Management 505

Assignment 1
May 2024
Thursday 5 September 2024
Instructor: WEBER JEFFRER
Student: Roeun Pisey
ID: 0098803

Please write your answers in a Word document, using 12 point Arial typeface. I expect
your assignment to be 5 - 6 pages long.

Answer

1. Analyse the concept of strategic management and its significance in achieving

competitive advantage for organizations. Provide an example of a real world
business and describe briefly its strategic plan.
The strategic business plan is the visible outcome of strategic business
development. It is not an action plan or task list and should not be too detailed.
Even if there is a standardised form to be used for the plan, it is important to see
it as a tool for business development and not just a form to be filled in. The
business plan is also a good tool for promoting the business and making it visible.
Often there is an annual process for drawing up the business plan and an
example of this process is described, starting with formulating the business
concept and ending with the presentation and discussion of the plan with the key
stakeholders. The important elements of the business plan are:
The effect of strategic management on competitive advantage. In this study, the
research strategy was the descriptive and quantitative approach. Research data
were collected via a questionnaire, and the sampling includes 200 employees and
managers in Somalia. Data were analyzed using Statistical Package for the Social
Sciences-19 software. The factor analysis will determine the original dimensions of
variables, and the correla-tion analysis will find the relations among variables and
measurements. The regression analy-sis will evaluate the effects between the
obtained dimensions. The results show that there is a positive relationship between
strategic management and competitive advantage.The results revealed that strategic
management practices allow the organization to be proactive in change and initiate
positive changes. It is recommended that organizations continually manage, main-
tain, and improve strategic management practices as this is an indispensable tool for
business performance.
Chandler’s definition of strategic management emphasizes the importance of
understanding the underlying goals and objectives of an organization, as well as the
plans and resources needed to achieve them. This approach focuses on the long-
term direction and vision of the organization, and the allocation of resources to align
with that vision. the other hand, highlights that there are no universally accepted
definitions of strategic management, and that different authors may have different
perspectives on the subject. He also points out that the field of strategic manage-
ment is constantly evolving and that new theories and concepts are continuously
being developed.In summary, strategic management is a process that organiza-tions
use to plan and direct their activities in order to achieve specific goals and
objectives. It involves identifying the long-term direction of the organization, and
allocating resources to align with that vision. Different authors may have different
perspec-tives on the subject and the field is constantly evolving. The reception of
strate-gies and the allotment of assets are necessary for doing these objectives.
According in business associations today is methodology. Henceforth, the
methodology is the fundamental arrangement for any association to achieve its
objectives inside expressed periods. The system should be contained to instigate the
manageability of the upper hand. The general use of the business technique is an
upper hand. The pro-cedure comes from being ordinary to rivalry. The entire pith of
vital arranging empowers an association to acquire an economic edge over its rivals.
There is an essential need to use an associa-tion’s courage most efficiently over its
competitors. develops a comprehensive plan to achieve them. The implemen-tation
stage is where the organization puts the plan into action, and the evaluation stage is
where the organization evaluates the performance of the strategy and makes
adjustments as neces-sary. The strategy entails determining which business to
pursue, how to divide assets without provok-ing hostile takeovers, and whether or
not to enter international commercial sectors.

2. What is Michael Porter’s five forces framework? Explain how each of these five
forces can impact an organization’s corporate strategy. Illustrate your points by
providing an example from a real-world industry.
Michael Porter’s Five Forces analysis is a framework that helps analyzing the level of
competition within a certain industry. It is especially useful when starting a new business or
when entering a new industry sector. According to this framework, competitiveness does not
only come from competitors. Rather, the state of competition in an industry depends on five
basic forces: threat of new entrants, bargaining power of suppliers, bargaining power of
buyers, threat of substitute products or services, and existing industry rivalry. The collective
strength of these forces determines the profit potential of an industry and thus its
attractiveness. If the five forces are intense. Almost no company in the industry earns
attractive returns on investments. If the forces are mild. There is room for higher returns.
Each force will be elaborated on below with the aid of examples from the airline industry to
illustrate the usage.

