MNGT 1211 Assignment 2 - Grade: 96% PDF

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Assignment 2 Planning and Decision-Making MNGT 1211 November 29, 2018

Part A: Question 1

The main differences between corporate strategy and competitive strategy are which level implements the strategies and the purposes those strategies serve. Corporate strategy comes from the top of the organization—the   top executives and management—and  they  decide “what businesses to be in and what to do with those businesses”(Robbins, Coulter, DeCenzo, & Anderson, 2017, p.56). Primarily, the top management takes account of all of the businesses in which an organization is currently engaged, and comes up with strategies to grow, maintain or renew those businesses based on their goals, and information from internal and external analyses. This could mean creating a new business, absorbing an existing business, selling a business, or optimizing a business’s current operations. Once the corporate strategy is established, the competitive strategy can begin.

The competitive strategy takes place at the head of each business within the organization, and determines how to make that particular business competitive. Using the competitive strategy, businesses aim to distinguish themselves from their competitors by specializing in one of the following categories: cost leadership, differentiation, or focus. Walmart, for instance, uses cost leadership to distinguish itself from competitors by pricing their products lower than others. Concentrating their efforts into one of the categories allows businesses to focus on becoming competitive in one area, rather than trying to compete in all aspects at once.

Corporate and competitive strategies are implemented at different levels in an organization and accomplish different objectives. Nonetheless, they both need to be in line with and contribute towards the overall organizational goal.

Question 2

Bulldog Interactive Fitness is pursuing the focus competitive strategy: specifically the focus differentiation strategy. Holly and James Bond built Bulldog Interactive Fitness for children who enjoy playing video games—a  small percent of the general population—which demonstrates that the Bonds’ are focusing on a niche market. The differentiation aspect acts as a subsection of the focus strategy and shows that the Bonds will not compete to be cost leaders within this niche market, but rather due to their innovative idea, will distinguish themselves from the competition using their uniqueness. The Bonds’ efforts prove that they effectively use focus differentiation—their only viable competitive strategy.

The Bonds, motivated by their own overweight teen, created an interactive fitness concept to appeal to children, particularly overweight kids who prefer video games to exercising. In choosing not to market to the population in general, but by carving out a small slice of the population to whom they will sell their service, the Bonds’ create a narrow audience. This automatically requires them to use the focus competitive strategy because other two strategies aim their efforts and products towards a broad market. With kids as their target, the Bonds make use of interactive technology to engage and motivate their audience by combining the compelling components of video games with fitness. James and Holly undoubtedly use the

focus strategy to compete as a business, but within that strategy, they also make use of a differentiation.

In choosing a niche market and thereby a focus strategy, Holly and James subsequently need to decide how they will compete within their narrow market. Two options exist: the first—cost   leadership— aims  to provide its customers with the lowest priced goods and services; the second— differentiation—  focuses on providing its customers with unique or customized solutions, services, or products. Cost leadership is not a valid option because the Bonds’ specialty gyms will be more expensive to install, maintain, and upgrade than other gyms; in order to be profitable, that cost must be passed along to the consumer. Therefore, they could never compete cost-wise with any community recreational centres or school sports.

Instead, their product thrives by flaunting its ingenious response to a growing need. At Bulldog Interactive Fitness “The children are enjoying the same video games they love, but they are getting their heart rates up and burning calories at the same time” (“Bulldog Fitness”, 2006, para. 2). This feature checks all the boxes of what a competitive strategy aims to do: Bulldog Interactive Fitness possesses a resource that others do not, which allows them to engage children in a way that other gyms cannot, and to children who love video games, it can prove more enticing than engaging in other sports. But, even though their product is one-of-a-kind, developing a competitive edge requires active effort. Holly and James are doing their best to further distinguish their innovative new gym by building brand recognition through commercials, and trying to join forces with Sony. Bulldog Interactive Fitness stands out from competitors by using interactive technology to entice children to trade in their

traditional video games for video-game fitness. To leverage this advantage, the Bonds want to add a well-known name to increase their company’s legitimacy and franchisee confidence in their product.

Launching Bulldog Interactive Fitness, an interactive gym for kids who like video games, automatically requires Holly and James use focus differentiation because they appeal to their small market by offering an innovative solution to a growing problem. Fortunately, Holly and James appear to recognize this and are effectively employing the strategy.

Question 3

The strategic management process involves 6 steps to create strategies an organization employs to effectively achieve its goals. Within these strategies, businesses must decide what they want to do and how they will do it, while simultaneously generating a profit and satisfying customers. The first three steps take an analytical approach to identify the organization’s mission (its reason for being in business), to appraise its external environment (its opportunities and threats), and to evaluate its internal processes (its strengths and weaknesses). Holly and James Bond, founders of Bulldog Interactive Fitness, apply the strategic management process exactly this way.

