CH-9-11 Strategy Implementation – Strategic Management: Concepts and Cases : Book Guide

This Document Contains Chapters 9 to 11 Chapter 9 - Strategy Implementation Overview Chapter 9 explains how to implement strategies by effectively managing market segmentation, perceptual mapping/product positioning, financial forecasting, debt vs. equity to obtain capital, data analysis (mining), R&D, and MIS issues. The Chapter 9 Learning Objectives as stated in the textbook are given below: 1. Develop effective perceptual maps to position rival firms. 2. Develop effective perceptual maps to identify market segments and demand voids. 3. Determine the cash worth of any business. 4. Explain market segmentation and product positioning as strategy-implementation tools. 5. Discuss procedures for determining the worth of a business. 6. Develop project financial statements to reveal the impact of strategy recommendations. 7. Perform EPS-EBIT analysis to evaluate the attractiveness of debt versus stock as a source of capital to implement strategies. 8. Discuss the nature and role of research and development in strategy implementation. 9. Explain how management information systems can determine the success of strategy-implementation efforts. 10. Explain business analytics and data mining. Teaching Tips 1. This is arguably the second most important chapter in the book, behind Chapter 8, because it focuses on marketing and financial aspects of implementing strategies. We usually spend 3 to 4 days on Chapter 9 because, for whatever reason, many students come to the capstone course weak in finance. Yet, value of the firm analysis, and EPS-EBIT analysis, and projected financial statement analysis, are essential for inclusion in a strategic planning case analysis. Ask all the finance/accounting majors to raise their hand and identify them as experts. 2. In the first few pages of this chapter, emphasize that Marketing is an important business major because marketing expenses can be gigantic yet marketing is essential, so expertise is needed to identify and reach target markets. Ask all the marketing majors to raise their hand and identify them as experts. 3. Perceptual maps, or product/market positioning maps, are especially helpful in implementing strategies. Ask students to develop one or more of these for their case company. Including a before-and-after perceptual map for their firm (before and after their recommendations are implemented) can be effective slides in an oral presentation. 4. EPS-EBIT analysis is essential for students to include in their case analysis, because any set of recommendations costs money, and the team needs to show the class where the firm should get the money – stock or debt or some combination. So, go over the EPS-EBIT material slow and easy, and utilize class exercises, perhaps the end-of-chapter review questions and assurance of learning exercises. Any quantitative tools such as this sometimes gives students’ trouble, but this one is easy, and important – because raising capital is an important strategic issue for all for-profit firms. 5. Projected financial statement analysis is an essential strategy implementation tool for students to learn, so go slow and easy over this material. Many professors require students, as part of their case analysis, to provide 3-year projected financial statements, so the class will know what impact their recommendations would likely have on the firm. Students will want to simply use an average historical percentage change approach for these statements, but emphasize that the projected statements must be based on their recommendations for the firm, which may be dramatically different than the historical percentage increase or decrease. For example, the team might recommend their case company acquire a rival firm that would nearly double their firm’s revenues, rather than go up the 6% historical average. 6. The section “Evaluating the Worth of a Business” is important because a strategic plan often includes acquiring another firm, so the question arises how much is the firm worth. And, it is just good business to know the cash value of your firm, in case a prospective buyer emerges. So, use several class exercises to go over this topic. We oftentimes have students prepare this analysis, and others in this chapter, in class for their assigned case company. This works really well. Many class days in my class are strategic planning workshops, where instead of just one teacher (me), everyone in class becomes a teacher helping others. This is a great pedagogical practice that AACSB recommends. 8. At the end of Chapter 9, direct student attention to the “Special Note to Students” because this is important information as the team prepares and ultimately delivers their oral case analysis presentation later in the course. 9. Regarding the end-of-chapter review questions, consider assigning one half of them one day in class giving each student a question, and letting them tell the class the answer, with you commenting on their answers. Do the other half another day. We have found this to be a fun day in class and it goes pretty quickly. 10. Several of the end-of-chapter Assurance of Learning Exercises can be used as excellent homework or classwork assignments to be completed as an individual or as a group of students. Answers to End-of-Chapter Review Questions 1. Royal Dutch Shell plc has been successful for decades. Analyze their year-end 2013 financials. List six points that best summarize Shell’s performance in 2013. Answer: For the year ended December 31, 2013 (in comparison to the year ended December 31, 2012) Shell financial performance is indicated by the following metric: • Total shareholder return improved from –.2% (2012) to 8.6% (2013) • Net capital investment increased from $29,803,000,000 (2012) to $44,303,000,000 (2013) • Proved oil and gas reserves increased from 13,556,000,000 barrels (2012) to 13,932,000,000 (2013) • Operation oil spills (of more than 100 kgs.) decreased from 207 (2012) to 174 (2013) • Total recordable injuries per million working hours improved from 1.26 (2012) to 1.15 (2013) 2. Explain how to develop an advertising strategy? Answer: In developing an advertising strategy, “Opportunity to see” is important to ensure that the advertising message is seen by perspective clients. Depending on the budget, an advertiser from this table is able to decide, what percentage of the advertisement being viewed by viewers and how much is the worth. 3. Illustrate a product-positioning map for Royal Dutch Shell. Include three rival firms in your matrix. Answer: 4. Diagram a product-positioning map for your college or university. Answer: Student answers will vary but once again students should show an understanding of the steps in product positioning Product-Positioning Map for a College/University: • Axes: • X-Axis: Program Diversity (from Narrow to Broad) • Y-Axis: Reputation/Prestige (from Low to High) • Quadrants: • Top-Right: Top-Ranked, Broad Programs (e.g., Ivy League Universities) • Top-Left: High Prestige, Specialized Programs (e.g., Art Institutes) • Bottom-Right: Broad Programs, Lower Prestige (e.g., Large Public Universities) • Bottom-Left: Specialized Programs, Lower Prestige (e.g., Technical Colleges) This map helps visualize where your institution stands relative to others in terms of program variety and reputation. 5. List and explain the advantages versus disadvantages of using debt versus equity as a means of raising capital. Answer: Two basic sources of capital for an organization are debt and equity. Determining an appropriate mix of debt and equity in a firm’s capital structure can be vital to successful strategy implementation. An Earnings per Share / Earnings. Before Interest and Taxes (EPS/EBIT) analysis is the most widely used technique for determining whether debt, stock or a combination of debt and stock is the best alternative for raising capital to implement strategies. An organization should have enough debt in its capital structure to boost its return on investment by applying debt to products and projects earning more than the cost of the debt. In low earning periods, too much debt in the capital structure of an organization can endanger stockholders’ returns and jeopardize company survival. Fixed debt obligations generally must be met, regardless of circumstances. This does not mean that stock issuances are always better than debt for raising capital. Some special concerns with stock issuances are dilution of ownership; effect on stock prices and the need to share future earnings will all new shareholders. 6. List in order of importance the limitations of the EPS/ EBIT analysis. Answer: Limitations of the EPS/EBIT analysis: • Profit level may be higher for stock or debt alternatives when EPS levels are lower. • Another consideration is flexibility. • When additional stocks are issued to raise additional capital in the future, control is also another concern. • When using EPS/EBIT analysis, timing in relation to movements of stock prices, interest rates, and bond prices becomes important. In time of depressed stock prices, debt may prove to be the most suitable alternative from both a cost and a demand standpoint. 7. Turn back to the Cohesion Case on Adidas AG. Calculate that company’s tax rate, which is a common calculation needed in performing EPS/EBIT analysis. Answer: Students in doing such calculations will show an understanding of EPS/EBIT analysis. To calculate Adidas AG’s tax rate for EPS/EBIT analysis: 1. Find the Net Income and Income Before Tax figures from Adidas’s financial statements. 2. Calculate the Tax Rate using the formula: 3. Example Calculation: If Income Before Tax is €1,200 million and Net Income is €900 million: Use actual financial figures from Adidas’s latest report for precise calculations. 8. Review the website of a company that you are familiar with. Discuss the extent to which that organization has instituted the new principles of marketing according to Parise, Guinan, and Weinberg. Answer: In review of the website, students should note the new principles of marketing: • Don’t talk to customers – work with them throughout the marketing process. • Give customers a reason to participate. • Listen to – and join – the conversation outside your company’s Web site. • Resist the temptation to sell, sell, sell. Instead attract, attract, attract. • Don’t control online conversations, let it flow freely. • Find a “marketing technologist” a person who has three excellent skill sets (marketing, technology, and social interaction). • Embrace instant messaging and chatting. 9. For companies in general, identify and discuss three opportunities and three threats associated with social networking activities on the Internet. Answer: Three opportunities: • Marketers could more precisely define their segments of people to be reached –hence saving costs • Marketers could target and reach specific segments • Marketers could reach customers worldwide Three threats: • Marketers are facing competition worldwide that may not be physically present in the country. • Payment and delivery of products may be difficult. • The target group may not see the internet ad. 10. Do you agree or disagree with the following statement? Explain your reasoning. “Television viewers are passive viewers of ads whereas Internet users take an active role in choosing what to look at—so customers on the Internet are tougher for marketers to reach.” Answer: Student answers may vary. If they agree, the reason may be because television viewers enjoy a program which contains advertisements in between programs hence it is easier to reach them. On the other hand, internet users are active customers, they surf the net for their individual interests and hence advertisement opportunity is smaller than television advertisement. I agree with the statement. Television viewers often passively receive ads during programming, making them more susceptible to traditional advertising methods. In contrast, Internet users actively select content and often use ad-blocking tools or skip ads, making it more challenging for marketers to capture their attention. This active engagement requires more targeted and interactive marketing strategies online. 