This assignment utilizes a case depicting a real-life situation of which you will conduct a detailed case analysis. This will involve reading the provided case, resear

BUS 6320, Global Strategic Management 1

Course Learning Outcomes for Unit III Upon completion of this unit, students should be able to:

2. Analyze the processes for formulating sustainable corporate business strategies. 2.1 Examine how competitive advantage impacts corporate business strategies.

3. Synthesize the role of leadership in strategic business planning.

3.1 Analyze how organizational leaders drive competitive advantage. Required Unit Resources Chapter 5: Competitive Advantage, Firm Performance, and Business Models MiniCase 2: Starbucks CEO Kevin Johnson: “I’m not Howard Schultz,” pp. 475–479 Unit Lesson Competitive advantage in the context of a business organization suggests that one organization is better than another. It occurs when an organization develops a set of attributes that enables the organization to outperform its competitors. What differentiates one organization from another? How can leaders within an organization move towards differentiating their company with the goal of reaching this competitive advantage? Rothaermel (2019) emphatically states, “competitive advantage is the defining goal of strategic management” (p. 146). Sustainable competitive advantages reach toward organizational longevity. In order for a company to be successful, leaders need to have a solid understanding of the landscape in which they are operating. This includes an understanding of both the competitors and the customers through a market analysis.

UNIT III STUDY GUIDE Maintaining a Competitive Advantage

BUS 6320, Global Strategic Management 2

UNIT x STUDY GUIDE Title

The first step in a market analysis is developing an understanding of the types of markets, as detailed in the image below.

Pure competition is considered the ideal market structure because all producers and all customers are equal. What this means is that the probability of consumer exploitation is low because companies do not have pricing power to charge higher than normal prices. There is much debate on whether this is more of a theoretical benchmark or is actually obtainable. Through this understanding of the types of markets, leaders can identify how large and how competitive the market could be. Another point to examine in the market analysis is that of the competitor analysis, which represents an organized approach to evaluating the strengths and weaknesses of all organizations that represent competitors. Organizational leaders gather this information from a variety of both internal and external courses. Rothaermel (2019) suggests that organizational leaders measure competitive advantage based upon the organization’s accounting profitability, shareholder value creation, and company economic value. Accounting profitability utilizes financial data and ratios derived from financial statements. Since competitive advantage is defined as superior performance, the utilization of these tools provides a logical yardstick in determining the level of competitive advantage. Correlating these measures over time provides solid benchmark goals and measurements. The use of shareholder value as a measurement also holds significant credibility. Looking through the eyes of shareholders, this is the most important measure because their concern is centered around return on investment (ROI). Finally, the use of economic value as a measurement of competitive advantage is somewhat inherent in strategic planning toward profit. The idea behind the concept of economic value created is the difference between how much it costs to produce a product compared to how much the same product would cost.

Types of markets

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The balanced scorecard was discussed in earlier units and can be aligned here with organizational performance tracking. It can be used as a dashboard of performance metrics of the most important and/or relevant measures or targets as determined by leaders of the organization. An organization will compile a balanced scorecard by identifying these measures and attaching goals to each of them. The scorecard goals are then communicated to the appropriate stakeholders, and in some cases, aligned to their individual performance. As scorecard measures are analyzed, appropriate feedback and adjustments are made to the strategic plan. Other measurement tools include business intelligence dashboards or performance scorecards. A business intelligence dashboard (BI dashboard) is a data visualization tool whereas the performance scorecard is a graphical representation. Within the scope of benchmarking the performance of the strategic plan, organizations also use key performance indicators (KPIs). In the most basic sense, key performance indicators represent measurable values that demonstrate whether the organization is achieving identified business objectives. KPIs can also be used to determine the performance of a division, department, and even an individual. The effectiveness of KPIs begins with well-defined and quantifiable goals. Common thought divides KPIs into four categories including financial, customer, process, and people. What are some examples of KPIs that are used by businesses today? Beginning with financial KPIs, one of the most important and/or largely used by organizations is a profit KPI. Understandably, profit aligns with the mere sustainability of a company thus, a profit KPI is logical. Aligned with that is a cost KPI, which measures how well a company maintains the lowest costs and overall reductions in costs. Another popular KPI is a comparison of expenses to the overall budget. This provides leaders with an understanding of how far off budget they are as well as exactly where the fluctuation occurs within the organization. A sales KPI provides an organization with instrumental information such as comparing the actual sales versus targeted sales, which will inevitably impact the overall profit margins for the organization. Another financial KPI that is currently trending is innovation spending, which measures the amount of money spent on innovations. This aligns directly with a company’s desire to differentiate itself through innovative products/services. Within the category of customer KPIs, customer lifetime value (CLV) is an important KPI within organizations that are interested in sustainability. This KPI measures the value associated with a long-term customer relationship. Related to this is the customer acquisition cost (CAC) KPI, which measures the costs associated with acquiring new customers. Another area of concern to organizations is retaining customers and maintaining high levels of satisfaction with their customers. The customer satisfaction and retention KPI will measure the customer satisfaction scores and the number of repeat customers. Process KPIs examine efficiencies within the overall operations of the organization. A highly recognized KPI in this area is the customer support ticket KPI, which analyzes the number of new tickets and resolved tickets. Obviously, customers that are supported by efficient customer service levels will probably also be repeat customers. Most organizations have an ideal operational efficiency level, which can also be measured through a KPI. People KPIs, generally, provide measurements of employee satisfaction. Data support that the recruitment process is a costly venture thus retention of employees is financially prudent. With this in mind, the employee turnover rate KPI measures the number of people who have left the organization either voluntarily or involuntarily. Additionally, many organizations utilize an employee satisfaction KPI which measures employee happiness with their job and the overall organization. Every organization needs to determine the KPIs that are the most appropriate for their industry and align with their company goals, mission, objectives, and vision. Furthermore, having a reasonable number of KPIs will maintain focus on the important attributes within the organization. The other notable fact is that several of these KPIs overlap with each other. What this means is that organizational leaders need to critically think through the mix of KPIs to use. Whichever KPI metric or tool that the organization decides to utilize, business analytics (BA) are used as the means of analyzing the data. Business intelligence (BI) is the method of tracking these processes using technology. This term includes a broad variety of tools, applications, and methodologies that enable companies to collect data from both internal and external sources.

