BUSN 470 Regent University Week 1 Business Environment Discussion Compose a post that integrates a complete Bible scripture verse and transcends all aspect

BUSN 470 Regent University Week 1 Business Environment Discussion Compose a post that integrates a complete Bible scripture verse and transcends all aspects of the following question(s) comprehensively and collectively as a single post.

1. Explain how changes in interest rates affect the automobile, home construction, and auto repair industries.

2. We began to learn about external environments and will discover more in the next weeks. This includes culture, politics, laws and the economy. Educational Services is a thriving industry. Using Regent University as an example, explain how political-legal and economic, forces have affected its operations over the past decade.

200- 300 Words

Providing a short introduction stating your position and argument
Supporting your argument (intext citing shows this)
When all is done, give a brief conclusion
a reference at the end
Strategic Management: Theory and Practice, 5th Edition, (Solon, OH: Academic Media Solutions, 2017) John A. Parnell (Online eTextbook Access Card: ISBN 978-1-942-04128-3)
Good to Great: Why Some Companies Make the Leap–and Others Don’t, 1st Edition, (New York, NY: Harper Business, 2001) James Collins (ISBN-13: 978-0066620992)

Read: Chapter 1 & 2 Parnell

Chapter 1 Collins

Henry Mintzberg coined the terms intended and realized strategies, but this is just one of his many contributions to the field of management.

The Business Model Canvass is a tool used to identify and clarify a company’s business model. These videos explain the canvass approach and apply it to Starbucks.

Michael Porter expands on the five forces model for evaluating industry competitiveness and assessing potential profitability.

https://www.youtube.com/watch?v=mYF2_FBCvXw Strategic Management:
Theory and Practice
Chapter 1
Fundamentals of Strategic
Management
Strategic Management, 5e. © 2017 Academic Media
Solutions.
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Strategy & Strategic Management
Intended & Realized Strategies
Influences on the Strategic Management
Field
Corporate Governance
Strategic Decisions
The Global Imperative
Strategic Management, 5e. © 2017 Academic Media
Solutions.
© iQoncept/Shutterstock
Chapter 1: Key Issues
Key Terms in Strategy
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The mission is a broadly defined but enduring
statement of purpose that identifies the scope of an
organization’s operations and its offerings to the
various stakeholders. Numerous examples can be
found on the Internet.
Strategy refers to top management’s plans to develop
and sustain competitive advantage so that the
organization’s mission is fulfilled.
Competitive advantage is a state whereby a firm’s
successful strategies cannot be easily duplicated by its
competitors. Maintaining a sustained competitive
advantage over time can be challenging.
Strategic Management, 5e. © 2017 Academic Media
Solutions.

Strategic Management is a
broader term than strategy and
is a process that includes top management’s
analysis of the environment in which the
organization operates prior to formulating a
strategy, as well as the plan for implementation
and control of the strategy.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
© Pod Pad/Shutterstock
What Is Strategic
Management?
The Strategic Management Process
1.
2.
3.
4.
5.
External Analysis (Chapters 2–4)
Internal Analysis (Chapter 5)
Strategy Formulation (Chapters 6–9)
Strategy Implementation (Chapters 10–11)
Strategic Control (Chapter 12)
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Foundational Concepts of Strategy
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Efficient market hypothesis- The idea that all
individuals or firms in a market earn the same returns
in the long run. If this is completely true, then strategy
wouldn’t matter.
Subjective value- The idea that a resource’s value
differs across firms because it is determined by the
individual or organization possessing it. This explains
why firms obtain different resources and implement
different strategies.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Business Model

