Table of Contents

1) Basic strategic issues facing a company:-...........................................................2

2) The resource based view of the firm challenges the Porters generic strategies:................................................................................................................................ 2
3) Reasons for Peoples resistance to change.........................................................6
4) Benefits and limitations of a mission statement:-............................................11
5) Porters Generic Strategy:-................................................................................ 12
6) Game Theory:-.................................................................................................. 12
7) Comparison of Prescriptive and Descriptive Strategic Management:-...............13

1) Basic strategic issues facing a company:What external changes could affect the organization?
What are the opportunities we might have from this external situation?
What are the threats that we might be facing from this external situation?
What is the quality of our internal activities, e.g., Board operations, planning,
marketing, products and services, staffing and finances?
What are our weaknesses of the organization, based on the quality of our internal
activities?
What are our strengths, based on the quality of our internal activities?
Should we do a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats?

2) The resource based view of the firm challenges the

Porters generic strategies:The resource-based view (RBV) as a basis for the competitive advantage of a firm lies
primarily in the application of a bundle of valuable tangible or intangible resources at the firm's
disposal. To transform a short-run competitive advantage into a sustained competitive advantage
requires that these resources are heterogeneous in nature and not perfectly mobile. Effectively, this
translates into valuable resources that are neither perfectly imitable nor substitutable without great
effort. If these conditions hold, the bundle of resources can sustain the firm's above average returns.

Resource-Based View of the Firm (RBV)

What is RBV?
The RBV framework combines the internal (core competence) and external (industry
structure) perspectives on strategy. Like the frameworks of core competence and
capabilities, firms have very different collections of physical and intangible assets
and capabilities, which RBV calls resources. Competitive advantage is ultimately
attributed to the ownership of a valuable resource. Resources are more broadly
defined to be physical (e.g. property rights, capital), intangible (e.g. brand names,
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technological know how), or organizational (e.g. routines or processes like lean

manufacturing). No two companies have the same resources because no two
companies have had the same set of experience, acquired the same assets and
skills, or built the same organizational culture. And unlike the core competence and
capabilities frameworks, though, the value of the broadly-defined resources is
determined in the interplay with market forces. Enter Porter's 5 Forces. For a
resource to be the basis of an effective strategy, it must pass a number of external
market tests of its value.

Collins and Montgomery (1995) offer a series of five tests for a valuable resource:
1. Inimitability - how hard is it for competitors to copy the resource? A company
can stall imitation if the resource is (1) physically unique, (2) a consequence of
path dependent development activities, (3) causally ambiguous (competitors
don't know what to imitate), or (4) a costly asset investment for a limited
market, resulting in economic deterrence.
2. Durability - how quickly does the resource depreciate?
3. Appropriability - who captures the value that the resource creates: company,
customers, distributors, suppliers, or employees?
4. Substitutability - can a unique resource be trumped by a different resource?
5. Competitive Superiority - is the resource really better relative to competitors?
Similarly, but from a more external, economics perspective, Peteraf (1993) proposes
four theoretical conditions for competitive advantage to exist in an industry:
1. Heterogeneity of resources => rents exist
A basic assumption is that resource bundles and capabilities are heterogeneous
across firms. This difference is manifested in two ways. First, firms with superior
resources can earn Ricardian rents (profits) in competitive markets because they
produce more efficiently than others. What is key is that the superior resource
remains in limited supply. Second, firms with market power can earn monopoly
profits from their resources by deliberately restricting output. Heterogeneity in
monopoly models may result from differentiated products, intra-industry mobility
barriers, or first-mover advantages, for example.
2. Ex-post limits to competition => rents sustained
Subsequent to a firm gaining a superior position and earning rents, there must
be forces that limit competition for those rents (imitability and substitutability).
3. Imperfect mobility => rents sustained within the firm
Resources are imperfectly mobile if they cannot be traded, so they cannot be bid
away from their employer; competitive advantage is sustained.
4. Ex-ante limits to competition => rents not offset by costs
Prior to the firm establishing its superior position, there must be limited
competition for that position. Otherwise, the cost of getting there would offset
the benefit of the resource or asset.