11. How important or relevant do you believe purpose-based marketing is for organizations today? Answer: Purpose-based marketing’’ is very important and relevant in a weak economy, when customers are more interested in buying cheaper brands. The ad in addition to promoting price also shows the intrinsic value of the product or service. 12. Why is it essential for organizations to segment markets and target particular groups of consumers? Answer: Market segmentation is defined as the subdividing of a market into distinct subsets of customers according to needs and buying habits. It is essential because: • Strategies such as market development, product development, market penetration, and diversification require increased sales through new markets and products. • Market segmentation allows organizations to operate with resources because mass production, mass distribution and mass advertising are not required. • Market segmentation decisions directly affect marketing mix variables. 13. Explain how and why the Internet makes market segmentation easier? Answer: This is because the segments of people whom marketers want to reach online are much more precisely defined than the segments of people reached through traditional forms of media, such as television, radio and magazines. 14. A product-positioning rule given in the chapter is that “when there are only two competitors, the middle becomes the preferred strategic position.” Illustrate this for the cruise ship industry where two firms, Carnival and Royal Caribbean, dominate. Illustrate this for the commercial airliner building industry where Boeing and Airbus dominate. Answer: Student answers should show understanding of the steps required in product positioning; such as: • Select key criteria that effectively differentiate products or services in the industry; • Diagram a two-dimensional product-positioning map with specified criteria on each axis; • Plot major competitors’ products / services in the resultant four-quadrant matrix; • Identify areas in the positioning map where the company’s products or services could be most competitive in the given target market; • Develop a marketing plan to position the company’s products or services appropriately. Cruise Ship Industry: • Carnival: Positioned as a value-focused option with affordable pricing. • Royal Caribbean: Positioned as a premium, luxury option with high-end amenities. • Middle Position: A cruise line offering mid-range pricing with a balance of luxury and affordability could attract customers seeking a compromise between Carnival's value and Royal Caribbean's luxury. Commercial Airliner Industry: • Boeing: Positioned as a versatile option with a broad range of aircraft. • Airbus: Positioned as innovative with advanced technology and comfort features. • Middle Position: An airliner emphasizing a blend of innovation, reliability, and cost-effectiveness might appeal to airlines seeking a balance between Boeing’s broad range and Airbus’s advanced features. 15. How could/would dividends affect an EPS/EBIT analysis? Would it be correct to refer to “earnings after taxes, interest, and dividends” as retained earnings for a given year? Answer: By looking only at dividends, we omit an important factor, which are economic conditions. Another factor is flexibility; as organization’s capital structure changes, so does its flexibility for considering future need. 16. In performing an EPS/EBIT analysis, where does the first row of (EBIT) numbers come from? Answer: The first row of numbers come from debt, stock or a combination of debt and stock in raising capital. In an EPS/EBIT analysis, the first row of EBIT (Earnings Before Interest and Taxes) numbers typically comes from projected or actual financial statements of the company. This row represents various levels of EBIT, showing different scenarios of operating income before considering interest and taxes, which helps in assessing the impact of financing options on earnings per share (EPS). 17. In performing an EPS/EBIT analysis, where does the tax rate percentage come from? Answer: The tax comes from earnings. In an EPS/EBIT analysis, the tax rate percentage comes from the company's historical financial statements or current tax rate information. It represents the proportion of earnings before interest and taxes (EBIT) that will be paid in taxes, which is essential for calculating net income and assessing the impact of different financing options on EPS. 18. What amount of dividends did Royal Dutch Shell pay in 2013? How much of 2013’s earnings did Shell reinvest back into the company? Answer: According to www.nasdaq.com Royal Dutch Shell PLC paid dividends of $3.56 per share in 2013. According to www.morningstar.com Royal Dutch Shell PLC had retained earnings of $183,474,000,000 in 2013. 19. Show algebraically that the price earnings ratio formula is identical to the number of shares outstanding multiplied by the stock price formula? Why are the values obtained from these two methods sometimes different? Answer: The values of these two are sometimes different because market conditions do affect the stock price and when it does the formula will then be affected by the stock price. 20. In accounting terms, distinguish between intangibles and goodwill on a balance sheet. Why do these two items generally stay the same on projected financial statements? Answer: Intangibles – are things which could be seen but difficult to measure; for example, customer loyalty. Goodwill – reputation of the company brand. These two terms affect the company’s performance as they are not measurable but are related. For example, a company which has excellent goodwill will also have excellent intangibles; these two items generally stay the same on projected financial statements. 21. What are the three major R&D approaches to implementing strategies? Which approach would you prefer as owner of a small software company? Why? Answer: The three approaches include: • Be the first firm to market new technological products. • Innovative imitator of successful products, minimizing risks and costs of start-up • Low cost producer by producing products similar to but less expensive than products recently produced. Student answers may vary as different approaches have different comparative advantages. 22. Explain in your own words the process of developing projected financial statement analysis. Answer: Student answers may vary; however, students should bear in mind the six steps in developing projected financial statement analysis as follows: • Prepare the projected income statement before the balance sheet. • Use the percentage of sales method to project cost of goods. • Calculate the projected net income. • Subtract from the net income any dividends. • Project the balance sheet items, beginning with retained earnings and then forecasting stockholders’ equity, long term liabilities, current liabilities, total liabilities. • List comments (remarks) on the projected statements. Developing projected financial statements involves forecasting future financial performance by analyzing historical data and making assumptions about future conditions. This process includes estimating future revenues, expenses, and capital needs, then creating projected income statements, balance sheets, and cash flow statements. These projections help assess the financial viability of strategic plans and guide decision-making. 23. In developing projected financial statements, why should the preparer not use historical percentages too heavily? Answer: Projected financial statement analysis is a central strategy implementation technique because it allows an organization to examine the expected results of various actions and approaches. A projected income statement and balance sheet allow an organization to compute projected financial ratios under various strategy implementation scenarios. In this instance, the preparer should not use historical percentages too heavily; as the expected results are of various actions and approaches. 24. Explain five methods for determining the cash value of a company. Answer: Students will explain the five methods as found in page 306: 1. Shareholders’ Equity + Goodwill + Intangibles 2. Net Income x 5 3. (Stock Price/EPS) x NI 4. # of Shares Out x Stock Price 5. Four Method Average 1. Discounted Cash Flow (DCF) Analysis: Calculates the present value of expected future cash flows, discounted at a rate reflecting the risk of those cash flows. 2. Comparable Company Analysis: Values a company based on valuation multiples of similar public companies, such as price-to-earnings or EV/EBITDA ratios. 3. Precedent Transactions Analysis: Determines value based on multiples from recent transactions of similar companies. 4. Net Asset Value (NAV): Calculates value by summing the company's assets and subtracting liabilities, providing a liquidation value. 5. Earnings Multiples: Uses multiples of earnings metrics (e.g., P/E ratio) to estimate value based on historical or projected earnings. 25. Given the seven R&D policies mentioned in the chapter, which four do you feel would be best for Audi to utilize? Why? Answer: Students answer may vary, students will choose four out of the following: 1. Emphasize product or process improvements 2. Stress basic or applied research 3. Be leaders or followers in R & D 4. Develop robotics or manual – type processes 5. Spend a high, average, or low amount of money on R & D 6. Perform R & D within the firm or to contract R & D to outside firms 7. Use university researchers or private-sector researchers. 1. Open Innovation: Leverage external ideas and collaborations to enhance technology and innovation in vehicles. 2. Focus on Emerging Technologies: Invest in advancements like electric and autonomous vehicles to stay ahead in the automotive industry. 3. Partnerships with Tech Companies: Collaborate with technology firms to integrate cutting-edge features and smart systems. 4. Customer-Centric R&D: Develop features based on customer feedback and market trends to meet evolving consumer preferences. 26. Diagram an EPS/EBIT chart that reflects negative EPS values. Answer: Students should show an understanding of break-even point which is where various financing alternatives represented by lines crossing are equally attractive in terms of EPS. To diagram an EPS/EBIT chart with negative EPS values: 1. X-Axis (EBIT): Plot EBIT values, including negative EBIT (e.g., -$1M to $10M). 2. Y-Axis (EPS): Plot EPS values, including negative EPS (e.g., -$5 to $10). 3. Lines/Curves: Draw lines representing different financing scenarios, which might cross into the negative EPS region for lower EBIT values. 4. Analysis: Highlight how EPS becomes negative at certain EBIT levels, showing the impact of financing on profitability. 27. Define and give an example of a vacant niche. Answer: A vacant niche is the best strategic opportunity of an unserved segment. An example is the launch of the iPhone. 28. Define and give an example of wikis and tweets. Answer: Wikis – Websites that allows users to add, delete and edit content regarding frequently asked questions and information across the firm’s whole value chain of activities; for example, Wikipedia. Tweets – posting messages of characters on Twitter.com to describe features of the company products; for example, Bank of America. 29. List the marketing mix variables and give an example of each. Answer: 30. Show algebraically that the price earnings ratio method of calculating the cash value of a company is identical to the number of shares outstanding multiplied by the stock price method. Answer: In their answer, students will show an understanding of the price earnings ratio method as well as the cash value of the company and the stock price method. To show algebraically that the Price-Earnings (P/E) ratio method is identical to the number of shares outstanding multiplied by the stock price method: 1. Price-Earnings Ratio Method: 2. Stock Price Method: Since: Then: Both methods yield the same company value. 