Threat of new entrants

New entrants in an industry bring new capacity and the desire to gain market share. The
seriousness of the threat depends on the barriers to enter a certain industry. The higher these
barriers to entry, the smaller the threat for existing players. Examples of barriers to entry are
the need for economies of scale, high customer loyalty for existing brands, large capital
requirements. The need for cumulative experience, government policies, and limited access to
distribution channels. More barriers can be found in the table below.

Example: The threat of new entrants in the airline industry can be considered as low to
medium. It takes quite some upfront investments to start an airline company (e.g. purchasing
aircrafts). Moreover, new entrants need licenses, insurances, distribution channels and other
qualifications that are not easy to obtain when you are new to the industry. Furthermore, it
can be expected that existing players have built up a large base of experience over the years
to cut costs and increase service levels. A new entrant is likely to not have this kind of
expertise, therefore creating a competitive disadvantage right from the start. However, due to
the liberalization of market access and the availability of leasing options and external finance
from banks, investors, and aircraft manufacturers, new doors are opening for potential
entrants. Even though it doesn’t sound very attractive for companies to enter the airline
industry, it is NOT impossible. Many low-cost carriers like Southwest Airlines, RyanAir and
EasyJet have successfully entered the industry over the years by introducing innovative cost-
cutting business models, thereby shaking up original players like American Airlines, Delta
Air Lines and KLM.

Bargaining power of suppliers

This force analyzes how much power and control a company’s supplier (also known as the
market of inputs) has over the potential to raise its prices or to reduce the quality of
purchased goods or services, which in turn would lower an industry’s profitability potential.
The concentration of suppliers and the availability of substitute suppliers are important
factors in determining supplier power. The fewer there are, the more power they have.
Businesses are in a better position when there are a multitude of suppliers. Sources of
supplier power also include the switching costs of companies in the industry, the presence of
available substitutes, the strength of their distribution channels and the uniqueness or level
of differentiation in the product or service the supplier is delivering.
Example:The bargaining power of suppliers in the airline industry can be considered very
high. When looking at the major inputs that airline companies need, we see that they are
especially dependent on fuel and aircrafts. These inputs however are very much affected by
the external environment over which the airline companies themselves have little control. The
price of aviation fuel is subject to the fluctuations in the global market for oil, which can
change wildly because of geopolitical and other factors. In terms of aircrafts for example,
only two major suppliers exist: Boeing and Airbus. Boeing and Airbus therefore have
substantial bargaining power on the prices they charge.
Bargaining power of buyers
The bargaining power of buyers is also described as the market of outputs. This force analyzes to
what extent the customers are able to put the company under pressure, which also affects the
customer’s sensitivity to price changes. The customers have a lot of power when there aren’t
many of them and when the customers have many alternatives to buy from. Moreover, it should
be easy for them to switch from one company to another. Buying power is low however when
customers purchase products in small amounts, act independently and when the seller’s product is
very different from any of its competitors. The internet has allowed customers to become more
informed and therefore more empowered. Customers can easily compare prices online, get
information about a wide variety of products and get access to offers from other companies
instantly. Companies can take measures to reduce buyer power by for example implementing
loyalty programs or by differentiating their products and services.

Example: Bargaining power of buyers in the airline industry is high. Customers are able to
check prices of different airline companies fast through the many online price comparisons
websites such as Skyscanner and Expedia. In addition, there aren’t any switching costs involved
in the process. Customers nowadays are likely to fly with different carriers to and from their
destination if that would lower the costs. Brand loyalty therefore doesn’t seem to be that high.
Some airline companies are trying to change this with frequent flyer programs aimed at
rewarding customers that come back to them from time to time.
Threat of substitute products
The existence of products outside of the realm of the common product boundaries increases
the propensity of customers to switch to alternatives. In order to discover these alternatives
one should look beyond similar products that are branded differently by competitors. Instead,
every product that serves a similar need for customers should be taken into account. Energy
drink like for instance is usually not considered a competitor of coffee brands such as
Nespresso or Starbucks. However, since both coffee and energy drink fulfill a similar need
(i.e. staying awake/getting energy), customers might be willing to switch from one to another
if they feel that prices increase too much in either coffee or energy drinks. This will
ultimately affect an industry’s profitability and should therefore also be taken into account
when evaluating the industry’s attractiveness.

