Strategic planning questions
The elements of industrial organization above average return model includes the following:
External environment: consists of general environment, industrial environment and competitor environment. The general environment consists of constraints and pressures which determine strategies that lead to returns that are above average. Industrial environment and competitor environment involves organizations within an industry which are controlling similar resources that are strategically relevant and while competing, these firms pursue same strategies in regard to the mentioned resources (Hitt, Ireland & Hoskisson, 2016).
An attractive industry: This involves an industry that consists of structural features that seems to indicate returns that are above average (Hitt, Ireland & Hoskisson, 2016).
Strategy formulation: it refers to choosing a strategy that can be linked with above- average returns in a given industry in a competitive market (Hitt, Ireland & Hoskisson, 2016).
Assets and skills; they involves the necessary factors required for the purpose of implementing the selected strategy (Hitt, Ireland & Hoskisson, 2016).
Strategy implementation; it refers to choosing a strategic action aligned with effective adoption of the selected strategy (Hitt, Ireland & Hoskisson, 2016).
Superior returns; refers to where an organization obtains earnings that are above average (Hitt, Ireland & Hoskisson, 2016).
Elements of resource based model
Resources; refers to various inputs in the production process of an organization like the capital equipment, finances, patents, employees skills and talented managers (Hitt, Ireland & Hoskisson, 2016). Capacity; refers to the capability of certain resources to carry out a given activity or task in a way that is integrative n the organization.
Core competences; refers to those capabilities and resources which gives competitive advantage for a company over its major competitors and they are mostly viewed in terms of organizational functions. Competitive advantage; refers to the ability of a company to outdo its competitors in terms of performance. An attractive industry; means an industry where a firm can exploit available opportunities using its resources and capabilities. Formulation and implementation of strategy; refers to strategic actions adopted by the firm so that earnings will be above average returns (Hitt, Ireland & Hoskisson, 2016).
Vision refers to a specific picture of what an organization wants to be and generally the ultimate achievement that it wants to obtain, and it I contained in a vision statement which describes the organization while shaping the intended future. Mission; refers to the specification of business in which the organization plans to compete and the targeted customers, and it is basically founded on its vision (Hitt, Ireland & Hoskisson, 2016).
Corporate governance; refers to various methods used in managing the relationship among the organizational stakeholders and in controlling and determining the performance and strategic direction of a firm. The members of board of directors are classified into either insiders, related outsiders or the outsiders. Insiders involve senior and active managers elected by the board and are familiar with organization’s daily operations. Related outsiders have their relationship with the firm established through contract or otherwise. Outsiders offer independent advice to the organization and may hold managerial positions in other firms (Hitt, Ireland & Hoskisson, 2016).
The role played by “keiretsu” in Corporate Governance in Japan is to enhance obligation on the part of directors through creation of a family unit relationship so that individuals take up organizations roles as part of their lives and thereby promoting allegiance of involved parties across the corporations (Hitt, Ireland & Hoskisson, 2016).
A heterogeneous top management team refers to a group comprising of individuals who possesses different functional education and experience and different functional backgrounds. They have expertise and knowledge that is required to ensures that operations of the internal organizations are running, and can also handle the all the stakeholders of a firm and various competitors. These individuals are able to benefit from discussions about the different perceptions held by members of the team in which they belong. Such discussions lead to quality decisions from the team when synthesis is found within the group while assessing the diverse opinions (Hitt, Ireland & Hoskisson, 2016).
Core competencies; refer to capabilities which bring about competitive advantage for an organization over its main competitors. The core competences are linked to the functional skills of an organization such as finance, marketing, manufacturing, research and development. They are important elements to strategic leaders when they are implementing strategies. The development of these competences happens overtime as organizations learn through performing specific actions and improve the knowledge on them (Hitt, Ireland & Hoskisson, 2016).
The general environment refers to the various dimensions that make up the broader society and whose impacts are felt within individual firms and the industry in which they operate. These dimensions are grouped into different environmental segments including the economic, legal-political, technological, social cultural, demographical and physical factors. Industrial environment refers to the various factors whose impacts, competitive actions and even responses are felt directly by a firm (Hitt, Ireland & Hoskisson, 2016).
The five competitive factors include powers of suppliers and buyers, competitors’ rivalry intensity, threat posed by new entrants and substitute products. The five forces interact to determine the profit potential of a given industry and such potential affects the choices made by every firm in terms of strategic decision (Hitt, Ireland & Hoskisson, 2016).
Value refers to the measure of the characteristics of a product’s performance and the various aspects for which a customer is willing to spend his money (Hitt, Ireland & Hoskisson, 2016).
Reference
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic Management. Boston, MA: Cengage Learning.