Implications for strategy?

Managers should build their strategies on resources that pass the above tests.
In determining what are valuable resources, firms should look both at external
industry conditions and at their internal capabilities. Resources can come from
anywhere in the value chain and can be physical assets, intangibles, or routines.
Continuous improvement and upgrading of the resources is essential to
prospering in a constantly changing environment. Firms should consider
industry structure and dynamics when deciding which resources to invest in.
In corporations with a divisional structure, it's easy to make the mistake of
optimizing divisional profits and letting investment in resources take a back seat.
Good strategy requires continual rethinking of the company's scope, to make
sure it's making the most of its resources and not getting into markets where it
does not have a resource advantage. RBV can inform about the risks and
benefits of diversification strategies.

Porter's generic strategies describe how a company pursues competitive advantage

across its chosen market scope. There are three generic strategies, either lower cost,
differentiated, or focus. A company chooses to pursue one of two types of competitive advantage,
either via lower costs than its competition or by differentiating itself along dimensions valued by
customers to command a higher price. A company also chooses one of two types of scope, either
focus.

Generic Strategy: Types of Competitive Advantage

Basically, strategy is about two things: deciding where you want your business to
go, and deciding how to get there. A more complete definition is based on
competitive advantage, the object of most corporate strategy:
Competitive advantage grows out of value a firm is able to create for its buyers that
exceeds the firm's cost of creating it. Value is what buyers are willing to pay, and
superior value stems from offering lower prices than competitors for equivalent
benefits or providing unique benefits that more than offset a higher price. There
are two basic types of competitive advantage: cost leadership and differentiation.
-- Michael Porter, Competitive Advantage, 1985, p.3

The figure below defines the choices of "generic strategy" a firm can follow. A firm's
relative position within an industry is given by its choice of competitive advantage
(cost leadership vs. differentiation) and its choice of competitive scope.
Competitive scope distinguishes between firms targeting broad industry segments
and firms focusing on a narrow segment. Generic strategies are useful because
they characterize strategic positions at the simplest and broadest level. Porter
maintains that achieving competitive advantage requires a firm to make a choice
about the type and scope of its competitive advantage. There are different risks
inherent in each generic strategy, but being "all things to all people" is a sure recipe
for mediocrity - getting "stuck in the middle".

Treacy and Wiersema (1995) offer another popular generic framework for gaining
competitive advantage. In their framework, a firm typically will choose to
emphasize one of three value disciplines: product leadership, operational
excellence, and customer intimacy.

Porter's Generic Strategies (source: Porter, 1985, p.12)

COMPETITIVE ADVANTAGE
Lower Cost

Differentiation

Broad
Target

1. Cost Leadership

2. Differentiation

Narrow
Target

3A. Cost Focus

3B. Differentiation
Focus

COMPETITIVE
SCOPE

3) Reasons for Peoples resistance to change:i) the fear of loss of job

ii) Bad Communication Strategy
iii) Shock and Fear of the Unknown
iv) Loss of Control
v) Lack of Competence
vi) Poor Timing
vii) Former Change Experience
viii) Lack of trust and support

Managers and employees who persistently resist change over time create measurable
impacts on a company including decreased productivity, negative customer satisfaction
and loss of valued employees. In some cases, excessive resistance can cause a
change to fail. This tutorial presents a new model for understanding resistance to
change and the impact on a business.

Flight and Risk Model Description

The Flight and Risk Model is a useful teaching tool to convey the key attributes of
resistance to change. The model is shown in Figure 1 and consists of three regions.
Region 1, Comfort and security (also shown in green), is the normal work environment.
Region 2 (shown in yellow) is an area of worry and uncertainty for employees. Region 3,
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the Risk or Flight zone (shown in red), is the area that employees feel at risk from the
change. Along the vertical axis, employee fear and resistance is increasing. Along the
horizontal axis, time is moving forward.
Each band of the Flight and Risk Model has characteristics for employee behavior. In
the comfort and security region, employees feel secure in their work status and
environment. This is the region of optimal productivity and normal work behavior. In
Region 2, employees are worried about the changes taking place at work. In this region,
employees become distracted (and they distract others). Employee morale may decline
and evidence of passive resistance becomes visible. Productivity loss is measurable. In
Region 3, employees enter a "fight or flight" role. Active resistance to change is
apparent from some employees, while other employees may leave the company.
Customer impact is measurable and the change itself is at risk.
The dashed line represents a potential track that a group of employees may follow when
faced with change. Note that the onset of this track is a management communication or
a rumor that change is coming. The two essential characteristics of this track are time
and degree. Time reflects the duration that the group is under stress from the change.
Degree represents the height or level of stress felt by the organization.

