Business Policy & Strategy Course Code: MG-485-44
Question Description
Please research and rephrased the highlighted parts in this document. Of course, read the questions before you answer them. If you believe you can add more to the answers that is fine but concentrate on the highlighted parts…
Question Description
Chapter 1: Strategic Management and Strategic Competitiveness
- Pick any major organization or corporation of your choice (i.e. McDonald’s, Apple, Walmart, Microsoft, etc.) and provide answers to these questions:
In your opinion, has the company achieved “strategic competitiveness”? Please refer to the textbook + the information highlighted in the power point presentation to support your answer. (i.e. has it committed and acted to achieve above average returns??; Does the company have competitive advantage over other companies/organizations; What are some things that the firm has committed to do and/or committed not to do)?
ANS:
McDonald’s
In my opinion, I believe McDonald’s has achieved “strategic competitiveness”. McDonald uses cost leadership Business strategy and engages in a thorough use of its economies of scale to achieve this cost advantage. Likewise, it is well-known for the speed of customer service without altering the quality of the service. Big Mac tastes the same almost all over the world because it continues to use the same ingredients in the same quantities and appropriateness of its many famous recipes. Such consistency results in genuine results as it relates to consumer loyalty and competitive advantage.
McDonald’s was recognized by CEO Crock as high-growth potential with even higher-than-average returns.
Crock identified the strategy that allowed their companies to achieve high profits: through the “assembly line” of their burgers, and was able to use the company’s quality, consistency, rapid assembly system, and drive-thru concepts to continue to realize high profits.
The firm has pursued to establishing and enforcing responsible environmental practices in all aspects of its business including a green restaurant design, sustainable packaging, waste management and energy efficiency. McDonald has committed not to permit, the destruction of tropical rainforests for their beef supply for their restaurants.
(2A)How does the Industry Organization (I/O) Model of Above-Average returns – differ from the Resource Based Model of Above-Average Returns?
ANS:
The differences between the Industry Organization Model of Above-Average Returns and the resource based Model of Above Average Returns is that The Industry Organization Model of Above Average Return explains the external environment’s dominant influence on a firm’s strategic actions; specifies that the industry or segment of an industry in which a company chooses to compete has a stronger influence on performance than do the choices managers make inside their organization. On the other hand, the resource base model assumes that each organization is a collection of unique resources and capabilities. The following further help clarify.
| Industry Organization | Resource Based Model |
| · The external environment imposes pressures and constraints that determine strategic choices | · Firms acquire different resources |
| · Similarity in strategically relevant resources causes competitors to pursue similar strategies | · Firms develop unique capabilities base on how they combine and use resources |
| · Resource differences among competitors are short-lived due to resource mobility across firms | · Resources and certain capabilities are not highly mobile across firms |
| · Strategic decision makers are rational and engage in profit maximizing behaviors. | · Differences in resources and capabilities are the basis of competitive advantage and a firms performance rather than its industry’s structural characteristics |
(2B) Identify and discuss at least TWO key assumptions for each model.
ANS:
Two key assumptions for each model are as follows:
| Industry Organization | Resource Based Model |
| 1. The external environment impose constraints for strategic choices – the external environment pressures the company to adopt strategies to meet that pressure while simultaneously constraining or limiting the scope of strategies that might be appropriate and eventually successful. 2. Similar resources cause competitors to pursue similar strategies – Most companies competing in an industry or in an industry segment control similar sets of strategically relevant resources and thus pursue similar strategies. There are few significant differences among companies in an industry. |
1. Firms acquire different resources – Each firm is a collection of unique resources and capabilities that provides the basis for its strategy and is the primary source of firm returns (eg. characteristics of the firm itself constrains or limits the scope of strategies that might be appropriate). 2. Firms develop unique capabilities based on how they combine and use resources – Over time, firms acquire different resources and develop different or unique capabilities. Firms therefore are likely to adopt and implement different strategies in their attempts to achieve strategic competitiveness. |
(2C) Do you think one model is better that the other? – Please explain WHY or WHY NOT.
ANS:
I do not think that one model is better than the other simply because what might work for one organization may not necessarily work for another. Achieving strategic competitiveness should take a comprehensive approach. Resource Based Model supports that strategic competitiveness can be realized by capitalizing on a company’s internal rather than external factors as in comparison to the industrial organization view. This may be true to a certain extent, however, there isn’t a definite answer as to which approach to strategic management is best. The best approach is to evaluate both the external and internal factors and integrate both models so as to facilitate a sustainable competitive advantage.
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