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Should he rethink strategy as a result of factors in the environment?
Q1. Strategy Concept, cont.
- External forces had begun pushing for healthier forms of food
- Franchisees had inconsistency in service, décor
- New menu items had to be accepted by loyal customers
- Would Thompson be correct to continue with the original vision & mission?
- Should he rethink strategy as a result of factors in the environment?
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External forces had begun pushing for healthier forms of food. Company-owned and franchisee restaurants had inconsistency in service and décor. New menu items had to be accepted by loyal customers. Skinner appeared to have continued with the original vision & mission. Should Thompson do the same? McDonald’s provides an interesting example of a firm that did very well for decades with a clear strategy and then stumbled as it tried to reevaluate what it wanted to do. It is clear from the case that McDonald’s had been tremendously successful primarily as a fast food chain, with particular emphasis on hamburgers. Should Thompson rethink strategy as a result of factors in the environment?
McDonald’s
Q1. Strategy Concept, cont.
Strategic Management involves
- Analysis
- Strategic goals (vision, mission, strategic objectives)
- Internal and external environment
- Decisions – Formulation
- What industries should we compete in?
- How should we compete in those industries?
- Actions – Implementation
- Allocate necessary resources
- Design the organization to bring intended strategies to reality
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During strategic analysis, the leader does “advance work” to anticipate unforeseen environmental developments, identify unanticipated resource constraints, assess changes in his or her preferences for how to manage. During strategy formulation, the organization addresses the issue of how to compete in a given business to attain competitive advantage. Strategies are formulated at the business, corporate, and international levels. Entrepreneurial initiatives may also play a role. In strategy implementation, depending on the type of organization structure, the leader might include key individuals in a discussion around selecting which strategies might be best to implement at which level within the organization. The leader must ensure proper strategic controls and organizational design, and establish effective means to coordinate and integrate activities within the firm as well as with suppliers, customers and possible alliance partners. Leaders should also be committed to excellence and ethical behavior while promoting learning and continuous improvement. Here’s where innovation is important.
McDonald’s
Q1. Strategy Concept, cont.
- How can McDonald’s create a sustainable competitive advantage in the marketplace that is not only unique and valuable but also difficult for competitors to copy or substitute?
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The basic question strategic management tries to answer is: How can we create competitive advantages in the marketplace that are not only unique and valuable but also difficult for competitors to copy or substitute?
McDonald’s
Q1. External Environment
Q1 cont: What are the current forces in McDonald’s external environment?
- External Scanning
- Surveillance of a firm’s external environment:
Predict environmental changes to come
Detect changes already under way
Proactive mode
- External Monitoring
- Track evolution of:
- Environmental trends
- Sequence of events
- Streams of activities
Exhibit 2.1
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Organizational leaders must become aware of factors in the overall environment that might affect their ability to create a competitive advantage. So how do managers become environmentally aware? By doing scanning, monitoring, and gathering competitive intelligence, and using these inputs to develop forecasts. This prepares the firm to do more extensive analysis of the forces in the general environment and the industry or competitive environment. Environmental scanning involves surveillance of a firm’s external environment to predict environmental changes and detect changes already under way. It is a BIG PICTURE viewpoint of the industry/competition, looking for key indicators of emerging trends – what catches your eye? Alerts the firm to critical trends before changes have developed a discernible pattern and before competitors recognize them. Environmental monitoring is a firm’s analysis of the external environment that tracks the evolution of environmental trends, sequences of events, or streams of activities. Leaders need to monitor the trends that have the potential to change the competitive landscape – what do you want to track? Firms need to CHOOSE the trends identified via the scanning activity, and regularly monitor or track these specific trends to evaluate the impact of these trends on their strategy process.
McDonald’s
Q1. External Environment, cont.
- Demographic
- Sociocultural
- Political/Legal
- Technological
- Economic
- Global
The general environment is composed of factors that are both hard to predict and difficult to control: