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Title: 1.Strategic management 40


1
1.Strategic management 40
  • What are my businesss objectives?
  • What are the best ways to achieve those
    objectives?
  • What resources are required to make that happen?

2
objectives can have several phases
  • Assessing the landscape within which the company
    will operate, and formulating how the company
    sees its role within that landscape.
  • This is commonly known as a mission statement.
  • Establishing objectives to answer a long- and
    short-term view of what the company can offer.
  • This is commonly known as a vision statement.
  • Stipulating the goals the company has for itself,
    both in terms of financial and strategic
    objectives.

3
2. How best can we reach our goals?.
  • Phase two of successful strategic management is
    formulating a plan by which the company can
    accomplish what it sets out to do
  • Within this phase, a chain of command should be
    put in place, pairing individuals with the right
    skills, knowledge, and experience with the
    businesss needs and objectives.
  • From there, responsibilities for processes and
    tasks should be distributed across the full chain
    of command, delegating work to teams and
    individuals so that they companys goals can be
    attained through the combined efforts of all
    employees.
  • This includes communicating responsibilities and
    deliverables (what needs to be done, and how the
    results of those tasks will be measured).

4
unforeseen results
  • Strategic management is not a static process that
    can be limited to a linear process.
  • Strategic managers must be able to respond to
    occurrences that cannot be predicted.
  • Effective strategic management - to move quickly
    in response to new challenges, and replace ideas
    and practices with processes that can help meet
    new needs as they present themselves.

5
Strategic management
  • Strategic management is a level of managerial
    activity under setting goals and over Tactics.
  • Strategic management provides overall direction
    to the enterprise and is closely related to the
    field of Organization Studies.
  • In the field of business administration it is
    useful to talk about "strategic alignment"
    between the organization and its environment or
    "strategic consistency."
  • According to Arieu (2007), "there is strategic
    consistency when the actions of an organization
    are consistent with the expectations of
    management, and these in turn are with the market
    and the context."
  • Strategic management includes not only the
    management team but can also include the Board of
    Directors and other stakeholders of the
    organization. It depends on the organizational
    structure.

6
Strategic management
  • is an ongoing process that evaluates and controls
    the business and the industries in which the
    company is involved assesses its competitors and
    sets goals and strategies to meet all existing
    and potential competitors and then reassesses
    each strategy annually or quarterly to determine
    how it has been implemented and whether it has
    succeeded or needs replacement by
  • a new strategy to meet changed circumstances, new
    technology, new competitors, a new economic
    environment., or a new social, financial, or
    political environment.

7
Concepts/approaches of strategic management
  • The specific approach to strategic management can
    depend upon the size of an organisation, and the
    proclivity to change of its business environment.
  • These points are highlighted below
  • A global/transnational organisation may employ a
    more structured strategic management model, due
    to its size, scope of operations, and need to
    encompass stakeholder views and requirements.
  • An SME (Small and Medium Enterprise) may employ
    an entrepreneurial approach. This is due to its
    comparatively smaller size and scope of
    operations, as well as possessing fewer
    resources.
  • An SME's CEO (or general top management) may
    simply outline a mission, and pursue all
    activities under that mission.

8
Strategic management
  • It entails specifying the organization's mission,
    vision and objectives, developing policies and
    plans, often in terms of projects and programs,
    which are designed to achieve these objectives,
    and then allocating resources to implement the
    policies and plans, projects and programs.
  • A balanced scorecard ( hodnotiaca karta)is often
    used to evaluate the overall performance of the
    business and its progress towards objectives (
    pokrok k cielom)
  • Recent studies and leading management theorists
    have advocated that strategy needs to start with
    stakeholders expectations and use a modified
    balanced scorecard which includes all
    stakeholders.

9
Vision and mission statement
  • Organizations sometimes summarize goals and
    objectives into a mission statement and/or a
    vision statement.
  • Others begin with a vision and mission and use
    them to formulate goals and objectives.
  • A Mission statement tells you the fundamental
    purpose of the organization. It defines the
    customer and the critical processes.
  • A Vision statement outlines what the organization
    wants to be, or how it wants the world in which
    it operates to be. It concentrates on the future.
    It is a source of inspiration. It provides clear
    decision-making criteria.

10
Mission statemenet
  • A written declaration of an organization's core
    purpose and focus that normally remains unchanged
    over time.
  • Properly crafted mission statements serve as
    filters to separate what is important from what
    is not,
  • clearly state which markets will be served and
    how, and communicate a sense of intended
    direction to the entire organization.
  • Also called company mission, corporate mission,
    or corporate purpose

11
Mission statement
  • Effective mission statements commonly clarify the
    organization's purpose.
  • Commercial mission statements often include the
    following information
  • Purpose and aim(s) of the organization
  • The organization's primary stakeholders
    clients/customers, shareholders,
  • How the organization provides value to these
    stakeholders, for example by offering specific
    types of products and/or services
  • According to Bart (1997), the commercial mission
    statement consists of 3 essential components
  • Key market who is your target client/customer?
    (generalize if needed)
  • Contribution what product or service do you
    provide to that client?
  • Distinction ( rozdiel ) what makes your
    product or service unique, so that the client
    would choose you?