A business model explains how the organization seeks
to earn a profit by selling its goods.
Progressive firms often devise innovative business
models that extract revenue—and ultimately profits—
from sources not identified by competitors.
© Perfect Gui/Shutterstock
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Strategic Management, 5e. © 2017 Academic Media
Solutions.
5 Characteristics of a Successful Strategy
1.
2.
3.
4.
5.
Understand the competitive environment.
Strengths and weaknesses are assessed in a
thorough and realistic manner.
The strategy is consistent with the mission and
goals of the organization.
Plans for putting the strategy into action are
designed before it is implemented.
Possible future changes (i.e., strategic control) are
evaluated before the strategy is adopted.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
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© Still Gui/Shutterstock
Intended & Realized
Strategies
Intended Strategy—what management originally
plans.
Realized Strategy— what management actually
implements.
Intended & realized strategies typically differ
because of unforeseen events, better information
that was not available when the strategy was
formulated, and/or an improvement in top
management’s ability to assess its environment.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Art vs. Science Debate:
Strategy as an Art
© Kanjanee Chaisin/Shutterstock
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The lack of environmental predictability and the
fast pace of change render elaborate strategy
planning as suspect at best.
Strategic managers should emphasize creativity
and innovation.
Strategies should be developed like a potter molds
clay.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Art vs. Science Debate:
Strategy as a Science
© pedrosek/Shutterstock
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The scientific approach is the most widely
recognized view of strategy.
Strategic managers are encouraged to
systematically assess the firm’s external
environment and evaluate the pros and cons of
myriad alternatives before formulating strategy.
The scientific approach is more prominent in this
text.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
3 Theoretical Perspectives
on Strategic Management
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Industrial organization (IO), a branch of
microeconomics, emphasizes the influence of the
industry environment on the firm.
Resource-based theory views performance primarily
as a function of a firm’s ability to utilize its resources
and emphasize the development of a distinctive
competence.
Contingency theory represents a middle ground
perspective that views organizational performance as
the joint outcome of environmental forces and the
firm’s strategic actions.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
3 Theoretical Perspectives
on Strategic Management (Table 1-2)
Theoretical
Perspective
Primary Influence on
Firm Performance
How Applied to the
Case Analysis
Industrial
Organization
(I/O) Theory
Structure of the
industry
Industry analysis
portion of the external
environment
Resource-Based
Theory
Firm’s unique
combination of
strategic resources.
Analysis of internal
strengths and
weaknesses
Contingency
Theory
Fit between the firm
and its external
environment.
SWOT analysis &
SW/OT matrix
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Corporate Governance
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Strategic decisions are typically made by the owners in
small privately-held firms. It’s much more complicated in
large corporations.
Corporate governance refers to the board of directors,
institutional investors (e.g., pension and retirement
funds, mutual funds, banks, insurance companies, among
other money managers), and large shareholders known
as blockholders who monitor firm strategies to ensure
effective management.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
© Rawpixel.com/Shutterstock
Boards of Directors
Boards consist of officials elected by shareholders who
are responsible for monitoring activities in the
organization. Boards are responsible for:
1. Evaluating top management’s strategic proposals.
2. Establishing broad direction for the firm
3. Selecting and determining the compensation for
the chief executive
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Criticisms of Boards
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CEO Duality—when the CEO also serves as the
chairman of the board—represents a potential
conflict of interest.
Some boards simply “rubber stamp” top
management’s proposals.
Evidence suggests that many boards are becoming
more responsive and assertive in their
responsibilities.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
© docstockmedia/Shutterstock
Sarbanes-Oxley Act
(2002)
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Covers public firms in the United States
Requires that both the CEO and the CFO certify
every report that contains company financial
statements
Restricts membership of the firm’s audit committee
to outsiders
Prohibits firms from extending personal loans to
board members or executives
The effectiveness of S-Ox is widely debated
Strategic Management, 5e. © 2017 Academic Media
Solutions.
4 Characteristics of Strategic Decisions
1.
2.
3.
4.
➢
Based on a systematic, comprehensive analysis of
internal and external factors.
Long-term and future-oriented—usually several
years to a decade or longer.
Seek to capitalize on favorable situations outside the
organization.
Involve choices and trade-offs.
Strategic decisions are typically made by a top
management team, although the CEO alone is
usually held responsible.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
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Most firms are involved globally to some extent.
The basis for global involvement is comparative
advantage, the idea that certain products may be
produced more cheaply or at a higher quality in
particular countries due to cost or technology
advantages.
Note: Comparative advantage and competitive
advantage are distinct concepts.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