Example
In terms of the airline industry, it can be said that the general need of its customers is
traveling. It may be clear that there are many alternatives for traveling besides going by
airplane. Depending on the urgency and distance, customers could take the train or go by car.
Especially in Asia, more and more people make use of highspeed trains such as Bullet Trains
and Maglev Trains. Furthermore, the airline industry might get some serious future
competition from Elon Musk’s Hyperloop concept in which passengers will be traveling in
capsules through a vacuum tube reaching speed limits of 1200 km/h. Taken this altogether,
the threat of substitutes in the airline industry can be considered at least medium to high.

Rivalry among existing competitors

This last force of the Porter’s Five Forces examines how intense the current competition is in
the marketplace, which is determined by the number of existing competitors and what each
competitor is capable of doing. Rivalry is high when there are a lot of competitors that are
roughly equal in size and power, when the industry is growing slowly and when consumers
can easily switch to a competitors offering for little cost. A good indicator of competitive
rivalry is the concentration ratio of an industry. The lower this ration, the more intense rivalry
will probably be. When rivalry is high, competitors are likely to actively engage in
advertising and price wars, which can hurt a business’s bottom line. In addition, rivalry will
be more intense when barriers to exit are high, forcing companies to remain in the industry
even though profit margins are declining. These barriers to exit can for example be long-term
loan agreements and high fixed costs.
Example: When looking at the airline industry in the United States, we see that the industry
is extremely competitive because of a number of reasons which include the entry of low cost
carriers, the tight regulation of the industry wherein safety become paramount leading to high
fixed costs and high barriers to exit, and the fact that the industry is very stagnant in terms of
growth at the moment. The switching costs for customers are also very low and many players
in the industry are similar in size (see graph below) leading to extra fierce competition
between those firms. Taken altogether, it can be said that rivalry among existing competitors
in the airline industry is high.
3. Describe and discuss the different types of decision-making models commonly used
by managers.

Decision-making models are versatile and can be applied to a wide range of

decisions in project management, from strategic to operational levels.

For instance, they can help determine the scope of a project, select the right
methodologies, allocate resources efficiently and even resolve conflicts among team
members.

Each model is designed to address specific types of decisions:

 Strategic decisions: Long-term decisions that define the direction of a

project.
  Operational decisions: Day-to-day choices that affect the project’s
immediate activities and processes.
 Tactical decisions: Decisions that involve the allocation and
management of resources.

Application in diverse scenarios

These models are not one-size-fits-all but can be tailored to fit the specific needs and
context of a project.

This adaptability makes them incredibly valuable tools for project managers who
must often shift between various types of decisions and projects with different
requirements and goals.

For example, a decision-making model that excels in a technology

project may need adjustments to be equally effective in a
construction project.
Benefits of decision-making models

Incorporating decision-making models into project management not only structures the
decision-making process but also enhances overall project effectiveness and efficiency.

Here are detailed benefits that these models provide:

Improved consistency

Using a consistent decision-making framework ensures that every decision is processed

through the same evaluative steps, which significantly reduces variability in outcomes.

This consistency is particularly important in project environments where multiple

stakeholders are involved.

By standardising how decisions are made, teams can minimise misunderstandings and
misalignments that might arise from subjective decision-making practices.

Enhanced efficiency

Decision-making models streamline the process of making choices by providing clear, step-
by-step guidelines to follow.

This structured approach reduces the time spent on deliberating each decision, enabling
project managers and their teams to make faster decisions without compromising the quality
of those decisions.

Efficiency is crucial in maintaining project timelines and meeting deadlines, especially in

complex projects where delays in decision-making can lead to cost overruns and extended
project timelines.

Better outcomes
Structured decision-making leads to more informed and effective outcomes.

By systematically analysing each option and its potential impacts, decision-making models
help ensure that all critical factors are considered before a final decision is made.

This thorough vetting process helps in identifying the optimal solution that maximises
benefits while minimising risks and adverse effects.