12
Effective mission
  • Effective mission statements commonly clarify the
    organization's purpose.
  • Commercial mission statements often include the
    following information
  • According to Bart (1997), the commercial mission
    statement consists of 3 essential components
  • - Key market who is your target
    client/customer? (generalize if needed)
  • - Contribution what product or service do
    you provide to that client?
  • - Distinction what makes your product or
    service unique, so that the client would choose
    you?

13
Mission statement
  • The mission statement can be used to resolve
    trade-offs between different business
    stakeholders.
  • Stakeholders include managers executives,
    non-management employees, shareholders, board of
    directors, customers, suppliers, distributors,
    creditors/bankers, governments (local, state,
    federal, etc.), labour unions, competitors

14
a mission should
  • Define what the company is
  • Limited to exclude some ventures
  • Broad enough to allow for creative growth
  • Distinguish the company from all others
  • Serve as framework to evaluate current activities
  • Stated clearly so that it is understood by all

15
McDonalds - mission
  • McDonalds - "To provide the fast food customer
    food prepared in the same high-quality manner
    world-wide that is tasty, reasonably-priced
    delivered consistently in a low-key décor and
    friendly atmosphere."
  • Key Market The fast food customer world-wide
  • Contribution tasty and reasonably-priced food
    prepared in a high-quality manner
  • Distinction delivered consistently (world-wide)
    in a low-key décor and friendly atmosphere.

16
Courtyard by Marriott -mission
  • Courtyard by Marriott - "To provide economy and
    quality minded travelers with a premier, moderate
    priced lodging facility which is consistently
    perceived as clean, comfortable, well-maintained,
    and attractive, staffed by friendly, attentive
    and efficient people"
  • Key Market economy and quality minded travelers
  • Contribution moderate priced lodging
  • Distinction consistently perceived as clean,
    comfortable, well-maintained, and attractive,
    staffed by friendly, attentive and efficient
    people

17
Mission
  • a Mission should
  • Define what the company is
  • Limited to exclude some ventures
  • Broad enough to allow for creative growth
  • Distinguish the company from all others
  • Serve as framework to evaluate current activities
  • Stated clearly so that it is understood by all

18
Vision
  • An aspirational description of what an
    organization would like to achieve or accomplish
    in the mid-term or long-term future.
  • It is intended to serves as a clear guide for
    choosing current and future courses of action.
    See also mission statement.

19
Vission statement
  • Vision Defines the way an organization or
    enterprise will look in the future. Vision is a
    long-term view, sometimes describing how the
    organization would like the world to be in which
    it operates. For example, a charity working with
    the poor might have a vision statement which
    reads "A World without Poverty

20
Camparison vission and mission
  • Mission Defines the fundamental purpose of an
    organization or an enterprise, succinctly
    describing why it exists and what it does to
    achieve its Vision.
  • Organizations sometimes summarize goals and
    objectives into a mission statement and/or a
    vision statement.
  • Others begin with a vision and mission and use
    them to formulate goals and objectives.

21
Strategy
  • Strategy a word of military origin, refers to a
    plan of action designed to achieve a particular
    goal.
  • In military usage strategy is distinct (odlišná)
    from tactics,
  • Which is part of the four levels of warfare
    political goals or grand strategy, strategy,
    operations, and tactics.
  • "a comprehensive way to try to pursue political
    ends, including the threat or actual use of
    force, in a dialectic of wills there have to be
    at least two sides to a conflict

22
2. Strategic analysis
  • Macro-enviroment analysis industries, markets,
    companies, clients and competitors
  • Law system ( statutory law,commercial code,
    privat and public law, cotracts law,property law,
    bankruptcy law)
  • Government and business are equal and
    reciprocal relationship
  • Governments dependentc on Business and
    assistance to business , government regulatory
    agencies their impact on business

23
Analysis
  • Macroenvironment
  • There are a number of common approaches how the
    external factors, which are mentioned in the
    defintion of Kroon and which describe the macro
    environment.
  • These factors indirectly affect the organization
    but cannot be controlled by it.
  • One approach could be the PEST analysis. PEST
    stands for political, economic, social and
    technological.
  • Two more factors, the environmental and legal
    factor, are defined within the PESTEL analysis
    (or PESTLE analysis).

24
Economical factors
  • Inflation rate
  • Growth in spending power
  • Rate of people in a pensionable age etc.

25
Technological factors
  • Technological changes
  • New or improved distribution channels
  • Improved communication and knowledge tranfer etc.