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Business analytics could be defined as the quantitative and methodical examination of data using statistical analysis. In order for the business analytics to be accurate and useful, the data must be accurate, complete, reliable, relevant, and current. The KPIs identified earlier are tracked through descriptive analytics, which reviews the current state of the business. Predictive analytics can also be used; these examine trends and predict future outcomes. Prescriptive analytics are also commonly used by organizations. This type of analytics uses past performance to accumulate recommendations on how to handle issues if they arise again. In today’s technology-driven world, there are a variety of software tools that will provide a more efficient method of tracking KPIs. Familiarizing yourself with these types of software will provide you with a competitive advantage when you are interviewing or looking for career advancement. Examples of these software are discussed below.

• Geckoboard provides a visual overview of KPIs. • Salesforce is a multi-faceted tool that enables organizations to easily build personal and departmental

dashboards. • Grow is a professional dashboard that connects to a variety of tools including Google Analytics,

AdWords, and Facebook. • Tableau is an excellent and very intuitive tool used for data analytics and customer/retailer

engagement KPIs. It is differentiated by the fact it allows for real-time reporting and data blending. • Olation utilizes predictive analysis that eliminate the need for additional spreadsheets. • HubSpot is primarily used in the sales and marketing KPI tracking.

In conclusion, measuring the proficiency of an organization’s strategic plan begins with the identification of the KPIs that are important to the organization. From there, measurement tools need to be deployed, which could include a balanced scoreboard dashboard. It is important to remember that in order to determine competitive advantage, these data should be compared to identified competitors. Leadership teams can then identify where deficiencies lie and how to adjust the strategic plan using a data-driven decision-making approach.

Reference Rothaermel, F. T. (2019). Strategic management: Concepts (4th ed.). McGraw-Hill Education. Suggested Unit Resources In order to access the following resources, click the links below. This article examines the importance of differentiation through the eyes of online retailers. The point of differentiation for online retailers is convenience, and in some cases, pricing that creates a competitive advantage in the mind of today’s time-poor consumer. Wang, Z., Zhu, C., Tian, S., & Li, P. (2019). Differentiation and pricing power of online retailers. Frontiers of

Business Research in China, 13(1), 1–20. https://libraryresources.columbiasouthern.edu/login?url=http://search.ebscohost.com/login.aspx?direc t=true&db=bsu&AN=134611555&site=ehost-live&scope=site

This article provides an additional example of how the balanced scorecard is used effectively—in this case for a not-for-profit organization. Martello, M., Watson, J. G., & Fischer, M. J. (2016). Implementing a balanced scorecard in a not-for-profit

organization. Journal of Business & Economics Research (Online), 14(3), 61. https://search-proquest- com.libraryresources.columbiasouthern.edu/docview/1804901110?accountid=33337

BUS 6320, Global Strategic Management 5

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This article summarizes how maintaining a level of differentiation and competitive advantage is imperative to the compilation of an effective strategic plan. Through this article, we see how this can be applied in not only a corporation, but also a family farm. Wittman, D. (2019). From the farm boardroom, part one: Set your farm's strategic direction. Southwest Farm

Press. https://search-proquest- com.libraryresources.columbiasouthern.edu/docview/2190363319?accountid=33337

Learning Activities (Nongraded) Nongraded Learning Activities are provided to aid students in their course of study. You do not have to submit them. If you have questions, contact your instructor for further guidance and information. Identify five KPIs for your personal family household. What benchmarks would you like to use to track your financial future? Discuss these KPIs with your family members, and determine how you will track and measure them.