© Rawpixel.com/Shutterstock
The Global Imperative
Case Analysis Step 1:
Introduction of the Organization
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This step provides background information and
creates the context for the analysis.
When and how did the organization form?
Is the company public or private?
What is the firm’s mission?
What is the firm’s business model?
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Strategic Management:
Theory and Practice
Chapter 2
Industry Competition
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Chapter 2: Key Issues
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Defining the industry
The Industry Life Cycle
Analyzing an industry’s potential profitability using
Porter’s five forces model
Limitations of Porter’s model
© Bildagentur Zoonar GmbH/Shutterstock
Strategic Management, 5e. © 2017 Academic Media
Solutions.
What Is an Industry?
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An industry is a group of companies that produce
competing products or services.
Rivals often share critical success factors (CSFs)—
elements of the strategy that are promote (but do not
guarantee) success within a given industry.
The old SIC system and its successor, the NAICS, can be
used as a starting point. Outside sources can help
define an industry, but top managers must make their
own determination.
A primary industry consists of a firm’s most direct
competitors. A secondary industry also includes less
direct rivals.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
© iQoncept/Shutterstock
Market Share
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Market share represents the proportion
of industry sales attributed to a particular rival.
When revenue data is not readily available or a
business wishes to evaluate only a subset of rivals
in an industry, relative market share—the firm’s
percentage of sales in an “industry” restricted to
select competitors—is a useful measure.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Case Analysis Step 2:
Identify Industry & Competitors
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Use other sources and classifications (SIC, NAICS, etc.)
to guide thinking, but make your own assessment.
Consider the question “Where would the firm’s
customers go if the firm did not exist?” when
determining competitors.
Draw a picture to illustrate firms inside and outside
of the industry.
Provide market shares if possible. Compute relative
market shares if market share data is not readily
available.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Industry Life Cycle Stages
Introduction
Growth
Shakeout
Maturity
Decline
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Porter’s Five Forces Model
Barriers to Entry
Bargaining Power
of Suppliers
Existing Rivalry
Bargaining Power
of Buyers
Threat of
Substitutes
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Essentials of Porter’s
Five Forces Model
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Collectively, the five forces determine an industry’s
potential for profitability. However, forces do not
guarantee that an individual firm will be profitable
or unprofitable.
Ideally, firms should seek to compete in industries
with a high potential for profitability. It’s easier to
paddle with the current than against it.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Intensity of Rivalry Among
Incumbent Firms
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Intense competition can result in price wars,
advertising battles, new product introductions or
modifications, and even increased customer
service or warranties.
Eight factors that influence rivalry intensity are
presented in the following slides.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Intensity of Rivalry Factor #1
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Concentration of competitors
Industries with few firms tend to be less competitive,
but those with many firms that are roughly equivalent
in size and power tend to be more competitive, as
each firm fights for dominance.
© vetre/Shutterstock
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Intensity of Rivalry Factor #2
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High fixed or storage costs
Firms with high fixed costs are most likely to cut prices
when excess capacity exists because they must
operate near capacity to be able to spread their
overhead over more units of production.
© Pavel L Photo and Video/Shutterstock
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Strategic Management, 5e. © 2017 Academic Media
Solutions.
Intensity of Rivalry Factor #3
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Slow industry growth
Firms in industries that grow slowly are more likely to
be highly competitive than those in fast-growing
industries because one firm’s increase in market share
must come primarily at the expense of rivals.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Intensity of Rivalry Factor #4
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Lack of differentiation or low switching costs
The more similar the offerings among competitors,
the more likely customers are to shift from one to
another.
Switching costs are incurred by buyers if they
switch from one competitor to another. When they
are low, firms are under more pressure to satisfy
customers.
When products or services are less differentiated,
purchase decisions are often based on price,
thereby increasing rivalry.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Intensity of Rivalry Factor #5
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Capacity augmented in large increments
If economies of scale or other factors dictate that
production be augmented in large blocks, then
capacity additions may lead to temporary
overcapacity in the industry, and firms may cut prices
to clear inventories.
© Photobank Gallery/Shutterstock
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Strategic Management, 5e. © 2017 Academic Media
Solutions.
Intensity of Rivalry Factor #6
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Diversity of competitors
Companies that are diverse in their origins, cultures,
and strategies often have different goals and means of
