Question # 1
– Strategic management defines managerial conclusion and course of actions that help achieve long-term goals of an organization. Strategic management includes external and internal resources, control, evaluation and strategy formulation/implementation. Having strategic management in a firm is very important and needs effective researchers and practitioners to accomplish organizational goals.
Question # 2
– The last step for strategic management is the evaluation process, which is also a key element for the company. In this process a firm can see what they have accomplished so far, see the actual performance and compare with desired performance. After this they can solve the problems of the company and get back in the right track. If it needed it can help resolve all the problems and maybe restart the entire strategic planning process to have the best possible options for the company.
Question # 3
– Triggering events will be needed when a company needs a change in strategy, usually it happens when performance does not meet expectations or the company needs fine-tuning to have better performance. These triggering events can be; change of a new CEO, performance gap, strategic inflection point, external intervention or threat of a change in ownership. Strategic decisions relates to triggering events because the existence of a triggering event is based a strategic decision. Having a confident and strong strategic management will make good decisions, which will increase performance and it will help accomplish goals faster and easier.
Question # 4
– Agency problem occurs when there is a conflict of interest between owners/shareholders and agents. Different interests can be resulted from; solving a problem in different ways or an agent would choose easier ways to protect his/her job. These agency problems can be solved by different techniques, for example, Agency Theory, Stewardship Theory, monitoring or asking a third party for solving the actual problem. (It can be affiliated directors or retired executive directors who can give their opinion to solve the problem)
Question # 5
– Agency Theory is involved with solving conflict of interest and moral hazards. Conflict of interest was mentioned in question # 4 and moral hazard refers to a situation where it is hard to confirm the truth of what the agents are doing. The theory also says that a big number of the board members should be from outside the firm to help solve selfishness within the company. Stewardship Theory is very similar to Agency Theory because it is also between principal and agents. It is saying that managers should have the best interest in decision making for the company over self-interests. Agency Theory is more likely to focus on lower-level needs like, security and payment. On the other hand, Stewardship Theory is more likely to focus on higher-level needs like, consciousness and achievements.
Question # 6
– Sarbanes-Oxley Act in June 2002 made deep and wide changes in corporate governance. This Act helps shareholders and investors and protecting against fraud and criminal activities. The act has many requirements; directors can’t receive extra fees and they have to be independent of the firm, boards can’t grant loans to corporate officers, “whistleblowers”, if anyone is doing something wrong within the firm and another person knows about it, he/she has to report it and the act also bans auditors for providing the same audit to the same company. Firms’ statistics are showing less adjustment for unusual charges and no fees received by directors, which had helped getting more reported earnings in the past. This requirements also helped for less post-date executive stock options by companies.
Question # 7
– Selecting a good director to the firm is very important. The person has to be an expert in global business, firm’s industry, firm’s technology and the current situation of the firm. Also important to have some external contacts, which could be beneficial to the firm. Having a good relationship with the management team and the stakeholders are important and also be able to challenge them when the situation requires it. After a director has been chosen he is responsible for corporate performance/government, planning, strategy, execution and CEO succession. However, there are no standards for director responsibilities in the United States and responsibilities vary in different states. But the responsibilities listed above are very similar to each other.
Question # 8
– Friedman’s view of responsibilities of a business is very clear and brings the business to the first place over social responsibilities. He says that supporting social needs (e.g. hiring unemployed people or millions spent in social services) could affect the company’s long-term goals. He says that the firm has to make wise decisions and put the firm in front of social needs to reach the best possible outcomes to the business. On the other hand, Carroll states that only way to reach business goals is trough social needs. He is saying that the people has the same needs as the firm, so achieving social goals will lead to achievements in business. Friedman and Carroll both argue the same impact of social responsibility on firm’s profit. While Friedman is focusing on maximum revenue over social responsibility, Carroll is more likely to achieve goals trough social responsibility. I agree with Carroll’s point of views because I believe taking care of other people will lead to better things.
Question # 9
– In my opinion, a business should be socially responsible according to Carroll’s theories. Social responsibility will lead to enhanced reputation with consumers, which will lead to more revenue. Also, environmental sustainability is very important because it can lead to more consumers, it can be a competitive advantage and also save some costs to the firm. Primary stakeholders have big power in decision-making and they can make decision without secondary stakeholders. However, making decision without secondary stakeholders can lead to wrong decisions. I think for a firm to achieve its goal, primary and secondary stakeholders have to sit down and discuss the needs of the firm to have a bigger picture, which will help to make better decisions. Consequently, primary and secondary stakeholders are both very important to the firm.