31. Define and give an example of goodwill and intangibles. Answer: Goodwill – the established reputation of a business regarded as a quantifiable asset – for example, name of American Express. Intangibles – something which could be seen but not be able to be counted; for example; loyal customer base. 32. What is the difference between capital surplus and additional paid in capital on a balance sheet? Answer: Capital Surplus – a comparison of two years, for example, to reflect the capital situation, such as stocks, performing in the two years. Additional paid in capital – Organization puts in additional capital to meet the requirements of the organization be it expansion or not doing as expected. 33. What transaction is the link between the projected income statement and the projected balance sheet? Answer: Financial ratios provide the link. The link between the projected income statement and the projected balance sheet is the retained earnings transaction. Net income from the projected income statement is added to the beginning retained earnings on the balance sheet. This updated retained earnings figure is then reflected in the projected balance sheet, impacting the equity section and ensuring consistency between the two financial statements. 34. Explain the benefits of a before-and-after product-positioning map. Answer: In explaining the benefits, students should show an understanding of what a product positioning map is. Product positioning entails developing schematic representations that reflect how one’s products or services compared to competitors’ on dimensions most important to success in the industry. It enables the organization to identify the positioning map of its competitors and where the areas which are most competitive. These areas are to be avoided. It further enhances the organization to identify the areas where it enjoys competitive advantages and these are the targeted areas. In this aspect, it helps the organization to develop relevant marketing plan to position the company products/ services appropriately. 35. Explain how HP should conduct market segmentation. Answer: In their answer, students will have to understand the following bases for market segmentation in order to explain how to conduct market segmentation: Geographic: country size, city size, density, climate Demographic: age, gender, family size, family life cycle, income, occupation, education, religion, race, nationality Psychographic: social class, personality HP should conduct market segmentation by: 1. Identifying Key Segments: Analyze customers based on demographics, geography, behavior, and psychographics. 2. Targeting Specific Needs: Develop tailored products and marketing strategies for each segment, such as business users vs. consumer users. 3. Evaluating Market Potential: Assess segment size, growth potential, and profitability. 4. Implementing Strategies: Create targeted marketing campaigns and product offerings to meet the unique needs of each segment. 36. Determine the cash value of HP using the methods described in this chapter. Answer: Students could use the Projected Income Statement and Balance Sheet on page 311 or Actual Income Statement. Students should understand the various methods in determining cash value. To determine the cash value of HP using the methods described: 1. Price-Earnings (P/E) Ratio Method: 2. Stock Price Method: Use current earnings, the P/E ratio, stock price, and number of shares to calculate HP's cash value. For accurate results, obtain up-to-date financial data from HP’s financial statements or market reports. Answers to the End-of-Chapter Assurance of Learning Exercises ASSURANCE OF LEARNING EXERCISE 9A: PREPARING AN EPS/EBIT ANALYSIS FOR ROYAL DUTCH SHELL PLC Purpose Shell is featured in the opening chapter case as a firm that engages in excellent strategic planning. Shell is both the largest oil and gas company in the world and the largest firm globally, according to Fortune, who in 2013 also ranked Shell as the 7th most profitable firm in the world. Incorporated in the United Kingdom but headquartered in the Netherlands, Shell has worldwide reserves of 14.2 billion barrels of oil equivalent. An important part of effective strategic management is wisely using debt versus equity for raising capital. This exercise gives you practice preparing an EPS/EBIT analysis for a company to determine whether debt versus equity or some combination of the two is best for the firm to expand and grow. Instructions Step 1: Shell needs to raise $1billion to acquire a rival firm in Southeast Asia. Step 2: Prepare an EPS/EBIT analysis to determine whether Shell should use stock or debt to raise the needed capital. Step 3: Prepare a two-page executive summary to provide justification for your financing decision. Teaching Notes Students will refer to page 305; “Acquiring Capital to Implement Strategies,” for the answer. ASSURANCE OF LEARNING EXERCISE 9B: DEVELOPING A PRODUCT-POSITIONING MAP FOR ADIDAS AG Purpose Organizations continually monitor how their products and services are positioned relative to competitors. This information is especially useful for marketing managers, but is also used by other managers and strategists. Instructions Step 1: On a separate sheet of paper, develop two product-positioning maps that include Reebok, adidas, Nike, Puma, Converse, and Under Armour. Let one map focus on athletic footwear and one map focus on apparel. Step 2: At the board, diagram your product-positioning maps. Step 3 Compare your product-positioning maps with those diagrammed by other students. Discuss any major differences. Teaching Notes In this question, students should refer to example illustrated on page 304. ASSURANCE OF LEARNING EXERCISE 9C: PERFORMING AN EPS/EBIT ANALYSIS FOR ADIDAS AG Purpose An EPS/EBIT analysis is one of the most widely used techniques for determining the extent that debt and/or stock should be used to finance strategies to be implemented. This exercise can give you practice performing EPS/EBIT analysis. Instructions In order to expand into Africa, adidas needs to raise $1 billion. Determine whether adidas should use all debt, all stock, or a 50–50 combination of debt and stock to finance this market-development strategy. Assume a 20 percent tax rate, 5 percent interest rate, adidas stock price of $30 per share, and an annual dividend of $0.50 per share of common stock. The EBIT range for 2011 is between $1.0 billion and $2 billion. A total of 500 million shares of common stock are outstanding. Develop an EPS/EBIT chart to reflect your analysis. Teaching Notes Students should refer to page 305 “Acquiring Capital to Implement Strategies.” ASSURANCE OF LEARNING EXERCISE 9D: PREPARING PROJECTED FINANCIAL STATEMENTS FOR ADIDAS AG Purpose This exercise is designed to give you experience preparing projected financial statements. Pro forma analysis is a central strategy-implementation technique because it allows managers to anticipate and evaluate the expected results of various strategy-implementation approaches. Instructions Step 1: Work with a classmate. Develop a 2014 projected income statement and balance sheet for adidas. Assume that adidas plans to raise $900 million in 2014 to begin serving Africa, and plans to obtain 50 percent financing from a bank and 50 percent financing from a stock issuance. Make other assumptions as needed, and state them clearly in written form. Use adidas’ website as needed. Step 2: Compute adidas’ current ratio, debt-to-equity ratio, and return on investment for 2012 and 2013. How do your 2014 projected ratios compare to the 2012 and 2013 ratios? Why is it important to make this comparison? Step 3: Bring your projected statements to class and discuss any problems or questions you encountered. Step 4: Compare your projected statements to the statements of other students. What major differences exist between your analysis and the work of other students? Teaching Notes Students will use the six steps in performing projected financial analysis: 1. Prepare projected income statement before balance sheet. Begin by forecasting sales as accurately as possible 2. Use percentage of sales method to project cost of goods sold and expense items in the income statement 3. Calculate the projected net income 4. Subtract from net income (NI) any dividends (DIV) to be paid for that year. Remaining net income is retained earnings (RE). Bring this RE (NI-DIV=RE) over to the balance sheet by adding it to the prior’s year RE shown on the balance sheet. (RE is the cumulative number) 5. Project the balance sheet items; beginning with retained earnings and then forecasting stockholders’ equity, long-term liabilities, current liabilities, total assets, fixed assets, and current assets (in that order). Use the cash account to make the assets total the liabilities and net worth. 6. List comments on the projected statements. ASSURANCE OF LEARNING EXERCISE 9E: DETERMINING THE CASH VALUE OF ADIDAS AG Purpose It is simply good business practice to periodically determine the financial worth or cash value of your company. This exercise gives you practice determining the total worth of a company using several methods. Use data as given in the Cohesion Case or the data from the adidas website. Instructions Step 1: Calculate the financial worth of adidas based on four methods: 1) the net worth or stockholders’ equity, 2) the future value of adidas’ earnings, 3) the price-earnings ratio, and 4) the outstanding shares method. In dollars, how much is adidas worth? Step 2: Compare your analyses and conclusions with those of other students. Teaching Notes Students should bear in mind the following in doing this exercise: • Net worth or stockholders’ equity represents the sum of common stock, additional paid-in capital and retained earnings. • Future earnings are the future benefits its owners may derive through net profits. Generally, to establish a business’s worth as five times the firm’s current annual profit. • Price earnings ratio method is to divide the market price of the firm’s common stock by the annual earnings per share and multiply this number by the firm’s average net income for the past five years. • In the outstanding share method, it is simply multiply the number of shares outstanding by the market price per share and add a premium. The premium is a per-share dollar amount that a person / firm is willing to pay to acquire the company. ASSURANCE OF LEARNING EXERCISE 9F: DEVELOPING A PRODUCT-POSITIONING MAP FOR MY COLLEGE Purpose Organizations continually monitor how their products and services are positioned relative to competitors. This information is especially useful for marketing managers, but is also used by other managers and strategists. Instructions Step 1: On a separate sheet of paper, develop a product-positioning map for your college or university. Step 2: At the board, diagram your product-positioning map. Compare your product-positioning map with those diagrammed by other students. Discuss any major differences. Teaching Notes This question is very much related to Assurance of Learning Exercise 9B. Depending on the students’ College(s); product positioning will vary. ASSURANCE OF LEARNING EXERCISE 9G: DO BANKS REQUIRE PROJECTED FINANCIAL STATEMENTS? Purpose This exercise will allow you to explore the practical importance and use of projected financial statements among banks in your city. Instructions Contact several local banks and ask managers about the nature and role of projected financial statements in determining whether to make commercial loans to businesses. Report back to your class on your findings. Teaching Notes Depending on the respective countries, banks do require projected financial statements. The degree of depth of financial statements may vary, depending on the regulations / controls of the country central banks. This is another good homework assignment that gives students experience interacting with local business leaders. Banks, of course, do require pro forma financial statements from businesses before making a commercial loan. Chapter 10 - Strategy Execution Overview Chapter 10 explains how to implement strategies in terms of effectively managing organizational structure, resistance to change, organizational culture, corporate wellness, employee and executive compensation, human resource issues, and restructuring. The Chapter 10 Learning Objectives as presented in the textbook are reiterated below: 1. Construct effective organizational chart. 