Rothaermel Exercises
Chapter 1
– The stakeholders of Target influence the decisions of managers in building
competitive advantage in the analysis stage of the AFI framework in several different
ways. For the manager, they must consider the immediate and short-term needs of
stakeholders through careful analysis, and look to meet these needs. Not only do
customers have needs, but employees, suppliers and the like have needs that must
be fulfilled. Customers also provide positive or negative feedback through a variety
of methods, and through experience, managers can perform analyses to better serve
the customers in the future.
Target can also gather information from stakeholders to increase customer
satisfaction in the formulation stage in order to differentiate it from its competitiors
or to lower overall costs. Methods that are commonly used are customer surveys
and questionnaires, as well as interviewing select customers with a specific set of
questions. These methods help managers gain in-depth insight into the short-term
needs of customers, enabling them to provide solutions or cost reductions.
A couple of the ways in which stakeholders may affect or be affected by the
implementation stage are: employees resisting organizational change or refusing to
change their own specific methodology in providing solutions, or by customers
refusing to comply with organizational changes by boycotting the company.
– There are several advice tips to give to the managers of BP in order to help them
rebuild their stakeholder relationships in the gulf region and as a whole. The first
tidbit would be to encourage transparency with all stakeholders and the general
public in order to regain lost credibility and gain trust for the company. Another
would be to publicize how BP is aiming to rebuild its credibility and reputation
through openly engaging in transparency efforts and community rebuild efforts.
– Firm effects are judged to be more important than industry effects because firm
effects are the overall effect that company internal policies and strategies have on
the organization as a whole. Industry effects, on the other hand, are external
factors not determined or controlled by the internal strategies and policies of the
organization. Firm effects are more important due to the fact that industry effects
are already in place when an organization begins conducting business, and the firm
effects will have a lasting effect on the success of the organization.
One scenario where firm effects are likely to be less important than industry
effects is when an industry is heavily regulated by government, because this
determines how the industry acts and reacts, and internal strategies and policies
have a negligible effect on the industry.
Chapter 2
2.4 – One industry that is heavily competitive and is often featured in the press is the
airline industry. Scenario planning helps organizations to plan in case certain
situations occur that affect the organization or industry as a whole. For example, an
airline company might prepare for abrupt changes that affect the industry as whole,
for instance a sudden increase in the costs of jet fuel. Scenario planning can benefit
airline companies by preparing for sudden cost increases or decreases, as well as
negative press that might come to light if a plane crash were to occur. Industries that
benefit greatly from scenario planning are ones that are highly competitive and have
a wide variety of substitutes, because if circumstances were to change, then
customers would have no problem finding a suitable substitute.
Chapter 3
– It is important for organizations to study and understand their external
environments because external factors can quickly have lasting negative or positive
effects on the organization. More specifically, understanding the external
environment allows organizations to gain potential competitive advantages, to plan
ahead for future scenarios, to identify new opportunities and threats, and to
understand the behavioral and purchasing patterns of consumers.
– The five competitive forces in Porter’s model affect the average profitability of the
industry in different ways:
1.
Threat of new entrants: new players in the industry bring different offer
different products and services, allowing existing players to use their own
competitive advantages to become more profitable and increasing the
stability of the industry.
2.
Bargaining power of suppliers: if the suppliers decide to fix prices because
there is a low number of suppliers, this benefits both the suppliers and the
buyers because other suppliers would have to follow suit, increasing industry
profitability.
3.
Bargaining power of buyers: if buyers have many options where they can buy
their product, then there is stronger and increased competition, as well as
increased profitability.
4.
Threat of substitutes: increased numbers of substitutes drive the quality of
products or services down due to reduced prices, negatively affecting the
industry profitability.
5.
Industry rivalries: competitors in the industry will look for advantages and
attempt to increase their market share over other organizations. This
negatively affects profitability of the industry if the industry has healthy
competition, but if the competition is unhealthy (for example undercutting
and minimizing quality), then this negatively effects profitability.
An industry where many competitors have financial performance issues is
the airline industry, and the strongest force is industry rivalry. Healthy competition
is good for the industry, while unhealthy competition is not.
Chapter 4
– The importance of an organization to study its internal resources, capabilities, and
activities are listed as follows:
1.
Internal resources: help the organization gain a deeper understanding of its
cash inventory and property and equipment. This is important because it
helps the organization to build its strategy and plan around its current
resources.
2.
Capabilities: can include the capabilities of property and of employees. This
helps in the planning stage because the organization can better understand
the capabilities of its employees and equipment in accordance with the
current or prospective plan.
3.
Activities: include the actions undertaken by the company to comply with its
current goals or strategies. Activities are to be analyzed because managers
and employees will better understand how to improve those processes and
reduce costs or increase profits.