26
Environmental factors
  • Laws on
  • Waste disposal
  • Energy consumption
  • Pollution monitoring etc.

27
Political factors
  • Taxation Policy
  • Trade regulations
  • Governmental stability
  • Unemployment Policy etc.

28
Legal factors
  • Unemployment law
  • Health and safety
  • Product safety
  • Advertising regulations
  • Product labelling etc.6

29
Competitive market equilibrium
  • is the traditional concept of economic
    equilibrium, appropriate for the analysis of
    commodity markets with flexible prices and many
    traders, and serving as the benchmark of
    efficiency in economic analysis.

30
Competitive markets
  • Competitive markets are an ideal, a standard that
    other market structures are evaluated by.
  • A competitive equilibrium is a vector of prices
    and an allocation such that given the prices,
    each trader by maximizing his objective function
    (profit, preferences) subject to his
    technological possibilities and resource
    constraints plans to trade into his part of the
    proposed allocation, and such that the prices
    make all net trades compatible with one another
    ('clear the market')

31
Porters model
  • Porters four corners model is a predictive tool
    designed by Michael Porter that helps in
    determining a competitors course of action.
  • Unlike other predictive models which
    predominantly rely on a firms current strategy
    and capabilities to determine future strategy
  • Porters model additionally calls for an
    understanding of what motivates the competitor.
  • This added dimension of understanding a
    competitor's internal culture, value system,
    mindset and assumptions help in determining a
    much more accurate and realistic reading of a
    competitors possible reactions in a given
    situation.

32
Motivation drivers
  • This helps in determining competitor's action by
    understanding their goals (both strategic and
    tactical) and their current position vis-à-vis
    their goals.
  • A wide gap between the two could mean the
    competitor is highly likely to react to any
    external threat that comes in its way, whereas a
    narrower gap is likely to produce a defensive
    strategy.
  • Question to be answered here is What is it that
    drives the competitor?
  • These drivers can be at various levels and
    dimensions and can provide insights into future
    goals.

33
Motivation Management Assumptions
  • The perceptions (výber)and assumptions (
    predpoklad) the competitor has about itself and
    its industry would shape strategy.
  • This corner includes determining the competitor's
    perception of its strengths and weaknesses,
    organization culture and their beliefs about
    competitor's goals.
  • If the competitor thinks highly of its
    competition and has a fair sense of industry
    forces, it is likely to be ready with plans to
    counter any threats to its position.
  • competitor who has a misplaced understanding of
    industry forces is not very likely to respond to
    a potential attack.
  • Question to be answered here is What are
    competitor's assumption about the industry, the
    competition and its own capabilities? ( schopnost)

34
Actions Strategy
  • A competitor's strategy determines how it
    competes in the market.
  • However, there could be a difference between the
    company's intended strategy (as stated in the
    annual report and interviews) and its realized
    strategy (as is evident in its acquisitions, new
    product development, etc.).
  • It is therefore important here to determine the
    competitor's realized strategy and how they are
    actually performing.
  • If current strategy is yielding satisfactory
    results, it is safe to assume that the competitor
    is likely to continue to operate in the same way.
  • Questions to be answered here are What is the
    competitor actually doing and how successful is
    it in implementing its current strategy?

35
Actions Capabilities
  • This looks at a competitor's inherent ability to
    initiate or respond to external forces.
  • Though it might have the motivation and the drive
    to initiate a strategic action, its effectiveness
    is dependent on its capabilities.
  • Its strengths will also determine how the
    competitor is likely to respond to an external
    threat.
  • An organization with an extensive distribution
    network is likely to initiate an attack through
    its channel, whereas a company with strong
    financials is likely to counter attack through
    price drops.
  • The questions to be answered here are What are
    the strengths and weaknesses of the competitor?
    Which areas is the competitor strong in?

36
Strengths
  • Considers implicit aspects of competitive
    behavior
  • Firms are more often than not aware of their
    rivals and do have a generally good understanding
    of their strategies and capabilities.
  • However, motivational factors are often
    overlooked. Sufficiently motivated competitors
    can often prove to be more competitive than
    bigger but less motivated rivals.
  • What sets this model apart from others is its
    insistence on accounting for the "implicit"
    factors such as culture, history, executive,
    consultants, and boards backgrounds, goals,
    values and commitments and inclusion of
    management's deep beliefs and assumptions about
    what works or does not work in the market.1

37
3.Predictive in nature(44)
  • Porter's four corners model provides a framework
    that ties competitor's capabilities to their
    assumptions of the competitive environment and
    their underlying motivations.
  • By looking at both a firm's capabilities (what
    the firm can do) and underlying implicit factors
    (their motivations to follow a course of action)
    can help predict competitor's actions with a
    relatively higher level of confidence.
  • The underlying assumption here is that decision
    makers in firms are essentially human and hence
    subject to the influences of affective and
    automatic processes described by neuroscientists.
  • Hence by considering these factors along with a
    firm's capabilities, this model is a better
    predictor of competitive behavior.