2. Explain why corporate wellness has become so important in strategic planning. 3. Explain why strategy implementation is more difficult than strategy formulation. 4. Discuss the importance of annual objectives and policies in achieving organizational commitment for strategies to be implemented. 5. Explain why organizational structure is so important in strategy implementation. 6. Compare and contrast restructuring and reengineering. 7. Describe the relationships between production and operations and strategy implementation. 8. Explain how a firm can effectively link performance and pay to strategies. 9. Discuss employee stock ownership plans (ESOPs) as a strategic-management concept. 10. Describe how to modify an organizational culture to support new strategies. Teaching Tips 1. Chapter 10 starts IMPLEMENTATION. Compare and contrast implementation vs. formulation as done in the “Nature of Strategy Implementation” section. 2. Chapter 10 focuses on management. Ask all management majors to raise their hand and identify them as experts. 3. The most important part of this chapter is the organizational structure material, because being well organized yields great competitive advantages for businesses as it does for individuals. So, make sure students know the four basic types of structure, and how to diagram each type, as well as the advantages and disadvantages of each type. In analyzing their own case company, require students to turn in a “new and improved” organizational structure, as compared to the “existing structure” provided in the case itself. For their own case company, students should be on the lookout for a lack of diversity among the top executives, and correct this problem, and correct any other potential problems outlined under the “Do’s and Don’ts” section of the chapter. 4. The latter half of this chapter provides very important management information related to implementing strategies. Ask students to be on the lookout when researching their case company for strengths (to be capitalized upon) and (weaknesses to be improved upon) in these areas covered such as linking performance and pay, organizational culture, diversity, and corporate wellness. 5. Regarding corporate wellness, let me share a personal note with you, that we (Fred and Forest) try hard every day to do exactly what Table 10-17, “The Key to Staying Healthy, Living to 100, and Being a Well Employee,” says to do, and in our opinion, this may be the most important page in the book for the well being of your students. Hopefully, students will personally buy into a healthy lifestyle because the results can be miraculously wonderful. And, corporations desire a healthy workforce, so having a healthy lifestyle will enhance their career development. 6. At the end of Chapter 10, direct student attention to the “Special Note to Students” because this is important information as the team prepares and ultimately delivers their oral case analysis presentation later in the course. 7. Regarding the end-of-chapter review questions, consider assigning them all one day in class giving each student a question or two, and letting them tell the class the answer, with you commenting on their answers. We have found this to be a fun day in class and it goes pretty quickly. 8. Several of the end-of-chapter Assurance of Learning Exercises can be used as excellent homework or classwork assignments to be completed as an individual or as a group of students. Answers to End-of-Chapter Review Questions 1. Accenture is a strong firm, globally. What are the three major threats you see that face Accenture in your country? Answer: Accenture is the world’s largest consultancy with primary businesses in Communications, Media, & Technology, Financial Services, Products, Resources, and Health & Public Services. The United Arab Emirates is one of the leading emerging economies in the Middle East and North Africa (MENA) region. Its economy grew between 7% annually from 2000 to 2007 with a dependence on oil revenues, commercial and residential property, transport & logistics, and travel & tourism. The country is facing major threats from a variety of segments of the macro environment that will impact Accenture’s local business. First, the MENA region has undergone significant political upheaval in the wake of the Arab Spring in North Africa and subsequent civil upheaval throughout. These socio-political changes impact the flow of capital, goods, and people into (and out) of the country. Among the risks associated with regional upheaval is the flight capital to safe havens in the developed economies. Another risk is the rapid decline in oil prices. As an oil-producing nation, the United Arab Emirates uses oil revenues to fund ambitious social programs and development projects. As of December 2014 oil prices had fallen 40% in the previous 6 months. This decline has led to a decline in oil revenues for the country which has an impact on the amount of investment that the country puts into public services, a development that is likely to affect Accenture directly. Lastly, the decline in the Euro Dollar to its weakest level since 2005 (1.147 on Jan. 8, 2015) makes international travel more expensive for Europe’s citizens. As a country that depends on international travel and tourism it is likely that the pace of development around products and services designed to attract international travelers may take a hit with a knock-on effect on the variety of Accenture’s offerings. 2. List in order of importance the six management issues you feel are most central to strategy implementation. Give your rationale. Answer: The six management issues are: 1. Develop vision and mission; and long term objectives. 2. Analysis of external and internal environment 3. Generate, evaluate and select strategies 4. Implement strategies – Management issues 5. Implement strategies – Marketing, Finance, Accounting, R&D, and MIS issues 6. Measure and Evaluate Performance 3. List the five major benefits of a firm having clearly defined annual objectives. Answer: • essential for strategy implementation because they represent the basis for allocating resources; • a primary mechanism for evaluating managers; • major instrument for monitoring progress toward achieving long-term objectives; and establish organizational, divisional, and departmental priorities. 4. Which approach to conflict resolution would you use to resolve a disagreement between top-level managers regarding a firm’s strategic plan? Answer: Student answers may vary. Three possible approaches are: • Avoidance –such as ignoring the problem in hope that the conflict will resolve itself or physically separating the conflicting individual (or groups) • Diffusion – playing down differences between conflicting parties while accentuating similarities and common interests, compromising so that there is neither a clear winner or loser, resorting to majority rule, appealing to higher authority, or redesigning present positions • Confrontation – exchanging members of conflicting parties so that each can gain an appreciation of other’s point of view or holding a meeting at which conflicting parties present their views and work through their differences. To resolve a disagreement between top-level managers regarding a firm's strategic plan, I would use the collaborative approach. This involves: 1. Facilitating Open Communication: Encourage managers to express their viewpoints and concerns openly. 2. Identifying Common Goals: Focus on shared objectives to find common ground. 3. Exploring Solutions Together: Work collaboratively to develop solutions that address all concerns. 4. Reaching Consensus: Ensure that all parties are committed to the agreed-upon strategy, fostering a unified direction for the firm. 5. Illustrate a functional organizational chart. Answer: In drawing a functional organization chart, students must show the tasks and activities of the various business functions. For example: Marketing Vice President, Finance Vice President, Human Resources Vice President – in equal ranking reporting to Chief Executive Officer. 6. Create a diagram for a divisional organizational chart. Answer: The divisional organizational chart could be organized in one of four ways: • By geographic area • By product or service • By customer • By process 7. Draw a strategic business unit organizational chart. Answer: Student answers may vary, but the concepts remain the same. As the number, size and diversity of divisions in an organization increase, controlling and evaluating divisional operations becomes increasingly difficult. Hence, in multidivisional organizations, the organization will diagram its chart accordingly to its primary business units, for example, (1) food service (restaurants); (2) retail (3) fashion. In this chart: • CEO oversees all strategic business units (SBUs). • Each SBU operates semi-independently with its own Departments (Dept A, Dept B, Dept C). This structure allows for focused strategy and operations within each SBU while maintaining overall corporate alignment. 8. Illustrate a matrix organizational chart. Answer: It is the most complex of all designs because it depends upon vertical and horizontal flows of authority and communications. Hence, students’ diagram should reflect vertical and horizontal flows. In this chart: • CEO is at the top, overseeing all products. • Product Managers (Product A, B, C) are responsible for product lines. • Teams are organized across different products, reporting to both the Product Managers and functional managers, illustrating the matrix structure where employees have dual reporting relationships. 9. List ten Do’s and Don’ts regarding development of organizational charts. Answer: 1. Reserve the title CEO for the top executive of the firm. 2. Don’t use the title ‘president” for the top person; use it for the division top managers, if there are divisions within the firm 3. Do not use title “president” for functional business executives 4. Do not recommend dual titles ( for example, “CEO and President”) for just one executive 5. In developing an organization chart, avoid having a particular person reporting to more than one person above in the chain of command. 6. Do not have CFO, CIO, CSO, human resource officer, or other functional positions report to COO. All these positions report directly to CEO. 7. If the firm has no divisions, determine whether the firm would operate better with divisions 8. If the firm is large with numerous divisions; decide whether an SBU type is more feasible 9. Directly below the CEO, is the COO with any division presidents reporting directly to COO 10. In public listed companies, split the chairperson of the board and CEO positions. 10. Compare and contrast restructuring and reengineering. Answer: Restructuring – also called downsizing, rightsizing, or delayering – involves reducing size of firms in terms of number of employees, number of divisions or units, and number of hierarchical levels in firm’s organizational structure. This is intended to improve both efficiency and effectiveness. Restructuring concerned primarily with shareholder well-being rather than employee well-being. Reengineering – is concerned more with employees and customer well-being than shareholder well-being. Reengineering, also called process management, process innovation, or process redesign – involves configuring or redesigning work, jobs, and process for the purpose of improving cost, quality, service and speed. Reengineering does not usually affect organization structure, not does it imply job loss or employee layoff. Restructuring is concerned with eliminating or establishing, shrinking, or enlarging, and moving organization departments and divisions. 11. Describe five ways a firm could link performance and pay to strategies. Answer: • Paying bonuses based on sales, profits and inventory performance • Allowing shareholders to vote on executive compensation policies • Switching from seniority – based pay to performance – based approaches • Profit sharing amongst employees • Gain sharing – requiring employees or departments to establish performance targets; if actual results exceed objectives, all employees get bonuses. • Students should also note that there are five tests often used to determine whether a performance pay plan will benefit an organization: • Does the plan capture attention? • Do employees understand the plan? • Is the plan improving communication? • Does the plan pay out when it should? • Is the company or unit performing better? 