BUS 6320, Global Strategic Management 1

Course Learning Outcomes for Unit II Upon completion of this unit, students should be able to:

2. Analyze the processes for formulating sustainable corporate business strategies. 2.1 Explain problems and challenges within a business. 2.2 Examine potential recommendations.

3. Synthesize the role of leadership in strategic business planning.

3.1 Examine the process that leaders use to overcome organizational challenges.

4. Summarize the role of innovation and risk management in strategic business planning. 4.1 Analyze the level of risk for varying potential recommendations. 4.2 Propose a recommendation towards strategic business planning. 4.3 Construct an implementation strategy.

Required Unit Resources Chapter 3: External Analysis: Industry Structure, Competitive Forces, and Strategic Groups Chapter 4: Internal Analysis: Resources, Capabilities, and Core Competencies Case Study: Best Buy Co., Inc. Unit Lesson Global strategic planning and management necessitates an understanding of external and internal events, trends, and capabilities. One might call this the situation analysis of an organization. Rothaermel (2019) examines the political, economic, sociocultural, technological, ecological, and legal analysis (PESTEL), which is basically an extension of the political, economic, sociocultural, and technological (PEST) analysis. As a reminder, this analysis is a tool used by strategic leaders to identify factors in the external environment that will affect their strategic planning. The PEST analysis utilizes the first four groups and the PESTEL all six of the groups. See Figure 1 for more information about the PESTEL analysis.

UNIT II STUDY GUIDE Analysis of Environment

BUS 6320, Global Strategic Management 2

UNIT x STUDY GUIDE Title

As a strategic leader, understanding each of these areas as it relates to an organization is necessary in order to compile an effective strategic plan rendering the organization capable of competing on a global basis. This tool, coupled with Porter’s five forces introduced in the Unit I lesson (and discussed in Chapter 3 of your textbook), will provide a detailed analysis of the external forces both within the external environment and within specific industries. The competitive analysis examines a particular company’s competitive advantage (or lack thereof) relative to other organizations within its industry. The industry analysis reviews the overall health of an industry. Are consumers purchasing significant quantities of the products within a certain industry? For instance, the health food industry enjoyed a healthy upswing in 2019. Also, think back to 2008 when the auto industry sales plummeted. Consumers were not buying automobiles, thus, every industry connected to automobiles also experienced a downturn. One method of comparing organizations within a certain industry is the use of ratio analysis and comparisons. Ratios can reveal where one organization stands in relation to another or to the industry average. Ratio analysis uses numbers from the financial statements to analyze business operations such as profitability, liquidity, activity, debt, and market. As a reminder, there are four main financial statements: balance sheets, income statements, cash flow statements, and the statement of shareholder’s equity. Access the financial statement activity to learn more. The alternative format for this activity is also available.

PESTEL Analysis

BUS 6320, Global Strategic Management 3

UNIT x STUDY GUIDE Title

As a leader and manager of a department, division, or entire organization, financial statements provide a barometer of how various aspects of the organization are performing. This can then be benchmarked against previous weeks, months, quarters, or years to aid in decision-making. Another helpful tool used by strategic leaders is that of a balanced scorecard, which supplements not replaces financial statements. The idea of the balanced scorecard is to measure performance from the perspective of the customers: internal business processes leading to learning and growth. This scorecard can assist strategic planners with aligning their long-term strategy with their short-term actions, which is sometimes a complicated process for organizational leaders. Kaplan (2007) examines the processes involved with the scorecard. Translating the vision is the first process enabling managerial teams the ability to rally around the vision, mission and overall objectives. The second process of communicating and linking enables leaders to share the proposed strategy through the horizontal and vertical chains of command. The third process of business planning enables leaders to understand and execute effective decisions from the financial statements. The final process of feedback and learning enables everyone within the organization to strategically learn from the review and feedback process. Ideally, leaders and management teams will modify their strategies to ensure overall organizational growth. The use of a balanced scorecard encourages accountability and responsibility of employees, which leads to effective implementation of the organization’s long-term strategy. According to Kaplan (2007), companies are using the scorecard to accomplish the following items.

• Clarify and update strategies in order to align with current industry needs. • Communicate strategies throughout the company. • Align individual employee goals with the strategies. • Link strategic objectives to long-term goals. • Compile, explain, and align strategic initiatives within the company. • Ensure that leaders are reviewing and modifying the strategic plan toward effectiveness.