38
Use in competitive intelligence and strategy
  • Despite its strengths, Porter's four corners
    model is not widely used in strategy and
    competitive intelligence.
  • In a 2005 survey by the Society of Competitive
    Intelligence Professionals's (SCIP) frequently
    used analytical tools, Porter's four corners does
    not even figure in the top ten
  • However this model can be used in competitive
    analysis and strategy as follows
  • Strategy development and testing Can be used to
    determine likely actions by competitors in
    response to the firm's strategy. This can be used
    when developing a strategy (such as for a new
    product launch) or to test this strategy using
    simulation techniques such as a business war
    game.
  • Early warning
  • The predictive nature of this tool can also alert
    firms to possible threats due to competitive
    action.
  • Porter's four corners also works well with other
    analytical models. For instance it complements
    Porters five forces model well. Competitive
    Cluster Analysis of industry products in turn
    complements Four Corners Analysis.3 Using such
    models that complement each other can help create
    a more complete analysis

39
Porter's five forces refer to competition from
external sources..
  • Porter referred to these forces as the micro
    environment, to contrast it with the more general
    term macro environment.
  • They consist of those forces close to a company
    that affect its ability to serve its customers
    and make a profit. A change in any of the forces
    normally, requires a business unit to re-assess
    the marketplace given the overall change in
    industry information.
  • The overall industry attractiveness does not
    imply that every firm in the industry will return
    the same profitability.
  • Firms are able to apply their core competencies,
    business model or network to achieve a profit
    above the industry average.
  • A clear example of this is the airline industry.
    As an industry, profitability is low and yet
    individual companies, by applying unique business
    models, have been able to make a return in excess
    of the industry average.

40
  • 1 The five forces
  • 1.1 The threat of the entry of new competitors
  • 1.2 The threat of substitute products or services
  • 1.3 The bargaining ( vyjednávanie) power of
    customers (buyers)
  • 1.4 The bargaining power of suppliers
  • 1.5 The intensity of competitive rivalry .

41
The threat of the entry of new competitors
  • Profitable markets that yield high returns will
    attract new firms.
  • This results in many new entrants, which
    eventually will decrease profitability for all
    firms in the industry. Unless the entry of new
    firms can be blocked by incumbents, the abnormal
    profit rate will tend towards zero (perfect
    competition).
  • The existence of barriers to entry (patents,
    rights, etc.) The most attractive segment is one
    in which entry barriers are high and exit
    barriers are low. Few new firms can enter and
    non-performing firms can exit easily.
  • Economies of product differences
  • Brand equity
  • Switching costs or sunk costs
  • Capital requirements
  • Access to distribution
  • Customer loyalty to established brands
  • Absolute cost
  • Industry profitability the more profitable the
    industry the more attractive it will be to new
    competitors

42
The threat of substitute products or services
  • The existence of products outside of the realm of
    the common product boundaries increases the
    propensity of customers to switch to
    alternatives
  • Buyer propensity to substitute sklon k náhrade
  • Relative price performance of substitute
  • Buyer switching costs ( prepájanie nákladov )
  • Perceived level of product differentiation
  • Number of substitute products available in the
    market
  • Ease of substitution. Information-based products
    are more prone to substitution, as online product
    can easily replace material product.
  • Substandard product
  • Quality depreciation

43
The bargaining power of customers (buyers)
  • The bargaining power of customers is also
    described as the market of outputs the ability
    of customers to put the firm under pressure,
    which also affects the customer's sensitivity to
    price changes.
  • Buyer concentration to firm concentration ratio
  • Degree of dependency upon existing channels of
    distribution
  • Bargaining leverage, particularly in industries
    with high fixed costs
  • Buyer volume
  • Buyer switching costs relative to firm switching
    costs
  • Buyer information availability
  • Ability to backward integrate
  • Availability of existing substitute products
  • Buyer price sensitivity
  • Differential advantage (uniqueness) of industry
    products
  • RFM Analysis

44
The bargaining power of suppliers
  • The bargaining power of suppliers is also
    described as the market of inputs. Suppliers of
    raw materials, components, labor, and services
    (such as expertise) to the firm can be a source
    of power over the firm, when there are few
    substitutes. Suppliers may refuse to work with
    the firm, or, e.g., charge excessively high
    prices for unique resources.
  • Supplier switching costs relative to firm
    switching costs
  • Degree of differentiation of inputs
  • Impact of inputs on cost or differentiation
  • Presence of substitute inputs
  • Strength of distribution channel
  • Supplier concentration to firm concentration
    ratio
  • Employee solidarity (e.g. labor unions)
  • Supplier competition - ability to forward
    vertically integrate and cut out the BUYER

45
For most industries, the intensity of competitive
rivalry is the major determinant of the
competitiveness of the industry
  • Sustainable competitive advantage through
    innovation
  • Competition between online and offline companies
  • Level of advertising expense
  • Powerful competitive strategy
  • The visibility of proprietary items on the Web
    used by a company which can intensify competitive
    pressures on their rivals.

