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Samenvatting Strategie van Organisaties
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A summary for Strategy of Organizations (Open Universiteit). I got an 8 myself with this summary.
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Strategic Management samenvatting, examenvragen en mindmaps per hoofdstuk
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1. What is Strategy and Why is it Important?Summary
An organization’s strategy consists of the overarching direction set by managers, plus the competitive moves
and business approaches that they are employing to compete successfully improve performance and grow
business.
The central thrust of an organization's strategy is undertaking moves to build and strengthen the organization’s
long-term competitive position and financial performance by competing differently from rivals and gaining a
sustainable competitive advantage over them.
An organization achieves a sustainable competitive advantage when it can meet customer needs more
effectively or efficiently than rivals and when the basis for this is durable, despite the best efforts of
competitors to match or surpass this advantage.
An organization’s strategy typically evolves over time, emerging from a blend of (1) proactive and deliberate
actions on the part of organization’s managers to improve the strategy and (2) reactive and emergent,
as-needed, adaptive responses to unanticipated developments and fresh market conditions.
An organization’s business model is management’s story-line for how the strategy will be a moneymaker. It
contains two crucial elements: (1) the customer value proposition - a plan for satisfying customer wants and
needs at a price customers will consider good value, and (2) the operating model - a plan for a cost structure
that will enable the organization to deliver the customer value proposition profitably. In effect, an
organization’s business model sets forth the economic logic for making money in a particular business, given
the organization's current strategy.
A good strategy will pass three sets: (1) Fit (external, internal and dynamic consistency); (2) Competitive
Advantage (durable competitive advantage), and (3) Performance (outstanding financial and market
performance).
Crafting and executing strategy are core management functions. How well an organization performs and the
degree of market success it enjoys are directly attributable to the calibre of its strategy and the proficiency with
which the strategy is executed.
The context in which a strategy is developed (the level of dynamism and disorder) will have an impact on the
type of process used. The four basic components (Diagnosis, Directions, Decisions and Delivery) will remain the
same but the way in which they are configured will change.
,What do we mean by strategy?
In moving an organization forward, managers face the same three central questions:
1. What is our present situation?
Evaluate industry conditions, current financial performance and market standing, resources, etc.
2. Where do we want to go from here?
Is about management vision of future directions. Establishing a sense of purpose. Content of strategy.
3. How are we going to get there?
Challenges managers to craft and execute (implement) a strategy capable of moving the organization.
Managers need to consider the following (ORMPI):
- How to outcompete rivals;
- How to respond to changing economic and market conditions and capitalize on growth
opportunities - both predictable and emerging.
- How to manage each functional piece of the business (R&D, supply chain, production, sales
and marketing, distribution, finance and HR).
- How to prioritize the allocation of resources to activities that will have the most impact on
strategic performance.
- How to improve the organization's standing with financial markets and sustain its financial
performance.
Increasingly, organizations are also using alliances and networks to move their strategy forward. In a number of
high-tech arenas groups of organizations share intellectual property through ‘research commons’, such as the
Acer group and IBM.
Strategy, at its essence, is about competing differently - doing what rival organizations do not do or what rival
organizations cannot do. An organization’s strategy provides direction and guidance, in terms of not only what
the organization should do but also what it should not do. Knowing what not to do can be as important as
knowing what to do, strategically.
Identifying an organization's strategy - what to look for:
- Actions to gain sales and market share via more performance features, appealing design, better
quality or customer service, wider product selector or other such actions;
- Actions to gain sales and market share with lower prices on lower costs;
- Actions to enter net product or geographic markets or to exit existing ones;
- Actions to capture emerging market opportunities and defend against external threats;
- Actions to strengthen market standing and competitiveness by acquiring or merging with other
companies;
- Actions to strengthen competitiveness via strategic alliances and collaborative partnerships;
- Actions and approaches used in managing R&D, production, sales and marketing, finance and other
key activities;
- Actions to upgrade build or acquire competitively important resources and capabilities;
- Actions to strengthen the firm’s bargaining position with suppliers.
,Competitive advantage generally comes from an ability to meet customer needs more effectively, with
products or services that customers value more highly, or more efficiently, at a lower cost.
A strategy is sustainable (or durable), as opposed to temporary, if the elements of the strategy give buyers
lasting reasons to prefer an organization's products or services over those of competitors - reasons that
competitors are unable to nullify or overcome despite their best efforts.
The key to successful strategy-making is to come up with one or more strategy elements that act as a magnet
to draw customers and that produce a lasting competitive edge over rivals.
In hypercompetitive markets, organizations are unable to build and defend positions in the long term and
there is a constant cycle of aggressive maneuvers as industry members seek to gain a temporary disruptive
advantage over rivals. Forecasting is difficult to rely on. In this sort of environment managers should seek to
exploit short-term opportunities to create a series of temporary competitive advantages - perhaps by
constantly introducing new products or services to gain frequent first-mover advantages.
Evolving strategy is about the fact that the task of crafting strategy is not a one-time event but always a work in
progress and so more of an emergent process in reality. A organization’s strategy is typically a blend of (1)
proactive actions to improve the financial performance and secure a competitive edge and (2) adaptive
reactions to unanticipated developments and fresh market conditions.
A deliberate strategy consist elements that are both planned and realized as planned (proactive).
An emergent strategy consist elements that emerge as changing conditions warrant (reactive). A portion of an
organization’s strategy is always developed reactively, coming as a response to fresh strategic manoeuvred on
the part of rival organizations, unexpected shits in customer requirements, fast-changing technological
developments, newly appearing market opportunities, a changing political or economic climate, or other
unanticipated happenings in the surrounding environment.
A realized strategy is the combination of proactive and reactive elements, with certain strategy elements being
abandoned because they have become obsolete or ineffective. An organization’s realized strategy can be
observed in the pattern of its actions over time.
, The Relationship between an Organization’s Strategy and its Business Model
A business model is a management’s blueprint. The two crucial elements are:
1. the customer value proposition;
2. operating model.
The customer value proposition describes the customers the organization is targeting, the products and
services it will offer to satisfy their wants and needs at a price they will consider good value and how the
organization will gain revenue. The greater the value provided and the lower the price, the more attractive the
value proposition is to customers.
The operating model describes the organization’s approach to determining a cost structure and set of activities
that will allow for acceptable profits, given the pricing tied to its customer value proposition.
Example: Magazines and newspapers employ a business model keyed to delivering information and
entertainment they believe readers will find valuable. This is combined with a profit formula aimed at securing
sufficient revenues from subscriptions and advertising to more than cover the costs of producing and delivering
their products to readers.
An organization’s profit formula depends on three basic elements: (1) the value provided to customers, in
terms of how effectively the goods or services of the organization meet customers’ wants and needs; (2) the
price charged to customers; and (3) the organization’s costs.
Multi-sided business models - is about changing two or more of the elements of the organization’s business
model in order to create more value. Because it is more difficult to coordinate this sort of change it is therefore
harder for competitors to copy, whereas a new product might be quickly reverse engineered by a competent
rival.
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