Figure 1 - Prosci Flight and Risk Model

Interpreting the model in terms of resistance to change

When a management communication or rumor starts about change, the organization

moves upward in this Flight and Risk model. That movement is normal and predictable.
The rate at which the organization moves upward in this model (the slope of the curve)
depends on several defining attributes of the organization and the change itself. The
factors that can impact the rate of climb into Region 2 or Region 3 are:

The organization's history with past change.

The organization's values and culture.

The level of change already going on within the organization.

These factors are inherent in the company. That does not imply that the track through
the Flight and Risk Model is pre-determined. In fact, the variables that managers can
control have a significant impact on this track. These variables include:

How communications are made (who, when, how and what). For example,
rumors accelerate the rise in the Flight and Risk model faster than a carefully
planned management communication.

The sponsorship for the change at all management levels.

How the future state is perceived by each employee.

The level and type of training and coaching provided to employees.

How resistance to change is dealt with by managers.

The time and degree for the track through the Flight and Risk Model is controlled by
how effectively change management techniques are employed to deal with these
inherent organizational factors. Figure 2 below shows two potential tracks for an
organization. One in which an organization employs change management effectively,
and the other track in which change management is not employed effectively. Note that
in the track labeled Poor Change Management, the organization rises rapidly into
Region 3, the Red Zone, and stays there for a long period of time. In this track, the
organization is surprised and shocked into change, and suffers customer and
productivity impacts. In the second track labeled Excellent Change Management, the
rise into Region 2 is slower, and the duration is shorter. In this track, change
management techniques were employed carefully to manage the negative
consequences of the change.

Figure 2 - Effectiveness of managing change

The track through the Flight and Risk Model is not the same for every group in an
organization. Each group or department will have unique values and management
styles. Each of them will be impacted differently by proposed changes. Figure 3 shows
the multiple tracks that may be experienced during the change process. Note that while
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Departments C and D followed a positive track through the Flight and Risk Model in this
example, Departments A and B had a greater level of resistance.

Figure 3 - Impact of change on different departments or groups

Observations from this model

This model is useful as a teaching tool when discussing resistance to change. The
following observations about resistance can be visualized with this model:

From an organization perspective, resistance to change is automatic and

expected.
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Resistance to change has levels of severity that have different impacts on the
organization.

Resistance to change is not an event, but a "state" of the organization. The

longer you remain in elevated states of resistance, the greater the impact on
productivity and on customers, and the greater the risk of losing valued
employees.

Resistance to change is not uniform across the organization; each group or

department will develop a uniqueperspective on the change.

Change managers need to be concerned with both the time and degree to
which the organization is under stress or duress from the change process.

Persistent and enduring resistance from managers or employees is a threat to

the change and the organization.

Although the inherent attributes of an organization are not controllable (history, culture,
current change capacity), the ultimate track an organization follows through the Flight
and Risk Model is controllable through the correct application of change management
techniques. Understanding resistance in the context of this model helps managers and
change agents plan for and correctly manage change in their organization.