Question # 10
– Being unethical in business could be delivered from differences between cultural norms, values and countries. For example, what considered being a bribe in what country could be usual business practice in another country. Another unethical behavior could also be when a key stakeholder believes in profit maximization, while other people has different priorities. Moreover, being unethical can be based on economic, political, social and religious issues. For example, business people from all over the world are scoring higher on political and economic values, which can also lead to unethical behavior against religious and social decision making progresses. Designing code of ethics for an organization can help prevent unethical issues in business. If a business has code of ethics well described, it will help people to understand how to make decisions based within ethical values.
Question # 11
– Porter’s approach to industry is most concerned with competitors in the same industry. There are different forces can harm your business, e.g.: buyers’ influence, leverage of suppliers, competition between existing companies, substitute products and new competitors. If these forces are strong the weaker your business gets in the long-term. By analyzing case 17, Whole Foods Market is facing some serious threats according to Porter. Lower-cost substitutes by supermarkets are entering the market and many people are willing to buy whole product in supermarkets over than spending their money in Whole Foods Market. Also there are many competitors because supermarkets are entering the natural food market and generally selling products at a lower price. Also very hard for them to keep the same buyers because there is a very wide market out there and people can get natural and healthy food from anywhere.
Question # 12
– Societal environment most likely have an influence on long-term progress, including four general forces; economic, technological, political-legal and sociocultural forces. Economic forces include regulating in change of money, energy, information and materials. Technological forces are helping the firms keeping its problem solving capabilities. Political-legal forces showing power and maintain laws and regulations. Sociocultural forces taking care of social values of the population. Some of the general forces that the United States are showing; sustainably by increasing environmental awareness, increasing health care, saying no to the mass market and differences in household fronts.
Question # 13
– My first pick is the Retail Chain Industry. People are buying bad quality clothes for less money in Walmart or Kmart and people are buying premium/quality clothes in Macy’s or Polo Ralph Lauren. Walmart has more costumers and the clothing section is targeting the low-income families. On the otherhand, Polo Ralph Lauren is targeting wealthy costumers. They have similar strategies with similar resources but they have completely different characteristic. My second pick for industry is the Restaurant Chain Industry. My example for low-price restaurants are Hardee’s and Taco Bell and the have offer fast food on the menu, which is unhealthy and bad quality. On the other hand, there is Cheesecake Factory and they offer quality food for premium price. Also they have similar strategies and similar resources but different characteristic in the same field of business.
Question # 14
– EFAS case # 17
Opportunities Weight Rating Weighted Comments
Brand Image
.15
4
0.6 Strong brand image, helps keep costumers.
Opening new stores
.10
3
0.3 Has been working very well in the past.
Targeting wealthy
Costumers
.15
2.5
0.375 Rich people buy premium products for premium price.
Threats
Competitors
.30
5
1.5 Supermarkets entering natural food industry.
Lower price substitutes
.20
4.5
0.9 People buying the low price products.(Wal-Mart)
Economic Recession
.10
2
0.2 Uncertainty of today’s market.
Total 1.0 3.875
Question # 15
– IFAS case # 17
Strengths Weight Rating Weighted Comments
Quality products .15 4 .60 Natural organic products.
Employee/costumer relationship .10 3 .30 “100 best companies to work for”
Sustainability .20 5 1 Charities, natural product.
Enthusiasm/respect .05 2 .20 Being environmentally friendly
Weaknesses
High price .40 5 2 Premium price for premium products.
Advertising .10 3 .30 Word of mouth advertising.
Total 1.0 4.4
Question # 16
– We can say corporate culture is the bible for corporations. It is usually designed by the founder(s) and it reflects beliefs, expectations and values of the corporation. Corporate culture is being shared trough generations and that is how a firm maintains the brand name. The two distinct attributes of corporation culture are integration and intensity.
Question # 17
– Firm’s competencies are the best capabilities of the corporation that make the business do well. For example; costumer service, flexibility, innovation, quality and sustainability. With this collection of corporate capabilities, the corporation has the ability to do tremendously well. You can evaluate sustainability by being socially responsible and environmentally responsible. For a business to be sustainable is very important nowadays and this seems to be the right way to grow your business in the 21st century