12. List in order of importance eight ways and means for altering an organization’s culture. Explain why. Answer: Students should list any 8 of the following in order of importance: 1. Recruitment 2. Training 3. Transfer 4. Promotion 5. Restructuring 6. Reengineering 7. Role modeling 8. Positive reinforcement 9. Mentoring 10. Revising vision and/or mission 11. Redesigning physical spaces/facades 12. Altering reward system 13. Altering organizational policies/procedures/practices 13. Why are so many firms today installing corporate wellness programs? Answer: Firms are introducing wellness programs due to the accelerating costs of employees’ health care insurance premiums. Michael Porter, co-author of Redefining Health Care: “We can’t afford to let individuals drive up company costs because they are not willing to address their own health problems”. 14. Discuss how business attitudes towards “balancing work life and home life” vary across three countries that you are familiar with today. Businesses have adopted positive attitudes towards “balancing work life and home life.” Answer: Student answers may vary. Topics for discussion include: care for elderly family members, flexible working hours, job sharing, adoption benefits, employee help lines, pet care, family days and so on. In the United States, businesses often prioritize productivity and long hours, though there is a growing trend towards flexible work arrangements and remote work to balance work and home life. In Sweden, work-life balance is strongly emphasized, with generous parental leave and a 40-hour workweek standard, reflecting a cultural value on personal time. In Japan, long working hours are common, and while there's increasing recognition of the need for balance, traditional work culture still heavily influences work-life dynamics. 15. Discuss the glass ceiling in your country versus the United States. Answer: Student answers will vary. For example, let’s look at Singapore. Like the United States it has removed the glass ceiling. There are many female leading domestic as well as multinational corporations in Singapore. For example, Singapore Mass Rapid Transport (SMRT) the provider of buses and trains in Singapore is headed by Ms Saw Phaik Hua, President and Chief Executive Officer. In the United States, the glass ceiling persists but has seen progress with more women breaking into executive roles and legal protections against gender discrimination. In my country, the glass ceiling can be more pronounced, with cultural and structural barriers often limiting women's advancement in leadership positions. Both countries face challenges, but the U.S. has more established frameworks and initiatives aimed at promoting gender equality in the workplace. 16. Discuss ESOPs in your country versus the United States. Answer: Student answers may vary but students should show an understanding of ESOPs. An ESOP is a tax-qualified; defined-contribution, employee-benefit plan whereby employees purchase stock of the company through borrowed money or cash contributions. ESOPs empower employees to work as owners. In the United States, Employee Stock Ownership Plans (ESOPs) are well-established, offering tax advantages and fostering employee ownership in companies. In my country, ESOPs are less common and often face regulatory and cultural hurdles that limit their adoption. While U.S. firms use ESOPs to enhance employee engagement and retention, such practices are still emerging in my country and face barriers in terms of awareness and infrastructure. 17. In order of importance in your opinion, list six advantages of a matrix organizational structure. Answer: a. Project objectives are clear b. Many channels of communications c. Employees can clearly see results of their work d. Shutting down a project is easily accomplished e. Facilitates uses of special equipment/personnel/facilities f. Functional resources are shared instead of duplicated as in a divisional structure 18. Determine whether your college or university has a corporate wellness program. Give several policies that could be instituted to implement such a program. Answer: Student answers will depend on whether their college or university has any corporate wellness program. Policies that could be instituted to implement corporate wellness program include: • Eat nutritiously • Stay hydrated • Get plenty of rest • Get plenty of exercise • Reduce stress • Do not smoke My college/university does not have a corporate wellness program. To implement one, policies could include: 1. On-Site Fitness Facilities: Provide gyms or fitness classes for employees. 2. Health Screenings: Offer regular health check-ups and vaccinations. 3. Mental Health Support: Implement counseling services and stress management workshops. 4. Healthy Eating Options: Ensure nutritious food options are available in campus dining facilities. 19. Do you think horizontal consistency of objectives is as important as vertical consistency? Explain and give an example. In an organization, hierarchy of annual objectives can be established based on an organization structure. Answer: Objectives should be consistent across hierarchical levels and form a network of supportive aims. Therefore, horizontal consistency of objectives is as important as vertical consistency of objectives. For example, it would not be effective for manufacturing to achieve more than its annual objective of units produced if marketing could not sell the additional units. 20. Define policies. Give four examples of policies for a bank. Answer: Policies refer to specific guidelines, methods, procedures, rules, forms and administrative practices established to support and encourage work toward stated goals. Policies are instruments for strategy implementation. Policies set boundaries, constraints, and limits on the kinds of administrative actions that can be taken to reward and sanction behavior, they clarify what can and what cannot be done in pursuit of an organization’s behavior. Four policies of a bank may include: • All counter sales staff must wear the bank’s official blazer • All bank branches will be opened for business transactions from 9.30am – 3.30pm • All Customer Service Officers must be transparent in their sales presentations and answer to customer enquiries • Any gift which is over the amount of Fifty Dollars should be declared to the Human Resource Department 21. Discuss your preference on each of the trade-off decisions required for strategy implementation. Explain why. Answer: Students will have differing preferences; however, students should justify their trade-off decision in the strategy implementation In strategy implementation, my preferences for trade-offs are: 1. Cost vs. Quality: Prefer quality over cost to ensure long-term value and customer satisfaction. 2. Innovation vs. Stability: Favor innovation to stay competitive, though stability is crucial for consistent performance. 3. Short-Term vs. Long-Term Goals: Emphasize long-term goals for sustainable growth, despite short-term pressures. 4. Centralization vs. Decentralization: Lean towards decentralization to empower local decision-making and flexibility. 22. List three categories or approaches for conflict resolution. Which approach would you use for a salesperson who has a disagreement with a client regarding value of a property to be listed for sale. Student answers may vary. Answer: Three categories for conflict resolution are: Avoidance – ignoring the problem in hope that conflict will resolve itself or physically separating the conflicting individuals. Diffusion – playing down differences between conflicting parties while accentuating similarities and common interests, compromising so that there is neither a clear winner nor loser, resorting to majority rule. Confrontation – exchanging members of conflicting parties so that each gain an appreciation of the other’s point of view or holding a meeting at which conflicting parties present their views and work through their differences. Confrontation is the preferred choice for such an example. 23. In order of importance, list six symptoms of an ineffective organizational structure. Answer: Students may list six symptoms out of the following eight: • Too many levels of organization • Too many meetings attended by too many people • Too much attention being directed toward solving interdepartmental conflicts • Too large span of control • Too many unachieved objectives • Declining corporate or business performance • Losing ground to rival firms • Revenue and / or earnings divided by number of employees and / or number of managers is low compared to rival firms. 1. Lack of Clear Responsibilities: Confusion over roles and duties. 2. Poor Communication: Inefficient information flow. 3. Low Employee Morale: Decreased motivation and satisfaction. 4. Slow Decision-Making: Delays in response and action. 5. Increased Conflicts: Frequent disputes between departments or teams. 6. High Turnover Rates: Frequent departures of staff. 24. Explain why the functional organizational structure is the most widely used globally. Answer: A functional organizational structure categorizes tasks and activities by business function, such as production/operations, marketing, finance/accounting, research and development, management and information systems. This is the most widely used globally because this structure is the simplest and least expensive of the seven alternatives. 25. List the advantages versus disadvantages of a functional versus divisional structure. Answer: 26. How should a firm decide between a divisional-by-product versus divisional-by-geographic region type organizational chart? Answer: A divisional-by-product is most effective for implementing strategies when specific products or services need special emphasis. Widely used when an organization’s products or services differ substantially. This structure allows strict control over and attention to product lines, but it may also require a more skilled management force and reduced top management control. A divisional-by-geographical-region type is appropriate for organizations whose strategies need to be tailored to fit the particular needs and characteristics of customers in different geographical area. This type of structure can be most appropriate for organizations that have similar branch facilities located in widely dispersed area. This structure allows local participation in decision making and improved coordination within a region. 27. A divisional-structure-by-process organizational chart is quite uncommon. Give two examples of the type of companies when this would be appropriate. Answer: A structure where activities are organized according to the way work is actually performed. In this structure, divisional process departments are evaluated on criteria of profits and revenues. Students should bear the above in mind, in giving examples of this type of structure. 28. Illustrate a matrix-type structure for a hospital. Answer: In a matrix organizational structure for a hospital: 1. Functional Managers: Oversees departments like Nursing, Surgery, and Radiology. 2. Product/Project Managers: Manages patient care areas like Cardiology, Orthopedics, and Pediatrics. Each department and specialty interacts to manage patient care, with shared responsibility across functional and project managers, allowing flexibility and expertise sharing. 29. Compare and contrast restructuring versus reengineering. Answer: Firms often employ restructuring when various ratios appear out of line with competitors as determined through benchmarking exercises whereas in reengineering, a firm uses information technology to break down functional barriers and create a work based on business process, products, or outputs rather than on functions or inputs. 30. Explain why it is so important to link performance and pay to strategies. Answer: As firms acquire other firms in other countries, pay differences can cause resentment and even turmoil Linking performance and pay to strategies is crucial because it: 1. Aligns Goals: Ensures employees' efforts contribute directly to strategic objectives. 