4)

Benefits and limitations of a mission statement :-

The Advantages of Having a Mission Statement:

Starting a new business is an inherently risky venture but business owners can increase the chances of
success through diligent planning. A common task undertaken by new business owners is creating a
business plan -- essentially a road map describing what a business does, how it does it and how it will
achieve profitability. A mission statement is a short summary of a business's purpose, which is a key
element of a business plan.
A mission statement describes the basic goals of a business or any other organization. According to the
U.S. Small Business Administration, a mission statement could be two words, two sentences, a
paragraph, or even a single image. Whatever its form, a mission statement should give readers a clear
idea of what a business does and its overall philosophy in a minimal amount of time.
A mission statement is commonly included as a part of the executive summary of a business plan and
may be the very first thing that appears in a business plan. The executive summary provides a brief
overview of the entire plan. The executive summary is the most important part of a business plan because
it is the first section that potential investors, lenders and strategic partners read. A strong mission

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statement can set the tone for the executive summary of a business plan and may ultimately help a
business attract investment, funding or business partners.
Another benefit of creating a mission statement is that it gives establishes a business's underlying
purpose beyond the simple goal of making profit. This purpose can help guide the types of products and
services the company offers as well as the company's policies. For example, an environmentallyconscious entrepreneur might include in his mission statement that his company will not use
environmentally harmful production methods.
A mission statement can potentially be beneficial to a business by acting as form of advertisement. For
instance, an entrepreneur might be able to attract business from other environmentally conscious
individuals and businesses by including the mission statement in advertisements.

The Limitations:

It will take too much time or money to develop them

Employees already know what the organization values and what is expected of them
Members of the organization will be resistant to change or be unable to reach a consensus3
Their organization is too small to have a mission statement.

5) Porters Generic Strategy:Porter's generic strategies describe how a company pursues competitive advantage
across its chosen market scope. There are three generic strategies, either lower cost,
differentiated, or focus. A company chooses to pursue one of two types of competitive advantage,
either via lower costs than its competition or by differentiating itself along dimensions valued by
customers to command a higher price. A company also chooses one of two types of scope, either
focus.

6) Game Theory:-

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Game theory is a study of strategic decision making Specifically, it is "the study of mathematical
models of conflict and cooperation between intelligent rational decision-makers". An alternative term
suggested "as a more descriptive name for the discipline" is interactive decision theory.[2] Game
theory is mainly used in economics, political science, and psychology, as well as logic, computer
science, and biology. The subject first addressed zero-sum games, such that one person's gains
exactly equal net losses of the other participant or participants. Today, however, game theory applies
to a wide range of behavioral relations, and has developed into an umbrella term for the logical side
of decision science, including both humans and non-humans (e.g. computers, insects/animals).
Modern game theory began with the idea regarding the existence of mixed-strategy equilibria in twoperson zero-sum games and its proof by John von Neumann. Von Neumann's original proof
used Brouwer fixed-point theorem on continuous mappings into compact convex sets, which
became a standard method in game theory and mathematical economics. His paper was followed by
the 1944 book Theory of Games and Economic Behavior, co-written with Oskar Morgenstern, which
considered cooperative games of several players. The second edition of this book provided an
axiomatic theory of expected utility, which allowed mathematical statisticians and economists to treat
decision-making under uncertainty.

7) Comparison of Prescriptive and Descriptive Strategic

Management:-

Two styles of strategic management exist: prescriptive and descriptive. In the prescriptive school of
strategic management, the upper echelon makes the decisions. Subordinates have no role in
management decision-making processes. They simply follow the dictates of their superiors.
Conversely, the descriptive school values the input of the lower rungs of the company's
ladder. Decision making in descriptive strategic management starts from the bottom and
moves upward.
Prescriptive and descriptive strategic management differ in the formulation of strategy. In a
company that uses a prescriptive style, managers focus on the strategy formulation process.
They want to make sure they use the correct process. However, the descriptive school
places a higher value on the content of the strategy. Descriptive strategic managers care
more about what the managers decide rather than how they decide it.
The two schools of strategic management also do not see eye to eye on when the planning
process should take place. Prescriptive strategic managers believe that strategy must be
planned well in advance. They do not take changing conditions into account. Descriptive
managers, on the other hand, accept that the decision-making environment can be
unpredictable. They prefer to be spontaneous and not to stick with a fixed, unchanging plan.

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In addition, descriptive and prescriptive strategic management do not share the same
desired outcome. Prescriptive strategic managers seek to formulate a strategy that
enhances performance. Improved functioning matters to descriptive strategic managers as
well, but not exclusively. They also want the company to survive, and they believe learning
from any experience that could help the business better succeed also carries great weight.

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