler, E. III (2012). Corporate Strategy: How HR Can Become a Player. Forbes. Retrieved from  http://www.forbes.com/sites/edwardlawler/2012/08/15/corporate-strategy-how-hr-can-become-a-player/

 
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