46
Criticisms
  • Porter's framework has been challenged by other
    academics and strategists such as Stewart Neill.
    Similarly, the likes of Kevin P. Coyne and Somu
    Subramaniam have stated that three dubious
    assumptions underlie the five forces
  • That buyers, competitors, and suppliers are
    unrelated and do not interact and collude.
  • That the source of value is structural advantage
    (creating barriers to entry).
  • That uncertainty is low, allowing participants in
    a market to plan for and respond to competitive
    behavior.
  • An important extension to Porter was found in the
    work of Adam Brandenburger and Barry Nalebuff in
    the mid-1990s. Using game theory, they added the
    concept of complementors (also called "the 6th
    force"), helping to explain the reasoning behind
    strategic alliances.
  • The idea that complementors are the sixth force
    has often been credited to Andrew Grove, former
    CEO of Intel Corporation.
  • According to most references, the sixth force is
    government or the public. Martyn Richard Jones,
    whilst consulting at Groupe Bull, developed an
    augmented 5 forces model in Scotland in 1993. It
    is based on Porter's model and includes
    Government (national and regional) as well as
    Pressure Groups as the notional 6th force. This
    model was the result of work carried out as part
    of Groupe Bull's Knowledge Asset Management
    Organisation initiative.
  • Porter indirectly rebutted the assertions of
    other forces, by referring to innovation,
    government, and complementary products and
    services as "factors" that affect the five
    forces.4

47
4. Critical success factor
  • Is the term for an element that is necessary for
    an organization or project to achieve its
    mission.
  • It is a critical factor or activity required for
    ensuring the success of a company or an
    organization.
  • The term was initially used in the world of data
    analysis, and business analysis.
  • For example, a CSF for a successful Information
    Technology (IT) project is user involvement.
  • Critical success factors are those few things
    that must go well to ensure success for a manager
    or an organization, and, therefore, they
    represent those managerial or enterprise area,
    that must be given special and continual
    attention to bring about high performance. CSFs
    include issues vital to an organization's current
    operating activities and to its future success."

48
Succes
  • Many argue that the success of a business is
    based on identifying a niche market that will
    ultimately result in growth, development and
    profitability.

49
Critical success
  • A critical success factor drives the strategy
    forward, it makes or breaks the success of the
    strategy, (hence critical).
  • Strategists should ask themselves 'Why would
    customers choose us?'.
  • The answer is typically a critical success
    factor.
  • KPIs, on the other hand, are measures that
    quantify management objectives and enable the
    measurement of strategic performance.
  • An example
  • KPI Number of new customers. (Measurable,
    quantifiable)
  • CSF Installation of a call centre for providing
    superior customer service (and indirectly,
    influencing acquiring new custome

50
Marketing
  • Some examples are
  • New customers acquired
  • Demographic analysis of individuals (potential
    customers) applying to become customers, and the
    levels of approval, rejections, and pending
    numbers.
  • Status of existing customers
  • Customer attrition
  • Turnover (ie, Revenue) generated by segments of
    the customer population.
  • Outstanding balances held by segments of
    customers and terms of payment.
  • Collection of bad debts within customer
    relationships.
  • Profitability of customers by demographic
    segments and segmentation of customers by
    profitability.
  • Many of these customer KPIs are developed and
    managed with customer relationship management
    (CRM) software.
  • Faster availability of data is a competitive
    issue for most organizations. For example,
    businesses which have higher operational/credit
    risk (involving for example credit cards or
    wealth management) may want weekly or even daily
    availability of KPI analysis, facilitated by
    appropriate IT systems and tools.

51
Manufacturing
  • Overall equipment effectiveness, or OEE, is a set
    of broadly accepted non-financial metrics which
    reflect manufacturing success.
  • Cycle Time
  • Cycle time is the total time from the beginning
    to the end of your process, as defined by you and
    your customer. Cycle time includes process time,
    during which a unit is acted upon to bring it
    closer to an output, and delay time, during which
    a unit of work is spent waiting to take the next
    action.
  • Cycle Time Ratio
  • CTR StandardCycleTime / RealCycleTime
  • Utilization
  • Rejection rate

52
Performance Indicator or Key Performance Indicator
  • success is defined in terms of making progress
    toward strategic goals, but often, success is
    simply the repeated achievement of some level of
    operational goal
  • What is important' often depends on the
    department measuring the performance - the KPIs
    useful to a Finance Team will be quite different
    to the KPIs assigned to the sales force, for
    example.
  • Because of the need to develop a good
    understanding of what is important, performance
    indicator selection is often closely associated
    with the use of various techniques to assess the
    present state of the business, and its key
    activities. These assessments often lead to the
    identification of potential improvements and as
    a consequence, performance indicators are
    routinely associated with 'performance
    improvement' initiatives.
  • A very common method for choosing KPIs is to
    apply a management framework such as the Balanced
    scorecard.