A final important analysis that should be completed by organizational leaders is that of an internal analysis. This determines whether the internal resources, capabilities, and core competencies are at the point of achieving competitive advantage. Rothaermel (2019) defines core competencies as unique strengths that an organization has embedded within the firm. An example of this might be Walmart, which arguably has an internal set of purchasing agents that are superb negotiators as they purchase items at the lowest cost to enable Walmart to resell these items and still remain profitable. See Exhibit 4.3 in your textbook for additional examples of core competencies within familiar companies. A gap analysis is an internal evaluation tool used by leaders to identify performance deficiencies. It looks at where the organization is within certain identified parameters and where they would like to be in the future. This identifies a gap, which ideally leads to the modification of elements within the strategic plan. Another tool is the root cause analysis, which can be used when the strategic planner needs to dig deeper into an identified problem. Assuming the problem is identified correctly, understanding the cause versus the symptom leads to the identification of the appropriate modifications within the organization.

BUS 6320, Global Strategic Management 4

UNIT x STUDY GUIDE Title

One final tool to be discussed is the McKinsey 7-S Model, which analyzes how well departments within the organization are working together. This model identifies seven elements that need to interact and align with each other in order to optimize performance within the organization. Strategy, structure, and systems are identified as relatively easy to align. After identifying the strategy within the organization, the structure (how the company is organized) and systems (daily processes for accomplishing tasks) are communicated. The final four elements are more intangible and include items such as shared values, style, staff, and skills. To clarify, shared values identify the core values, corporate culture, and ethical stance of the organization. The style identifies the type of leadership adopted within the organization. The final two elements of staff and skills address the capabilities and skillset of the employees within the organization. These tools are used today within companies to analyze their internal environment with the end goal of aligning core competencies most effectively within the strategic plan. These tools will help organizational leaders gain an understanding of how to maintain a competitive

advantage. This could inevitably be the key to their long-term existence. In order to maintain this competitive advantage, differentiation must be present. Differentiation suggests that one organization is providing something of value (value proposition) to the target market that the competitors are not. Innovation and forward-thinking strategic plans need to be in place to ensure this sustainability. Think of organizations that were at one-time powerhouses within their industry, who are currently either completely out of business or failing. Some examples might be Blockbuster (video rentals), Compaq Computer Corporation (technology), Kodak (photography), Circuit City (electronics), Enron (energy supplier), Pan Am (airline), Tower Records (record albums), Polaroid (instant photography), and Sears (retail). Each of these companies maintained a competitive advantage, enjoying significant profits for many years. It could be suggested that they did not utilize a balanced scorecard to analyze results, learn/modify, and revise the strategic plan. Most of these companies were victims of not adapting to the changes and demands of their external environment. What might have happened with Blockbuster if they had researched other video distribution systems (Redbox or Netflix) or even streaming? The same could be suggested with Kodak from the standpoint of researching the digital market. This course will employ a series of case analyses. As a reminder, a case provides you with the opportunity to analyze a real-life situation utilizing a real company.

The McKinsey 7-S Model

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Cases have four different types of situations that tend to occur; these are detailed in the figure below.

Cases can include complicating factors, which include irrelevant facts or limited testimony. This mimics the real world. Managers need to manage through these complications and lead their organization toward meeting their goals. It is imperative that every organization, no matter its size, analyze and understand both their external and internal environments. Leaders within these organizations need to utilize tools such as the SWOT (strengths, weaknesses, opportunities, and threats) analysis, PESTEL analysis, and Porter’s five forces to ensure that their strategic plan is effective within their industry. The balanced scorecard, financial statements, and ratio analysis need to be reviewed continuously to ensure that benchmarks are being met in order to maintain the competitive advantage. Applying these tools to your case analyses within this course will employ practical application of these tools ensuring a better understanding of how to apply these tools for making measured decisions in future business applications.

References Kaplan, R. S., & Norton, D. P. (2007). Using the balanced scorecard as a strategic management system.

Harvard Business Review, 85(7/8), 150–161. https://libraryresources.columbiasouthern.edu/login?url=http://search.ebscohost.com/login.aspx?direc t=true&db=bsu&AN=25358567&site=ehost-live&scope=site.

Rothaermel, F. T. (2019). Strategic management: Concepts (4th ed.). McGraw-Hill Education.

Figure 3: Four types of case situations

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Suggested Unit Resources In order to access the following resource, click the link below. The SWOT analysis is a powerful and often used tool in strategic analysis. However, it does have some weaknesses. The article below explore other frameworks that can be used in conjunction with a SWOT analysis to help lessen the possible effects of these weaknesses. Al-Araki, M. (2013). SWOT analysis revisited through PEAK-framework. Journal of Intelligent & Fuzzy

Systems, 25(3), 615–625. https://libraryresources.columbiasouthern.edu/login?url=http://search.ebscohost.com/login.aspx?direc t=true&db=bsu&AN=88899342&site=eds-live&scope=site

Printed by: [email protected] Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted.

Printed by: [email protected] Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted.

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