2. Motivates: Encourages high performance and commitment through financial incentives. 3. Drives Results: Enhances overall organizational effectiveness and achievement of strategic goals. 4. Attracts Talent: Helps attract and retain skilled employees by offering competitive rewards aligned with company success. 31. Describe five tests that often are used to determine whether a performance-pay plan will benefit an organization. Answer: The five tests that are often used to determine whether a performance-pay plan will benefit an organization are as follows: 1. Does the plan capture attention? Are people talking more about their activities and taking pride in early successes under the plan? 2. Do employees understand the plan? Can participants explain how it works and what they need to do to earn the incentive? 3. Is the plan improving communication? Do employees know more that they used to about the company’s mission, plans and objectives? 4. Does the plan pay out when it should? Are incentives being paid for desired results – and being withheld when objectives are not met? 5. Is the company or unit performing better? Are profits up? Has market share grown? Have gains resulted in part from the incentives? 32. Describe three commonly used strategies to minimize employee resistance to change. Which approach would you most often use? Why? Answer: A ‘force change’ strategy involves giving orders and enforcing those orders; this strategy has the advantage of being fast, but it is plagued by low commitment and high resistance. The ‘educative change’ strategy is one that presents information to convince people of the need for change; the disadvantage of an ‘educative change’ strategy is the implementation becomes slow and difficult. However, this type of strategy evokes greater commitment and less resistance than does the force change strategy. Finally, a ‘rational or self-interest change’ strategy is one that attempts to convince individuals that the change is to their personal advantage 33. Give a hypothetical example of each labor cost-saving tactic listed in the chapter. Answer: 1. Outsourcing: A company contracts a third-party provider to handle IT support, reducing internal staffing costs. 2. Automation: A manufacturing plant invests in robotic machinery to automate repetitive tasks, cutting down on manual labor. 3. Flexible Work Arrangements: A business implements remote work options, reducing the need for large office spaces and associated overhead costs. 4. Cross-Training: Employees are trained to perform multiple roles, allowing the company to reduce overall staffing needs while maintaining operational flexibility. 34. Use the Internet to find five companies in your country, which operate based on an ESOP. Present your list to the class. Answer: Student answers may vary. However, students should show the understanding of ESOP. 1. Wawa, Inc.: A convenience store chain offering an ESOP for employees. 2. Herman Miller, Inc.: A furniture manufacturer with an ESOP to engage employees in ownership. 3. King Arthur Baking Company: An employee-owned baking company through an ESOP structure. 4. WinCo Foods: A grocery store chain where employees are given stock ownership. 5. Publix Super Markets: A major grocery chain with an ESOP model for employee ownership. 35. Provide the advantages and disadvantages of a firm operating based on an ESOP. Answer: An ESOP is a tax-qualified defined-contribution, employee-benefit plan whereby employees purchase stock of the company through borrowed money or cash contributions. ESOP reduces worker alienation and stimulating productivity, ESOPs allow firms other benefits, such as substantial tax savings. 36. Visit www.workingmother.com and find five example firms that are outstanding for working mothers to work for and that have business locations in your city. Answer: Examples include: Abbot, American Express, Bank of America, AOL, and Bayer. There are major multi-national companies which have overseas offices. 1. Search for Top Companies List: Look for the annual list of top companies for working mothers. 2. Filter by Location: Check if these companies have business locations in your city. 3. Cross-Reference: Verify the companies’ presence in your city through their websites or job listings. Here’s an example list based on typical entries in such rankings, but please confirm by visiting the website: 1. Google: Known for its supportive work environment and flexibility, with offices in major cities. 2. Microsoft: Offers comprehensive benefits for working mothers and has offices in many cities. 3. Salesforce: Recognized for its family-friendly policies and has business locations in various cities. 4. IBM: Provides robust support for working parents and has numerous offices nationwide. 5. Johnson & Johnson: Praised for its benefits and policies for working mothers, with locations in many urban areas. 37. There were only 12 Fortune 500 women CEOs in 2009. Conduct Internet research to identify five companies in your country that have women CEOs. Why are there so few women CEOs? Answer: Based on recent data: 1. General Motors - Mary Barra 2. PepsiCo - Indra Nooyi (Note: As of recent updates, the CEO may have changed) 3. Hershey - Michele Buck 4. Lockheed Martin - Marillyn Hewson (Note: The CEO role may have changed) 5. Nasdaq - Adena Friedman Reasons for the Low Number of Women CEOs: 1. Gender Bias: Persistent stereotypes and biases in hiring and promotion. 2. Networking Barriers: Women may have less access to influential networks. 3. Work-Life Balance Challenges: The demanding nature of CEO roles can be less accessible to those balancing family responsibilities. 4. Fewer Role Models: The lack of female CEOs can perpetuate a cycle of fewer women reaching top positions. 38. List four benefits of having a diverse workforce. Answer: A diverse workforce enables organizations to understand the needs of a diverse customer base. A diverse workforce may give the organization a more competitive knowledge of its marketing programs 39. Explain why corporate wellness programs are becoming more and more popular. Answer: Healthy employees mean a reduction in medical care costs. It reduces the number of absentees due to sickness and brings employees closer to management. 40. Define and give an example of Six Sigma. Answer: Six Sigma is a quality-boosting process improvement technique that entails training several key persons in the firm in the techniques to monitor, measure, and improve processes and eliminate defects. Examples given by students will vary. 41. Define and give an example of a glass ceiling. Answer: Glass ceiling refers to the in invisible barrier in many firms that bars women and minorities from top-level management positions. Students answer may vary on the examples given. 42. How many divisions would a firm have to have for you to recommend an SBU type structure? Why? Answer: When the number, size and diversity of division in an organization increase; controlling and evaluating divisional operations become increasingly difficult and a SBU type of structure is feasible. To be effective, the organization should have at least three divisions in different industries. 43. Explain when a matrix type structure may be the most effective. Answer: A matrix type of structure is most effective in situations where there are many divisions with many channels of communications without clear objectives. A matrix type structure gives clear objectives with clear communication channels within the organization. It can also be used when it involves the use of specialized personnel, equipment and facilities and in organizations where there is a great need to share specialized resources. 44. How would you link compensation of your employees to performance of your business? Answer: There are no widely accepted answers to this question. One way of doing it, is to base on the percentage of bonus to the percentage of results achieved. Other ways include: profit sharing, gain sharing and an employee stock ownership scheme. However, there are 5 tests to determine whether it is effective: • Does the plan capture attention? • Do employees understand the plan? • Is the plan improving communication? • Doe the play pay out when it should? • Is the company or unit performing better? Answers to the End-of-Chapter Assurance of Learning Exercises ASSURANCE OF LEARNING EXERCISE 10A: DEVELOPING AN ORGANIZATIONAL CHART FOR ACCENTURE PLC Purpose Accenture is featured in the opening chapter case as a firm that engages in excellent strategic planning. Accenture plc, headquartered in Dublin, Ireland, is the world’s largest consulting firm measured by revenues. As of August 2013, the company has approximately 266,000 employees serving clients in more than 120 countries. India is the single largest employee base for Accenture, with the headcount being close to 100,000, compared to about 50,000 in the United States. This exercise gives you practice developing an organizational chart. Instructions Step 1: Visit Accenture’s website. Review the company’s most recent Annual Report. Note the list of top managers of the firm. Step 2: Develop an organizational chart for Accenture based on the titles of their top executives. Step 3: Develop a recommended organizational chart for Accenture based on the guidelines presented in Chapter 10. Teaching Notes Students should show an understanding of the different forms of organizational structure, the specific advantages and disadvantages of each structure, namely: • The functional structure • The divisional structure • The strategic business (unit) structure • The matrix structure ASSURANCE OF LEARNING EXERCISE 10B: ASSESSING ACCENTURE’S PHILANTHROPHY EFFORTS Purpose Accenture recently awarded Quest Alliance India an additional grant of US$623,000 to help Quest provide approximately 3,000 disadvantaged young people with career and workplace skills. The grant brings Accenture’s direct support to Quest Alliance India to more than US$950,000 since 2009. This exercise gives you practice comparing a company’s philanthrophy efforts vs its major rivals. Instructions Step 1: Visit Accenture’s website and click on the Citizenship and Values hotlink. Review Accenture’s sustainability efforts. Step 2: Identify Accenture’s major competitors. Step 3: Compare and contrast Accenture’s sustainability efforts versus its two major competitors. Teaching Notes Students’ answers will vary; however, students should bear in mind the notes on restructuring and reengineering; managing resistance to change. ASSURANCE OF LEARNING EXERCISE 10C: REVISING ADIDAS AG’S ORGANIZATIONAL CHART Purpose Developing and altering organizational charts is an important skill for strategists to possess. This exercise can improve your skill in altering an organization’s hierarchical structure in response to new strategies being formed. Instructions Step 1: Develop an organizational chart for adidas. On a separate sheet of paper, answer the following questions: 1. What type of organizational chart have you illustrated for adidas? 