53
Categorization of indicators
  • Key Performance Indicators define a set of values
    used to measure against.
  • These raw sets of values, which are fed to
    systems in charge of summarizing the information,
    are called indicators. Indicators identifiable as
    possible candidates for KPIs can be summarized
    into the following sub-categories

54
Categorie
  • Quantitative indicators which can be presented as
    a number.
  • Practical indicators that interface with existing
    company processes.
  • Directional indicators specifying whether an
    organization is getting better or not.
  • Actionable indicators are sufficiently in an
    organization's control to effect change.
  • Financial indicators used in performance
    measurement and when looking at an operating
    index

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IT
  • Availability
  • Mean Time Between Failure
  • Mean Time to Repair
  • Unplanned Availability

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Supply Chain Management
  • Businesses can utilize KPIs to establish and
    monitor progress toward a variety of goals,
    including lean manufacturing objectives, MBE
    (Minority Business Enterprise) and diversity
    spending, environmental "green" initiatives, cost
    avoidance (CA) programs and low-cost country
    sourcing (LCCS) targets.
  • Any business, regardless of size, can better
    manage supplier performance with the help of KPIs
    robust capabilities, which include
  • Automated entry and approval functions
  • On-demand, real-time scorecard measures
  • Single data repository to eliminate
    inefficiencies and maintain consistency
  • Advanced workflow approval process to ensure
    consistent procedures
  • Flexible data-input modes and real-time graphical
    performance displays
  • Customized cost savings documentation (CSD)
  • Simplified setup procedures to eliminate
    dependence upon IT resources.
  • Main SCM KPIs will detail the following
    processes
  • sales forecasts
  • inventory
  • procurement and suppliers
  • warehousing
  • transportation
  • reverse logistics

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Problems
  • In practice, overseeing Key Performance
    Indicators can prove expensive or difficult for
    organizations.
  • Indicators such as staff morale may be
    impossible to quantify.
  • Another serious issue in practice is that once a
    measure is created, it becomes difficult to
    adjust to changing needs as historical
    comparisons will be lost.
  • Conversely, measures are often of dubious
    relevance, because history does exist.
  • Furthermore, since businesses with similar
    backgrounds are often used as a benchmark for
    such measures, measures based only on in-house
    practices make it difficult for an organization
    to compare with these outside benchmarks.
  • Measures are also used as a rough guide rather
    than a precise benchmark.

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5.Resource
  • A resource is any physical or virtual entity of
    limited availability that needs to be consumed to
    obtain a benefit from it.
  • In most cases, commercial or even non-commercial
    factors require resource allocation through
    resource management. There are two types of
    resources renewable and non-renewable

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Value of a resource
  • The purely economic value of a resource is
    controlled by supply and demand.
  • This is, however, a narrow perspective on
    resources as there are many things that cannot be
    measured in money.
  • Natural resources like forests, mountains etc.
    are considered beautiful so they have aesthetic
    value. Resources also have an ethical value as
    well, because it is widely recognized that it is
    our moral duty to protect and conserve them for
    the future generations (see sustainable
    development

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  • It entails specifying the organization's mission,
    vision and objectives, developing policies and
    plans, often in terms of projects and programs,
    which are designed to achieve these objectives,
    and then allocating resources to implement the
    policies and plans, projects and programs.
  • A balanced scorecard is often used to evaluate
    the overall performance of the business and its
    progress towards objectives.
  • .

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Characteristics of resources
  • Resources have three main characteristics
    utility ( užitocnost), quantity (often in terms
    of availability), and consumption. However, this
    definition is not accepted by some, for example
    deep ecologists who believe that non-human
    elements are independent of human values.