The first step of the strategic management process, identifying the organization’s mission and goals, answers the following questions: what is the organization’s purpose for existing, and what does it want to achieve? The answers to these questions lay the foundations of a road

map that the organization will fill in with more detail as it progresses through the six step strategic process. These questions allow the organization to establish a starting point and an endpoint. The Bonds’ are in business to combat the childhood obesity epidemic and they “envision a business that will fight against this trend of inactivity, increase fitness levels, and encourage a healthier lifestyle in the long run” (“Bulldog Fitness”, 2006, para. 3). With this statement, Holly and James have a clear starting point, and have established a vision for the business. However, their vision is hard to measure, and establishes no real end point - it acts as more of a direction, like driving North. As such, they have laid a subsequent quantifiable goal of selling 1350 franchises over the course of five years—an   ambitious goal motivated by external factors.

The second step of the strategic management process, external analysis, examines a business’s opportunities and threats. Robbins et al. (2017) depict opportunities as trends in environmental factors that will positively affect the business, and threats as trends that could negatively impact the business (Robbins et al., 2017, p.53). Environmental factors and trends are specific to each business and are divided into two categories: the specific environment, and the general environment. Still, both should be considered to provide the clearest external analysis possible. The general environment sets the tone and overall trends for political, economic, sociocultural, technological, environmental, and legal factors. Holly and James have isolated the increasing number of overweight and obese children—a  sociocultural factor—as their most influential general environment consideration. By analyzing their external environment, they confirm that an opportunity for their interactive fitness centre exists, and realize that it presents not just a local opportunity, but a nation-wide opportunity. This understanding is reflected by the

number of franchises they are aiming to sell, and also by the fact that they already have locations in Nova Scotia and Toronto. By identifying the increasingly inactive and sedentary lifestyle that schools and electronic activities help to create, James and Holly consider the general environmental factor most pertinent to their business—the  childhood obesity epidemic.

With the general climate in mind, the Bonds can scrutinize their specific environment for opportunities and threats which includes: their customers, competitors, stakeholders, media, and suppliers. To start, Bulldog Interactive Fitness evaluates its customers —overweight   children “attracted to the stimulation and challenge of video” (“Bulldog Fitness”, 2006, para.2). This increasing trend confirms the opportunity for their business to thrive as their interactive fitness concept targets those exact kids. Also, although not directly mentioned by Holly and James, their use of CBC to raise product awareness through participating in this show, depicts their knowledgeable use of the opportunity for free, positive publicity.

Next, Holly and James identify their biggest threat—that   their idea can be easily replicated. In response to this threat, they need to move fast, and sell as many franchises as possible to become the dominant brand name associated with their new concept. Their lofty goal of selling 1350 franchises in five years demonstrates their recognition of this risk, and shows that they have developed a strategy to help them deal with it. Another aspect preoccupying the Bonds is trying to forge an alliance with their main supplier—Sony.   Sony’s technology is “the backbone of this unique gym” (“Bulldog Fitness”, 2006, para.2), and as such, Holly is doing her best to establish a partnership with the well-known company in order to accelerate the

speed at which she and James can sell franchises. Therefore, the move to partner with Sony addresses the threat the Bonds feel from potential competitors. Identifying and using Bulldog Interactive Fitness’s external environmental opportunities and threats cannot stand alone in creating a well-informed strategy, it needs to be accompanied by an equally in-depth assessment of the company’s internal abilities to be successful.

An internal analysis reveals a company’s strengths and weaknesses. Strengths highlight “any activities the organization does well or any unique resources that it has” (Robbins et al., 2017, p.52). Bulldog Interactive Fitness uses interactive technology to make exercising fun, stimulating, and challenging for kids - technology that competitors do not currently hold. Their weakness at the moment is their marketing ability. The Bonds need to sell a high number of franchises quickly (20 each month if they want to reach their target of 1350 in five years.) However, they currently run two locations themselves, and have only franchised one other. The discrepancy between their objective and their current sales depict the Bonds’ struggle to meet the sales numbers they desire. Holly “knows the sale would be a lot more attractive with a big name partner to add marketing power”(“Bulldog Fitness”, 2006, para.5), so she is in hot pursuit of a partnership with Sony, which could help strengthen their marketing and reassure potential franchisees, as well as customers, of Bulldog Interactive Fitness’s legitimacy. The actions taken by the Bonds depict their awareness of their strengths and weaknesses, and that strategies to leverage their advantage and strengthen their weakness are underway.

Through their actions, Holly and James Bond show their use of the first three steps of the strategic management process. By pursuing strategies in line with the results of external and

internal analyses, the Bonds increase their chances of achieving their goals and satisfying their mission.

Part B Question 1

The decision-making process involves eight important steps to make comprehensive and effective decisions. But to suggest that each of the steps are equally important is offensive. A mistake in the first step—identifying   the problem—means   the subsequent six steps will lead decision-makers to waste their time analyzing, selecting, and implementing an improper alternative for their existing problem. Furthermore, they will be unaware that their efforts have been misguided until step eight when they evaluate the effectiveness of their implemented strategies, at which point the entire process may need to be repeated. Of all of the steps, the first step is the most crucial to developing a relevant solution because it provides the direction for the rest of the process, thereby saving time and resources.

