Internal environment: strengths and weaknesses.  Components could include: financial capital, culture, structure, owners, board, employees, physical assets.

External environment: strenths and weaknesses. Components could include: competitors, economic conditions, political atmosphere, industry trends, technology being introduced, etc.

A VRIO asks 4 questions about each of a firm's resources/capabilities to determine the competitive potential of each.

1)Value: Does this resource allow Company X to exploit an environmental opportunity or neutralize a threat?

2)Rarity: How many companies share this same resource?

3) Imitability: Do other organizations face a cost disadvantage to obtain this resource?

4)Organization:  Is the organization structured to support exploitation of this valuable resource?

Primary: collected by me.

PROS: tailored to individual need, contextual, in-depth on specific area of need, reliable, scope can vary, comparable to secondary data. 

CONS: time-consuming, limited ability to reach adequate sample size, money constraints

Secondary: collected by someone else.

PROS: done by an expert on the subject, quick to obtain, cheap (usually), reviewed and double-checked, large group surveyed.

CONS: may be too broad or irrelevant for specific circumstances

Business level strategies are actions firms take to gain a competitive advantage in one market or industry.  Corporate level strategies are actions corporations take to gain a competitive advantage in multiple markets or industries.  Business-level strategies include cost-leadership, product differentiation and focus.  Walmart, Victoria’s Secret, Southwest Airlines.

What steps would company take to pursue a cost leadership strategy?

A firm with a cost-leadership business strategy (ex: Wal-mart with economies of scale and excellent supply chain management) focuses on gaining advantages by reducing costs below those of all competitors.  Sources of cost-leadership include: 1) size differences and economies of scale, 2) size differences and diseconomies of scale (the point on the production curve after lowest cost per product is passed), 3) experience differences and learning curve economics, 4) differential low-cost access to productive inputs, 5) technological advantages independent of scale, and 6) policy choices.

What steps would company take to pursue a differentiation strategy?

A firm with a product-differentiation strategy (ex: Victoria’s Secret, Patagonia) attempts to gain a competitive advantage by increasing the perceived value of their products or services relative to the value of other firms’ products or services.  Product differentiation can be achieved by a firm focusing directing on the attributes of 1) product/service features (BMW), 2) relationship between firm and consumer (Patagonia), and 3) linkages with or between firms (Yoplait and Breast Cancer Foundation, Kraft cheese & crackers).

What steps would company take to pursue a focus strategy?

A firm with a focus strategy (ex: Southwest Airlines with point-to-point flights) focuses on a narrow market or industry segment, specializing in serving this specific small group.  A firm with this strategy will probably look to gain competitive advantage through product innovation and or/brand marketing rather than efficiency. 

1) change organizational structure: decrease reporting layers, simplify reporting relationships, decrease corporate staff, focus on narrow range of corporate functions.

2) change management control systems: tighten cost control systems, cost goals, close supervision of inputs/outputs/production, cost leadership philosophy.

3) change compensation policies: rewards for cost reductions, incentives for all employees to be involved

Why does leadership matter to strategy? 

Purpose is at the heart of strategy.  Strategy never ends; it's constant change and adaption.  The CEO, who chooses a company's identity, must be a strategist and a leader; his/her vigilance must be constant.  The biggest responsibility of the CEO is to guide the never-ending process of adapting an organization to the current day and should provide perspective in the midst of action and purpose to the flow.  When in an environment of indecision and stalled action, a CEO can start the conversations and get people behind an idea.

"The executive's job is no longer to command and control but to cultivate and coordinate"

from the article "Beat the Odds and Succeed in Organizational Change": any change necessarily begins with a group of people who agree that change will be made and they need to work together, but as they get going there tends to be less input of ideas for fear that this will slow things down; to avoid this I would resist the temptation to make change a strict ideology, which widens the engagement gap. 

The democratic process is characterized by three core principles: voice, cohesion and action.

• Recognizing first of all that the four stages of teams development are: forming, storming, norming and performing.  The fifth state could be re-forming, which suggests the very short lifespan of a team; it should be formed for short projects.
• There should be good evaluation tools for evaluation and assessment of the project completed, as well as good peer-to-peer feedback.