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Types of resources
  • Natural resources
  • Natural resources are derived from the
    environment.
  • Many of them are essential for our survival while
    others are used for satisfying our needs.
  • Natural resources may be further classified in
    different ways on the basis of origin, resources
    may be divided into
  • Biotic - Biotic resources are those obtained from
    the biosphere. Forests and their products,
    animals, birds and their products, fish and other
    marine organisms are important examples. Minerals
    such as coal and petroleum are also included in
    this category because they were formed from
    decayed organic matter.
  • Abiotic - Abiotic resources comprise non-living
    things. Examples include land, water, air and
    minerals such as gold, iron, copper, silver etc.
  • On the basis of the stage of development, natural
    resources may be called

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Potential Resources
  • - Potential resources are those that exist in a
    region and may be used in the future. For
    example, mineral oil may exist in many parts of
    India having sedimentary rocks, but until the
    time it is actually drilled out and put into use,
    it remains a potential resource.
  • Stock are the materials in the environment which
    have the potential to satisfy human needs but do
    not have the appropriate technology to access
    them.
  • For example, hydrogen and oxygen are two
    inflammable gases present in water, but we do not
    have the technology to use them from water.
  • Reserved Resources are the subset of stock, where
    use has not yet been started and are saved for
    future use.
  • Actual resources are those that have been
    surveyed, their quantity and quality determined,
    and are being used in present times. For example,
    petroleum and natural gas obtained from the
    Mumbai High Fields.
  • The development of an actual resource, such as
    wood processing depends upon the technology
    available and the cost involved. That part of the
    actual resource that can be developed profitably
    with available technology is called a reserve.
  • On the basis of renewability, natural resources
    can be categorized into

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Renewable Resources
  • Renewable resources are those that can be
    replenished or reproduced easily. Some of them,
    like sunlight, air, wind, etc., are continuously
    available and their quantity is not affected by
    human consumption.
  • Many renewable resources can be depleted by human
    use, but may also be replenished, thus
    maintaining a flow.
  • Some of these, like agricultural crops, take a
    short time for renewal others, like water, take
    a comparatively longer time, while still others,
    like forests, take even longer

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Non-renewable Resources
  • - Non-renewable resources are formed over very
    long geological periods. Minerals and fossils are
    included in this category. Since their rate of
    formation is extremely slow, they cannot be
    replenished once they are depleted. Out of these,
    the metallic minerals can be re-used by recycling
    them, but coal and petroleum cannot be recycled.
  • Conditionally Renewable Resources - Conditionally
    renewable resources are often classified as a
    third kind of resource, or as a subtype of
    renewable resources. They are dependent upon the
    speed and quantity of consumption, and over
    consumption can lead to depletion and total and
    everlasting destruction of the resource.
    Important examples are agricultural areas, fish
    and other animals, forests, healthy water and
    soil, cultivated and natural landscapes.
    Conditionally renewable resources are presently
    subject to excess human consumption and the only
    sustainable long term use of such resources is
    the so-called zero ecological footprint, when we
    use less than

66
Other resources
  • Human resources
  • Human beings are also considered to be resources.
    The term Human Resources can also be defined as
    the skills, energies, talents, abilities and
    knowledge that are used for the production of
    goods or the rendering of services
  • In a project management context, human resources
    are those employees responsible for undertaking
    the activities defined in the project plan.
  • Tangible / intangible resources
  • Resources may be split ( môžeme delit )into
    tangible and intangible resources. Tangible
    resources are those resources like equipment,
    vehicles which have actual physical existence
    whereas intangible resources are things like
    corporate images, brands and patents that are
    present but cannot be grasped or contained.

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6.Resources allocation
  • allocating the right amount of resources to the
    different parts of your business so that those
    assigned to particular goals have what they need
    to meet their objectives.
  • This ranges from providing your workers with the
    right supplies to enacting systems by which
    employees receive the necessary training, all
    work processes are tested, and all information
    and data
  • To effectively manage your business
    strategically, every inch of your company must
    have its needs met in these ways, so all parts
    can work together as a seamless, highly
    functioning whole.

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Resource management
  • In organizational studies, resource management is
    the efficient and effective deployment for an
    organization's resources when they are needed.
    Such resources may include financial resources,
    inventory, human skills, production resources, or
    information technology (IT).
  • In the realm of project management, processes,
    techniques and philosophies as to the best
    approach for allocating resources have been
    developed. These include discussions on
    functional vs. cross-functional resource
    allocation as well as processes espoused by
    organizations like the Project Management
    Institute (PMI) through their Project Management
    Body of Knowledge (PMBOK) methodology to project
    management. Resource management is a key element
    to activity resource estimating and project human
    resource management.
  • Both are essential components of a comprehensive
    project management plan to execute and monitor a
    project successfully.
  • As is the case with the larger discipline of
    project management, there are resource management
    software tools available that automate and assist
    the process of resource allocation to projects
    and portfolio resource visibility including
    supply and demand of resources.

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HR (Human Resource) Management
  • This is the science of allocating human resources
    among various projects or business units,
    maximizing the utilization of available personnel
    resources to achieve business goals and
    performing the activities that are necessary in
    the maintenance of that workforce through
    identification of staffing requirements, planning
    and oversight of payroll and benefits, education
    and professional development, and administering
    their work-life needs. The efficient and
    effective deployment of an organization's
    personnel resources where and when they are
    needed, and in possession of the tools, training
    and skills required by the work.