competition. Such firms may have a difficult time
agreeing on a set of “rules of combat” and increase
rivalry.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Intensity of Rivalry Factor #7
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High strategic stakes
Competitive rivalry is likely to be high if firms also
have high stakes in achieving success in a particular
industry.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Intensity of Rivalry Factor #8
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High exit barriers
Exit barriers represent costs a firm must incur if it
leaves an industry. High exit barriers increase rivalry
because they keep firms in the industry.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Threat of Entry
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New entrants threaten the hold existing firms have
on an industry and thereby tend to lower profits.
The likelihood that prospective competitors will
join an industry depends on barriers to entry.
Firms often erect entry barriers to keep potential
competitors out of the industry.
Seven factors that affect the threat of entry are
presented in the following slides.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Threat of Entry Factor #1
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Economies of scale
Substantial economies of scale deter new entrants by
forcing them either to enter an industry at a large
scale or suffer substantial cost disadvantages
associated with a small-scale operation.
© Konstantins Visnevskis/Shutterstock
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Strategic Management, 5e. © 2017 Academic Media
Solutions.
Threat of Entry Factor #2
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Brand identity and product differentiation
Established firms may enjoy strong brand
identification and customer loyalties that are based on
actual or perceived product or service differences.
Typically, new entrants must incur substantial
marketing and other costs to overcome this barrier.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Threat of Entry Factor #3
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Capital requirements
Higher entry costs tend to restrict new competitors
and ultimately increase industry profitability for
existing competitors.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Threat of Entry Factor #4
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Switching costs
When switching costs are high, buyers often need an
incentive to try a new competitor; this raises costs for
the new company and acts as a barrier. When
switching costs are low—typically the case when
consumers try a new grocery store—change may not
be difficult.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Threat of Entry Factor #5
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Access to distribution channels
Existing competitors might have distribution
channel ties based on long-standing or even
exclusive relationships, requiring the new
entrant to create its own channels of
distribution.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Threat of Entry Factor #6
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Cost disadvantages independent of size
Existing competitors may have developed patents,
specialized technology, or other cost advantages not
related to firm size that cannot be easily duplicated by
newcomers. These advantages discourage other firms
from entering the industry.
Cost advantages that are dependent on size are
economies of scale, an entry barrier discussed earlier.
© Arcady/Shutterstock
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Threat of Entry Factor #7
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Government policy
Governments often control entry to certain industries
with licensing requirements or other regulations.
Alcohol sales are regulated in many locales in the U.S.
Health care providers, insurance companies, and
banks must meet certain requirements in order to
operate.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Pressure from Substitute Products
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Substitute products come from outside of the
industry, not from competitors.
Substitutes present acceptable alternatives in
some cases, but not others.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Buyers Have Bargaining Power When:
1.
2.
3.
Buyers are concentrated or each one
purchases a significant percentage of total
industry sales.
The products that the buyers purchase
represent a significant percentage of the
buyers’ costs.
The products are standard or
undifferentiated.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Buyers Have Bargaining Power When:
(Continued)
4.
5.
6.
7.
8.
Buyers face few switching costs.
Buyers earn low profits, creating pressure for them
to reduce their purchasing costs.
Buyers have the ability to become their own
suppliers (backward integration).
The industry’s product is relatively unimportant to
the quality of the buyers’ products or services.
Buyers have complete information.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Suppliers Have Bargaining Power When:
1.
2.
3.
4.
5.
The supplying industry is dominated by one or a few
companies.
There are few or no substitute products.
The buying industry is not a major customer of the
suppliers.
Suppliers are capable of becoming their own
customers (forward integration)
Suppliers’ products are differentiated or have built-in
switching costs, reducing the ability of buyers to play
one supplier against another.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Limitations of Porter’s Five Forces
Model
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Assumes a clear, recognizable industry and does not
consider partner firms.
Assumes that large firms cannot influence the
industry structure.
Assumes industry factors, not firm resources, are
primary profit drivers.
Difficult to apply to firms operating in multiple
countries where industry environments vary
considerably.
Strategic Management, 5e. © 2017 Academic Media
Solutions.
Case Analysis Step 3:
Potential Profitabili…
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