Looking at why people make decisions reveals why identifying the problem is the most important step. People make decisions to correct “a discrepancy between an existing and a desired state of affairs” (Robbins et al., 2017, p.77). In other words, decisions exist to solve problems people encounter. Robbins et al., suggest that every time someone makes a decision, they automatically use some or all of the eight steps outlined in formal decision-making (Robbins et al., 2017, p.77). The process “begins with identifying a problem” progresses through six more steps and “concludes with evaluating the decision’s effectiveness” (Robbins et al., 2017, p.77). Although, what Robbins et al. do not clarify with this statement is that this process acts as a feedback loop should the evaluation reveal the problem persists. Therefore, if

the problem does not get solved the first time, some or all of the decision-making process will need to be repeated until the discrepancy disappears.

With this in mind, it becomes obvious that incorrectly identifying the problem leads the decision-maker through the next six steps to implement a solution that will never fully address the issue. For example, a doctor could easily misdiagnosed or treat only the symptoms of a patient’s complaints if the doctor fails to conduct a thorough examination to discover the source of the issue. The same applies to management issues such as dissatisfied employees who might complain about the workload, the long hours, or the stress, but in reality the mental strain experienced by staff stems from being bored with their job. If the true discrepancy is not identified in the first step, the next steps cannot possibly construct an effective strategy. The way steps two through seven build on the first, demonstrates how much they depend on it to be valid themselves.

The second step establishes a decision criteria necessary to decide which elements are relevant to the decision—undoubtedly   important to fully satisfy the issue—but   if the issue has been improperly assessed, this criteria becomes irrelevant. Weighting the criteria, the third step, prioritizes this irrelevant criteria. After which, options are developed to fit the established criteria, which again means that the chosen alternatives will be ineffective themselves because they have been chosen to fit a criteria immaterial to the issue at hand. Analyzing each of the ill-fitted choices is the fifth step, and in the sixth and seventh steps insufficient alternatives are selected and implemented. For managers, steps two through seven consume a significant amount of time and resources as they carefully analyze possibilities. Accordingly, ensuring

the first step gets done correctly is imperative to reduce wasting precious time evaluating alternatives that cannot satisfy the objective.

The final step, evaluating a decision’s effectiveness, reinforces the importance of correctly identifying the issue. The eighth step objectively assesses whether or not the problem persists after implementing the decision. If the issue disappeared, the process is complete. But, if the problem persists, the first question asked is “Was the problem incorrectly defined?” (Robbins et al., 2017, p.84). If so, then the entire decision-making process must start again from scratch, consuming even more resources. Yet, if during the evaluation, an error was spotted in any of steps two through seven, at least the decision-process does not have to be completely overhauled, therefore saving time and resources.

The first step is called the first step for a reason; without it, further steps cannot be taken. Therefore, it is the most important step. Each of the eight steps Robbins et al. lay out in the decision-making process significantly impact decisions, nevertheless, without correctly diagnosing the problem, the chances of eradicating the issue remain poor.

Question 2

Advances in information and communication technology undoubtedly facilitate the access to relevant information. However, this ease of access translates into information overload, which makes the decision-making process more challenging as the number of available alternatives to analyze increases. In turn, this increases the difficulty of decision-making as it causes

decision-makers to doubt their decisions due to decreased certainty conditions. It also leads decision-makers to increasingly rely on bounded-rationality and personal biases to help filter through and make sense of the overwhelming amount of information.

Technological advances create information overload which dramatically increases the challenge of developing and analyzing alternatives. For example, when searching for winter gloves one could go to a local store where maybe 10 reasonable options exist to select from. Instead, with the incredible advances in technology, one could simply use the internet to identify the best choice. “Simply” being the operative word. In a Google search, simply typing in “winter gloves” brings up approximately 1,040,000,000 results in half a second. With the power of the internet, instead of evaluating 10 choices at a ski shop, more alternatives, and information regarding those alternatives, exist then are possible or reasonable to sift through in order to make one decision. Rather than providing an adequate amount of details and options, technology bombards people with too many possibilities. The length of time it would take to develop and analyze the alternatives available at the ski shop compared to how long it would take to evaluate every single alternative available on the internet is incomparable. Developing and analyzing alternatives has become tremendously burdensome with the rapid advances in technology.

Furthermore, not having the time or the resources to sort through all of the information for all of the alternatives for every decision, degrades the confidence of each decision because the certainty diminishes. Certainty is “a condition in which a decision-maker can make accurate decisions because the outcome of every alternative is known” (Robbins et al., 2017, p.85). In

other words, because humans have limited resources to investigate alternatives, many unexplored possibilities still exist. Therefore, people leave the most ideal decision-making condition behind and enter the realm of risk—where   it becomes necessary to estimate the probabilities of outcomes for chosen alternatives. The increased degree of uncertainty surrounding decisions adds to the difficulty of each decision and fuels the mind with doubt. Advances in ...