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Techniques
  • One resource management technique is resource
    leveling.
  • It aims at smoothing the stock of resources on
    hand, reducing both excess inventories and
    shortages.
  • The required data are the demands for various
    resources, forecast by time period into the
    future as far as is reasonable, as well as the
    resources' configurations required in those
    demands, and the supply of the resources, again
    forecast by time period into the future as far as
    is reasonable.
  • The goal is to achieve 100 utilization but that
    is very unlikely, when weighted by important
    metrics and subject to constraints, for example
    meeting a minimum service level, but otherwise
    minimizing cost.

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The principle is to invest in resources as stored
capabilities
  • The principle is to invest in resources as stored
    capabilities, then unleash the capabilities as
    demanded.
  • A dimension of resource development is included
    in resource management by which investment in
    resources can be retained by a smaller additional
    investment to develop a new capability that is
    demanded, at a lower investment than disposing of
    the current resource and replacing it with
    another that has the demanded capability.

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In conservation
  • In conservation, resource management is a set of
    practices pertaining to maintaining natural
    systems integrity.
  • Examples of this form of management are air
    resource management, soil conservation, forestry,
    wildlife management and water resource
    management.
  • The broad term for this type of resource
    management is natural resource management (NRM).

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Corporate Resource Management Process
  • Large organizations usually have a defined
    corporate resource management process which
    mainly guarantees that resources are never
    over-allocated across multiple projects.

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Competitive advantage
  • is defined as the strategic advantage one
    business entity has over its rival entities
    within its competitive industry.
  • Achieving competitive advantage strengthens and
    positions a business better within the business
    environment

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Competitive advantage
  • is based on theory that seeks to address some of
    the criticisms of comparative advantage.
  • Michael Porter proposed the theory in 1985.
    Competitive advantage theory suggests that states
    and businesses should pursue policies that create
    high-quality goods to sell at high prices in the
    market. Porter emphasizes productivity growth as
    the focus of national strategies.
  • Competitive advantage rests on the notion that
    cheap labor is ubiquitous and natural resources
    are not necessary for a good economy.
  • The other theory, comparative advantage, can lead
    countries to specialize in exporting primary
    goods and raw materials that trap countries in
    low-wage economies due to terms of trade.

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Competitive advantage
  • attempts to correct for this issue by stressing
    maximizing scale economies in goodsservices that
    garner premium prices (Stutz and Warf 2009).
  • Competitive advantage occurs when an organization
    acquires or develops an attribute or combination
    of attributes that allows it to outperform its
    competitors. These attributes can include access
    to natural resources, such as high grade ores or
    inexpensive power, or access to highly trained
    and skilled personnel human resources.
  • New technologies such as robotics and information
    technology either to be included as a part of the
    product, or to assist making it.

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7.The term competitive advantage
  • is the ability gained through attributes and
    resources to perform at a higher level than
    others in the same industry or market
    (Christensen and Fahey 1984, Kay 1994, Porter
    1980 cited by Chacarbaghi and Lynch 1999, p. 45).
  • The study of such advantage has attracted
    profound research interest due to contemporary
    issues regarding superior performance levels of
    firms in the present competitive market
    conditions.
  • A firm is said to have a competitive advantage
    when it is implementing a value creating strategy
    not simultaneously being implemented by any
    current or potential player (Barney 1991 cited
    by Clulow et al.2003, p. 221). Successfully
    implemented strategies will lift a firm to
    superior performance by facilitating the firm
    with competitive advantage to outperform current
    or potential players (Passemard and Calantone
    2000, p. 18).

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To gain competitive advantage a business strategy
of a firm manipulates the various resources over
which it has direct control and these resources
have the ability to generate competitive
advantage (Reed and Fillippi 1990 cited by
Rijamampianina 2003, p. 362). Superior
performance outcomes and superiority in
production resources reflects competitive
advantage (Day and Wesley 1988 cited by Lau
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signify competitive advantage
  • as the ability to stay ahead of present or
    potential competition, thus superior performance
    reached through competitive advantage will ensure
    market leadership.
  • Also it provides the understanding that
    resources held by a firm and the business
    strategy will have a profound impact on
    generating competitive advantage. Powell (2001,
    p. 132) views business strategy as the tool that
    manipulates the resources and create competitive
    advantage, hence, viable business strategy may
    not be adequate unless it possess control over
    unique resources that has the ability to create
    such a unique advantage.
  • Summarizing the view points, competitive
    advantage is a key determinant of superior
    performance and it will ensure survival and
    prominent placing in the market.
  • Superior performance being the ultimate desired
    goal of a firm, competitive advantage becomes the
    foundation highlighting the significant
    importance to develop same.
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