BUSM3125 Strategic Management

Week 3 Tutorial
1. Advantages & disadvantages of SWOT analysis
Advantages:
• Forces managers to consider both internal and external factors
simultaneously
• Emphasis on identifying opportunities and threats makes firms act
proactively rather than reactively
• Raises awareness about the role of strategy in creating a match between
the environmental conditions and the firm’s internal strengths &
weaknesses

Limitations:
• Key weakness of SWOT is that it is primarily a static assessment, it
focuses too much on one moment in time and doesn’t reveal the dynamics
of the competitive environment
• Strengths may not lead to an advantage; if a firm builds its strategy on a
capability that cannot, by itself, create or sustain competitive advantage,
it is essentially a wasted use of resources
• Too narrow of a focus on current customers, technologies, and
competitors may , hence may fail to notice important changes on the
periphery of their environment that may trigger the need to redefine
industry boundaries and identify a whole new set of competitive
relationships
• Overemphasizes a single dimension of strategy, become preoccupied with
a single strength or a key feature of the product or service they are
offering and ignore other factors needed for competitive success.

2. Briefly describe the primary & support activities in a firm’s value

chain
Primary Activities
• Inbound logistics: location of distribution facilities, warehouse layout and
design to increase efficiency of operations for incoming materials
• Operations: efficient plant layout and workflow design, efficient plant
operations to minimize costs, incorporation of appropriate process
technology
• Outbound logistics: effective shipping processes for quick and safe
delivery, shipping in large lot sizes to minimize transport costs
• Marketing and sales: innovative approaches to promotion and advertising,
proper identification of customer segments and needs
• Service: quick response to customer needs and emergencies, quality of
service personnel and ongoing training

Support Activities
• General administration: effective planning systems to attain overall goals
and objectives, good relationship with diverse stakeholder groups,
effective IT to integrate value-creating activities
• HRM: effective recruiting, development and retention mechanisms, quality
relations with trade unions, reward and incentive programs to motivate
employees
 • Technology development: effective R&D activities for process and product
initiatives, positive collaborative relationships between R&D and other
departments, personnel qualification
• Procurement: optimize quality and speed of inputs and minimize
associated costs, develop collaborative win-win relationships with
suppliers, analysis and selection of alternatives sources of inputs to
minimize dependence on 1 supplier
3. How can managers create value by establishing important
relationships among the value-chain activities both within their firm
and between the firm and its customers and suppliers?
Collaborative and strategic exchange relationships between value chain
activities either within firms or between firms involves the exchange of resources
such as information, people, technology, or money that contributes to the
success of the firm.
CHECK OLD NOTES

4. Briefly explain the 4 criteria for sustainability of competitive

advantage
• Valuable resources: neutralize threats and exploit opportunities
• Rare: not easily possessed by competitors
• Imitated easily: physically unique, causal ambiguity, path dependency,
social complexity
• Substitute: no equivalent strategic resources or capabilities

5. Under what conditions are employees and managers able to

appropriate some of the value created by their firm
4 factors help explain the extent to which employees and managers will be able
to obtain a proportionately high level of the profits that they generate:
• Employee bargaining power: vital to forming a firm’s unique capability,
loyal clients
• Employee replacement cost
• Employee exit cost
• Manager bargaining power: manager power based on how well they create
resource-based advantages, creating value through organizing,
coordinating, and leveraging employee as well as other forms of capital;
they have a more thorough, integrated understanding of the total
operation

7. Summarize the concept of the balanced scorecard, what are the main
advantages
Balanced scorecard provides a meaningful integration of many issues that come
into evaluating a firm’s performance; it enables managers to consider their
business from 4 key perspectives;
• Customers: how do customers see us
• Internal business: what must we excel at
• Innovation and learning: can we continue to improve and create value
• Financial: how do we look to shareholders
It includes financial measures that reflect the results of actions already taken,
but it complements these indicators with operational measures that drive future
financial performance. Managers also do not need to look at their job as
balancing stakeholder demands, the balanced scorecard provides a win-win
approach, increasing satisfaction among a wide variety of organizational
stakeholders, including employees (at all levels), customers, and stockholders.
ETHICS QUESTION
What are some of the ethical issues that arise when a firm becomes overly
zealous in advertising its products?