The insights to be gained by studying its internal resources, capabilities and
activities help it to better plan for the future and potentially avoid disaster and
increase profits by decreasing costs.
a –
Primary activities for McDonald’s include:
1.
Inbound logistics – purchasing ingredients
2.
Outbound logistics – preparation of food at each location, varying from
location to location
3.
Operations – preparation of food within the restaurant
4.
Marketing – promoting the food through social media, television, and news
outlets
5.
Services – free Wi-Fi on site
Secondary activities for McDonald’s include:
1.
Human resource management – benefits of being a McDonald’s employee,
solving problems in the workplace, employee recruitment
2.
Infrastructure – organizational structure and control, as well as corporate
culture
3.
Technology – proper use of technology to be efficient in the workplace
Inbound logistics and infrastructure add the most customer value for McDonald’s.
Inbound logistics and operations help to contain costs.
b – Adding new menu items required changes to the inbound logistics of
McDonald’s because it required adding more suppliers in a manner that helped keep
costs low while trying to purchase from ethical suppliers. Operations also changed
at the level of food preparation because customers desired healthier, more appealing
menu options. Offering low-cost burgers was once a mainstay for McDonald’s, but
the new changes have affected the value chain of the company at varying levels.
– One way that organizations determine the basis for sustainable competitive
advantages through resources is the VRIO concept, which stands for: valuable, rare,
imitate and organizing to capture value.
1.
Valuable – a resource can be deemed as valuable if it increases the perceived
value for customers.
2.
Rare – a resource is rare if competitors or other firms have limited access to
that resource, providing certain companies with competitive advantages.
3.
Imitate: a resource that is easily duplicated or substituted is not valued,
whereas a resource that is duplicated with difficulty or at a high cost to other
organizations can provide a competitive advantage to the firm that holds the
resource.
4.
Organizing to capture value – a resource must create perceived value to the
customer if it is to be used to gain a sustainable competitive advantage.
Using the VRIO framework concept, organizations can determine if their
resources are valuable, rare, easily imitated, and capture value. This framework
allows an organization to gain a sustainable competitive advantage. These measures
are dependent on one another, as valuable, rare, non-replicable resources are hard
to come by.
Chapter 5
5.1 -
1.
The students are the main customers of the Liberty University School of
Business, as well as companies who hire the students. The customers view
the school of business positively, as an outlet to become businesspersons who
are centered on promoting Christ in the business world.
2.
The school of business creates value by teaching foundational and upper-
level business skills to a wide variety of students, but doing so through the
lens of Christianity. Value is also created by having professors who have
varying levels of experience in business, who can share that experience with
their students.
3.
Core competencies of the school of business include effective communication,
problem solving abilities, provision of opportunities, challenges, team-based
and individual work, and a curriculum that is based off of the teachings in the
Bible.
4.
Shareholders of Liberty University must view the school of business as a
positive entity that adequately prepares its customers (students) with the
knowledge and skills necessary to be successful in the business world, all
while maintaining a curriculum centered around the goal of the university,
which is “building champions for Christ.”
5.2
While economic profitability was once the primary objective of engaging in
business activities, the triple bottom line has become the new method for
sustainable organizational growth and profits. The triple bottom line encourages
businesses to be sustainable through three pillars: people, planet, and profitability.
Many successful and well-known organizations have adopted the triple bottom line
philosophy, including global giants FedEx and Nike. However, even smaller
organizations have begun to use this holistic method in going about their business.
The three pillars begin with profitability. The primary reason for an
organization to come into existence is to turn an economic profit. Yet, economic
profitability is only one piece of the puzzle in the 3BL philosophy, which takes into
account not only the profits of a particular organization, but how society profits as a
whole through the business activities of that organization.
The next pillar is planet. In the modern era, environmental sustainability has
become more and more stressed for organizations, society, and the government. In
the 3BL, businesses are encouraged to reduce waste, recycle materials that can be
recycled, and to eliminate the use of chemicals that harm the environment. Another
reason to stress this pillar is that as the global wave of environmental sustainability
gains more traction, more and more governments are buying into the initiative. In
order to stay ahead of the curve, organizations are encouraged to engage in activities
that have minimal effects on the planet.
The final pillar of the 3BL philosophy is people. People are the most
important resource in the world. Traditionally, organizations would exploit people
through limited labor laws, cheap labor, and child labor. However, more and more
organizations are realizing that in order to truly benefit themselves and society, they
must treat people fairly and provide benefits to their stakeholders for engaging in
business with them.
The 3BL philosophy is important because as society advances and evolves,
there has been a shift of focus from purely profit-based to a focus on profits, people,
and planet-driven benefits. Organizations that actively engage in 3BL activities have
seen spikes in profits and overall reputation, as well as increased employee
retention and job satisfaction. As society has changed, successful business have
learned what drives that change and have adapted their plans and actions according
to the 3BL philosophy.