Increased accountability

When decisions are made through a defined and transparent process, it becomes easier to
track and justify why certain choices were made.

This accountability is essential in project management, where decisions can have significant
financial and operational impacts.

Increased accountability helps in building trust with stakeholders and also provides a
reference point for learning and improvement in future projects.

Improved forecasting

Decision-making models often involve analysing past data and projecting future outcomes.

This capability to forecast the implications of different choices can be invaluable in planning
and strategising.

For example, predictive models can help project managers anticipate potential problems and
devise effective mitigation strategies.

Forecasting aids in risk management, helping teams prepare for likely challenges and exploit
emerging opportunities.

Efficient resource allocation

One of the most critical aspects of project management is the allocation of resources, which
includes time, budget, personnel and equipment.

Decision-making models provide a framework for assessing the demands of various project
tasks and assigning resources in a manner that optimises project performance.

Effective resource allocation ensures that no part of the project suffers from resource
starvation, which can derail project objectives.

4. Compare and contrast different organizational structures (such as functional,

divisional, matrix) and discuss their advantages and disadvantages in terms of
coordination, communication, and efficiency.
  Discuss on the readings for this week had a lot of information I
consider critical to understanding Strategic Management, so it was
difficult to choose and focus on just one concept. On the other hand,
it is essential to understand the characteristics of functional,
divisional, and matrix organizational structures as well as we, as
students and future leaders within organizations, function within
these structures, doing our best to profit from each’s advantages
and minimizing the disadvantages. Below we have attempted to
provide a basic understanding of the characteristics of functional,
divisional, and matrix organizational structures.
First, the functional organizational structure consists of employees who
engage in a specific task, such as sales, marketing, or production. Second,
the divisional organizational structure consists of employee groups or
departments that each have their specific assigned tasks. Examples are
an organization’s marketing, human resources, accounting, or shipping
departments. the sales department and accounting department. Three,
the matrix organizational structure can be recognized by the internal
specialized divisions to which employees are assigned and the downline
divisions branching off of these.
In Functional organizational structures, employees are assigned specific
routine tasks typical of a hierarchical organization, with a supervisor
overseeing productivity and that supervisor having a supervisor to the top
decision-maker. Compensation is based on the employee’s position in the
hierarchy and their position’s classification. Because of the nature of this
structure, an employee’s output volume, assigned job responsibilities, and
projects to which they are assigned are relatively uncomplicated to
identify. For example, if a position is assigned to pack and ship an average
of a hundred orders a day, it is easy to identify if the employee is
averaging more or less of their designated average. Then the question is
whether the employee is staying focused on their job as they should not
be involved in lower-level decision-making, which frees the employee to
increase productivity and avoid change that would lower productivity.
This hierarchical Functional organizational structure traditionally has been
the most common form of organization.
In Divisional organizational structures, employees are responsible for
performing a unique function of the business for which they have some
decision-making responsibility over a specific department or objective and
can work in teams to accomplish the department’s goals and jointly
decide how best to achieve those goals in a non-hierarchical structure.
The downside is that employees tend to focus on only their specific
responsibilities making change problematic, and is used the majority of
the time by small businesses due to their lower ability to incorporate the
cost into their products or services without losing competitive advantage.
Matrix organizational structures are a combination of functional and
divisional organization structures in which each occupational position
having their direct supervisor in the decision-making hierarchy, who
provides supervision, and instruction, and evaluates their performance.
Matrix structures are most used to coordinate the actions of several
groups or departments and can be either centralized or decentralized with
varying levels of decision-making authority, especially for international
corporations engaged in resource-intensive industries such as
manufacturing and intellectual products or services such as the
technology industry. Google would be a good example of a technology
company with a Matrix organizational structure. The “organization
structure is based on the optimal coordination of interactions among
activities. The main idea is that each manager is capable of detecting and
coordinating interactions only within his limited area of expertise. Only the
CEO can coordinate company-wide interactions. The optimal design of the
organization trades off the costs and benefits of various configurations of
managers. Our results consist of classifying the characteristics of activities
and managerial costs that lead to the matrix organization, the functional
hierarchy, the divisional hierarchy, or a fiat hierarchy.