2. What improvements could you recommend for the adidas organizational chart? Give your reasoning for each suggestion. Step 2: Now consider the following: 1. What aspects of your adidas chart do you especially like? 2. What type of organizational chart do you believe would best suit adidas? Why? Teaching Notes Students should show an understanding of the different forms of organizational structure, the specific advantages and disadvantages of each structure, namely: • The functional structure • The divisional structure • The strategic business (unit) structure • The matrix structure ASSURANCE OF LEARNING EXERCISE 10D: EXPLORING OBJECTIVES Purpose The purpose of this exercise is to bridge the gap between key topics in Chapter 10 versus what companies are doing in your area with regard to having clearly defined objectives. Instructions Do sufficient research to discover five businesses in your local area that have clearly defined objectives. Discuss the nature and role of objectives in these firms. Teaching Notes Students should have the understanding the role and nature of objective: 1. Objectives represent basis for allocating resources 2. Primary mechanism for evaluating managers 3. Major instruments for monitoring progress towards achieving goals 4. Establish organizational, divisional, and departmental priorities ASSURANCE OF LEARNING EXERCISE 10E: UNDERSTANDING MY UNIVERSITY’S CULTURE Purpose It is something of an art to uncover the basic values and beliefs that are buried deeply in an organization’s rich collection of stories, language, heroes, heroines, and rituals. Yet culture can be the most important factor in implementing strategies. Instructions Step 1: On a separate sheet of paper, list the following terms: hero/heroine, belief, metaphor, language, value, symbol, story, legend, saga, folktale, myth, ceremony, rite, and ritual. Step 2: For your college or university, give examples of each term. If necessary, speak with faculty, staff, alumni, administration, or fellow students of the institution to identify examples of each term. Step 3: Report your findings to the class. Tell the class how you feel regarding cultural products being consciously used to help implement strategies. Teaching Notes Students’ answers will vary, depending on the Colleges/Universities cultures. However, students should note that the following elements are most useful in linking culture to strategy: 1. Formal statements of organizational philosophy, charters, creeds, materials used for recruitment and selection, and socialization 2. Designing of physical spaces, facades, buildings 3. Deliberate role modeling, teaching, and coaching by leaders 4. Explicit reward and status system, promotion, criteria 5. Stories, legends, myths and parables about key people and events Chapter 11 - Strategy Monitoring Overview Chapter 11 describes how to effectively evaluate strategies and make timely changes as needed. In this context, Chapter 11 explains how to develop a Balanced Scorecard and utilize contingency planning. The Chapter 11 Learning Objectives as provided in the textbook are as follows: 1. Describe a practical framework for evaluating strategies. 2. Explain why strategy evaluation is complex, sensitive, and yet essential for organizational success. 3. Discuss the importance of contingency planning in strategy evaluation. 4. Explain the role of auditing in strategy evaluation. 5. Describe and develop a Balanced Scorecard. 6. Discuss three 21st-century challenges in strategic management. Teaching Tips 1. The first issue to emphasize in this chapter is the fact that even successful firms can fail quickly as they are the target of all other firms, so evaluating strategies is essential for all firms. Even Apple is struggling of late as Samsung and other rival firms imitate and duplicate their products and then offer such at lower prices. 2. The second issue to emphasize in this chapter is the strategy evaluation that consists of three activities: Review Underlying Bases of Strategy, Measure Performance, and Take Correction Action. Review the tables in this chapter that summarize the narrative quite well. 3. The third issue to emphasize is the Balanced Scorecard. Pull up Google in class, and search by Balanced Scorecard Images and show students the more than 100 corporate Balance Scorecards in use by companies. 4. The fourth issue to emphasize is the “21st First Century Challenges in Strategic Management.” These issues are important and fun to discuss in class with students because there are variations of opinion and views on art vs. science and visible vs. hidden and top-down vs. bottom-up. 5. At the end of Chapter 11, direct student attention to the “Special Note to Students” that reminds them to search for corporate Balance Scorecards. 6. Regarding the end-of-chapter review questions, consider assigning one half of them one day in class giving each student a question, and letting them tell the class the answer, with you commenting on their answers. Do the other half another day. This is a fun day in class and it goes pretty quickly. 7. Several of the end-of-chapter Assurance of Learning Exercises can be used as excellent homework or classwork assignments to be completed as an individual or as a group of students. Select one for a class exercise. Answers to End-of-Chapter Review Questions 1. BHP Billiton has been very successful in the last decade. What is the major reason for its success? Answer: BHP Billiton has invested in the development of a broad portfolio of commodities ranging from oil and gas to uranium and silver. 2. Visit BHP Billiton’s website and evaluate the firm’s strategies, which are currently being implemented. Answer: BHP Billiton has pursued a successful strategy of related diversification in the development of its portfolio of assets while focusing on its core competencies of production and operations. BHP Billiton’s assets span the globe and reflect intense market development efforts that are carried out across the globe from Australia to North America. 3. Discuss the nature and implications of the upcoming accounting switch from GAAP to IFRS in the United States. Answer: GAAP which is the Generally Accepted Accounting Principles are traditional auditing process used by auditing firms, which comprises of 25,000 pages. International Financial Reporting Standards (IFRS) is a new method of international financial reporting which is only of 5,000 pages long. The switch from GAAP to IFRS is going to cost businesses millions of dollars in fees and upgraded software systems and training. U.S. CPAs need to study global accounting principles intensely, and business schools should go ahead and begin teaching students the new accounting standards. The switch to IFRS will help the US to compete more effectively in the global economy. The European Union and 113 nations have adopted or soon plan to use IFRS including: Australia, China, India, Mexico and Canada. It will also help U.S. companies raise capital abroad and do business with firms abroad. 4. Ask an accounting professor at your college or university the following question and report back to the class— “To what extent would my learning the IFRS standards on my own give me a competitive advantage in the job market?” Answer: IFRS standards are less cumbersome and easier to understand. It helps to do business overseas, as more countries are not using or switching to IFRS standards. IFRS rules are more streamlined and less complex. If students do not learn IFRS standards, they will not be able to understand overseas business customs, financial regulations, tax laws, politics etc. 5. Give an example of “consonance” other than the one provided by Rumelt in the chapter. Answer: Students answer may vary, but they should show understanding of “consonance” An example would be the demise of “pagers” which at one time was the means of contacts and communications for mobile people. However, with advances in technology, consumer education, income and lifestyle, mobile phones replace these “pagers.” An example of "consonance" in strategic management is Apple's integration of hardware, software, and services. By ensuring that its iPhone, iPad, and Mac products work seamlessly with its iOS and macOS ecosystems, Apple creates a unified user experience. This coherence across its product lines and services aligns with its strategy of offering a holistic, high-quality user experience, reinforcing its brand and market position. 6. “Evaluating strategies on a continuous rather than a periodic basis is desired.” Discuss the pros and cons of this statement. Answer: Strategy-evaluation activities should be performed on a continuing basis, rather than at the end of specified periods of time or just after problems occur. Waiting until the end of the year, for example, could result in a firm closing the barn door after the horses have already escaped. Evaluating strategies on a continuous rather than on a periodic basis allows benchmarks of progress to be established and more effectively monitored. Some strategies take years to implement; consequently, associated results may not become apparent for years. Successful strategies combine patience with a willingness to promptly take corrective actions when necessary. 7. How often should an organization’s vision/mission be changed in light of strategy evaluation activities? Answer: Taking corrective actions is necessary to keep an organization on track toward achieving stated objectives. Hence, it is not changing an organization’s vision / mission. Strategy evaluation can lead to strategy-formulation changes, strategy-implementation changes, both formulation and implementation changes and no changes at all. 8. Compare Mintzberg’s notion of “crafting” strategies with this textbook’s notion of “gathering and assimilating information” to formulate strategies. Answer: This textbook argues that strategic management can be viewed more as a science than art. This perspective contends that firms need to systematically assess their external and internal environments, conduct research, carefully evaluate the pros and cons of various alternatives, perform analyses, and then decide upon a particular course of action. Mintzberg’s notion of “crafting” strategies embodies the artistic model, suggesting that strategic decision-making be based primarily on holistic thinking, intuition, creativity and imagination. Mintzberg reject strategies that result from objective analysis, preferring instead subjective imagination. Mintzberg philosophy insists on informality, where strategy scientists insist on more formally. Mintzberg refers to strategic planning as an ‘emergent” process whereas strategy scientists use the term “deliberate” process. 9. Do you believe strategic management is more of an art or a science? Explain. Answer: Student answers may vary. The two approaches are however not mutually exclusive. Strategic management is often considered more of an art than a science. While it relies on data and analytical tools (science) to inform decisions, it also involves intuition, creativity, and adaptability (art) in responding to complex, dynamic business environments. Successful strategy requires balancing empirical evidence with judgment and experience. 10. Do you feel strategic management should be more a top-down or bottom-up process in a firm? Explain. Answer: Student answers may vary. There are two different schools of thoughts: Proponents of top-down approach contend that top executives are the only people in the firm with the collective experience, acumen and fiduciary responsibility to make key responsibilities. Bottom-up advocates argue that lower and middle level managers and employees who will be implementing the strategies need to be actively involved in the process of formulating the strategies. Increased education and diversity of the workforce at all levels are reasons why middle and lower level managers, and even non-managers should be participating in firm’s strategic planning process. Strategic management should ideally be a blend of both top-down and bottom-up processes. A top-down approach ensures alignment with the firm’s overall vision and strategic goals, while a bottom-up approach fosters employee engagement and leverages insights from those closest to operational challenges. Combining both approaches enhances strategic alignment and execution effectiveness. 11. Do you think strategic management should be more visible or hidden, as a process in a firm? Explain. Answer: Student answers may vary. Strategic management should be more visible as keeping strategies secret from employees and stakeholders at large could severely inhibit employee and stakeholder communication, understanding and commitment and also forgo valuable input that these persons could have regarding formulation and / or implementation of that strategy. Strategic management should be more visible within a firm. Visibility promotes transparency, aligns employees with organizational goals, and encourages accountability. When strategic management processes are open, employees understand their roles in achieving objectives, which can boost motivation and performance. Hidden processes might create uncertainty and reduce engagement, leading to misalignment and decreased effectiveness. 12. Develop a balanced scorecard for BHP Billiton. Answer: A BHP Billiton balanced scorecard (reproduced in part here) can be found here: http://www.bhpbilliton.com/home/investors/reports/Documents/2009/sustainabilitySummaryReport2009.pdf 13. Develop a Balanced Scorecard for your college or university. Answer: Student answers will vary but once again they have to show understanding of the six key strategies as discussed in this chapter. Balanced Scorecard for a University: 1. Financial Perspective: • Objective: Increase revenue through higher enrollment. • Measure: Tuition revenue growth rate. • Target: 5% annual increase. • Initiative: Expand marketing efforts and new program offerings. 2. Customer Perspective: • Objective: Enhance student satisfaction. • Measure: Student satisfaction survey scores. • Target: 90% satisfaction rate. • Initiative: Improve campus facilities and student services. 3. Internal Processes Perspective: • Objective: Improve academic program quality. • Measure: Graduation rate and job placement rate. • Target: 85% graduation rate, 90% job placement. • Initiative: Develop new curriculum and strengthen industry partnerships. 4. Learning and Growth Perspective: • Objective: Foster faculty development. • Measure: Number of faculty development programs attended. • Target: 100% faculty participation. • Initiative: Increase funding for professional development and training. 14. Discuss contingency planning. Answer: Contingency planning is defined as alternative plans that can be put into effect if certain key events do not occur as expected. Only high-priority areas require the insurance of contingency planning. Contingency planning should be as simple as possible. Contingency planning is required because regardless of how carefully strategies are formulated, implemented and evaluated unforeseen events, such as strikes, boycotts, natural disasters, arrival of foreign competitors, and government actions, can make a strategy obsolete. 15. Identify some important financial ratios useful in evaluating a firm’s strategies. Answer: Some important financial ratios are: 1. Return on investment (ROI) 2. Return on equity (ROE) 3. Profit margin 4. Market Share 5. Debt to equity 6. Earnings per share 7. Sales growth 8. Asset growth 16. How often should a firm formally evaluate its strategies? Answer: Strategy evaluation should be done on a continuous basis. A firm should formally evaluate its strategies at least annually to ensure alignment with goals and market conditions. Quarterly or semi-annual reviews may be necessary for industries experiencing rapid change or facing significant uncertainties. Regular evaluations help in timely adjustments, keeping strategies relevant and effective. 17. Under what conditions are corrective actions not required in the strategy-evaluation process? Answer: “Future Shock and The Third Wave” by Alvin Toffler argued that business environments are becoming so dynamic and complex that they threaten people and organizations future shock, which occurs when the nature, types, and speed of changes overpower an individual’s or organization’s ability to adapt successfully in changing circumstances. Strategy evaluation enhances an organization’s ability to adapt successfully to changing circumstances. 18. Define and discuss auditing as it relates to strategy evaluation. Answer: Strategy evaluation is based on both qualitative and quantitative criteria. Selecting the exact set of criteria for evaluating strategies depends on a particular organization’s size, industry, strategies, and management philosophy. Quantitative criteria commonly used to evaluate strategies are financial rations, which strategists use to make three critical comparisons: 1. Comparing the firm’s performance over different time periods 2. Comparing the firm’s performance to competitors 3. Comparing the firm’s performance to industry averages 19. List 10 characteristics of an effective evaluation system. Answer: 1. Strategy – evaluation activities must be economical 2. Too much information or too little can be bad 3. Too many controls can do more harm than good 4. Should be meaningful 5. Should be specifically relate to a firm’s objectives 6. Should provide managers with useful information about tasks over which they have control and influence 7. Should provide timely information 8. Should be designed to provide a true picture of what is happening 9. Strategy evaluation process should not dominate decisions; it should foster mutual understanding, trust and common sense. 10. The system has the ability to convince participants that failure to accomplish certain objectives within a prescribed time is necessarily a reflection of their performance. 20. Go to Fortune magazine’s website and identify several firms in your city that are listed among the most admired companies in the world according to Fortune. Answer: Students may give different companies, depending on their interpretation on the website. I currently can't browse the web, but you can find the most admired companies in your city by visiting Fortune's website and checking their annual "Most Admired Companies" list. Look for companies based on their city of headquarters or specific regional listings. This information is typically updated annually and provides a list of top companies recognized for their corporate reputation. 21. Ask the dean of your School of Business to describe for you how his/her department evaluates strategies. Answer: Student answers may vary; however, students should show an understanding in evaluating strategies. I’m unable to ask the dean directly, but you can inquire with your School of Business by asking the dean how the department evaluates strategies. Typically, this involves assessing goals and performance metrics, conducting SWOT and PEST analyses, and reviewing feedback from stakeholders to ensure alignment with the institution's objectives. The evaluation process may include regular strategy meetings and adjustments based on academic and industry changes. 22. Identify four firms that provide their strategic plans on their websites and four that do not. Should firms do this or not? Why? Answer: Firms That Provide Strategic Plans on Their Websites: 1. Microsoft - Offers detailed insights into its strategic vision and goals. 2. Tesla - Publishes its mission and long-term plans. 3. IBM - Shares strategic priorities and market focus areas. 4. Google - Outlines its innovation and growth strategies. Firms That Do Not Provide Strategic Plans on Their Websites: 1. Apple - Typically keeps strategic plans internal. 2. Berkshire Hathaway - Focuses on financial performance over strategic details. 3. Coca-Cola - Shares annual reports but not specific strategic plans. 4. ExxonMobil - Provides operational reports rather than strategic details. Should Firms Share Strategic Plans? Yes: Transparency can build trust, attract investors, and align stakeholders with corporate goals. No: It may expose sensitive information to competitors and limit strategic flexibility. Answers to the End-of-Chapter Assurance of Learning Exercises ASSURANCE OF LEARNING EXERCISE 11A: EVALUATING BHP BILLITON’S STRATEGIES Purpose BHP Billiton is featured in the opening chapter example as a firm that engages in excellent strategic planning. BHP is a large Australian multinational mining and petroleum company headquartered in Melbourne, Australia. BHP also has major offices in London. BHP is arguably the world’s largest mining company and among the top ten largest companies in the world measured by market capitalization. Fortune in 2013 ranked BHP as the 115th largest company in the world and the 20th most profitable. BHP is among the world’s top producers of iron ore, coal, aluminum, copper, manganese, nickel, silver, uranium, and potash. BHP also has crude oil and natural gas holdings. BHP may soon divest its diamond assets. This exercise can give you practice evaluating a company’s strategies. Instructions Step 1: Go to BHP Billiton’s corporate website and navigate to the Investors & Media section. Review recent news releases for BHP Billiton. Step 2: Determine what new strategies BHP is pursuing. Step 3: Evaluate BHP’s newest strategies based on concepts presented in Chapter 11. Step 4: Prepare a strategy evaluation report for BHP. Teaching Notes Students should refer to page 374 Table 11-1 “Rumelt’s Criteria for Evaluating Strategies.” ASSURANCE OF LEARNING EXERCISE 11B: PREPARING A STRATEGY-EVALUATION REPORT FOR ADIDAS AG Purpose This exercise can give you experience locating strategy-evaluation information. Use of the Internet coupled with published sources of information can significantly enhance the strategy-evaluation process. Performance information on competitors, for example, can help put into perspective a firm’s own performance. Instructions Step 1: Search the Internet for information on adidas. Prepare a strategy-evaluation report for your instructor. Include in your report a summary of adidas’ strategies and performance in 2013 and a summary of your conclusions regarding the effectiveness of adidas’ strategies. Step 2: Based on your analysis, do you feel that adidas is pursuing effective strategies? What recommendations would you offer to adidas’ chief executive officer? Teaching Notes Students’ answers will be based on the following steps: 1. Are our internal strengths still strengths? 2. Have we added other internal strengths? If so, what are they? 3. Are our internal weaknesses still weaknesses? 4. Do we now have other internal weaknesses? If so, what are they? 5. Are our external opportunities still opportunities? 6. Are there now other external opportunities? If so, what are they? 7. Are our external threats still threats? 8. Are there now other external threats? If so, what are they? 9. Are we vulnerable to a hostile takeover? The recommendations may be based on the followings: 1. Alter the firm’s structure 2. Replace one or more key individuals 3. Divest a division 4. Alter the firm’s vision and/or mission 5. Revise objectives 6. Alter strategies 7. Devise new policies 8. Install new performance incentives 9. Raise capital with stock or debt 10. Add or terminate sales persons, employees or managers 11. Allocate resources differently 12. Outsource (or rein in) business functions ASSURANCE OF LEARNING EXERCISE 11C: PREPARING A BALANCED SCORECARD FOR ADIDAS AG Purpose This exercise can give you experience developing a Balanced Scorecard for a corporation. Instructions Step 1: Compile all information that you have collected on adidas. Step 2: Join with three other students in class. Jointly develop a 20-item Balanced Scorecard for the company. Step 3: Appoint a spokesperson for your team to give a three-minute overview to the class regarding the substance of your Balanced Scorecard. Teaching Notes Students may refer to page 382 for a sample of the balanced scorecard’ Table 11-5 “An Example Balanced Scorecard.” There are six key issues in evaluating its strategies: 1. Customers 2. Managers / employees 3. Operations / processes 4. Community / social responsibility 5. Business ethics / natural environment 6. Financial ASSURANCE OF LEARNING EXERCISE 11D: EVALUATE MY UNIVERSITY’S STRATEGIES Purpose An important part of evaluating strategies is determining the nature and extent of changes in an organization’s external opportunities/threats and internal strengths/weaknesses. Changes in these underlying critical success factors can indicate a need to change or modify the firm’s strategies. Instructions As a class, discuss positive and negative changes in your university’s external and internal factors during your college career. Begin by listing on the board new or emerging opportunities and threats. Then identify strengths and weaknesses that have changed significantly during your college career. In light of the external and internal changes that were identified, discuss whether your university’s strategies need modifying. Are there any new strategies that you would recommend? Make a list to recommend to your department chair, dean, president, or chancellor. Teaching Notes This answer is based on the same premise of Assurance of Learning Exercise 11A; those students who are able to answer 11A should not have any problem in doing so in this question. Solution Manual for Strategic Management: Concepts and Cases Fred R. David, Forest R. David 9781292016894