MacroEnvironment - Innovation & Organizational Survival

Why is innovation important for organizational survival and success in a turbulent environment?

Ans:

Innovation is a primary source of competitive advantage in the modern business world. Organizations that survive and prosper the best are learning organizations –– ones that mobilize people, values, and systems to achieve continuous change and performance improvements driven by the lessons of experience. Organizations and their managers must continually adapt to new situations if they are to survive and prosper over the long run.

Source: Management, 11th Edition - John R. Schermerhorn

MacroEnvironment - Competitive Advantage

Explain the concept of competitive advantage. Identify the four general ways to pursue a competitive advantage according to your text.

Ans:

Competitive advantage refers to something that an organization does extremely well, a core competency that clearly sets it apart from its competitors and gives it an advantage over them in the marketplace. This concept is discussed further in Chapter 9 on Strategic Management. For

now, it is important to understand that competitive advantage is an ability to do things better than one’s competitors. When others cannot quickly copy or easily learn to do these things, the competitive advantage becomes more sustainable over time.

1.     Competitive advantage can be achieved through costs—finding ways to operate with lower costs than one’s competitors and thus earn profits with prices that one’s competitors have difficulty matching.

2.     Competitive advantage can be achieved through quality—finding ways to create products and services that are demonstrably of consistently higher quality for customers than what is offered by one’s competitors.

3.     Competitive advantage can be achieved through delivery—finding ways to outperform competitors by delivering products and services to customers faster and consistently on time, and to continue to develop timely new products.

4.     Competitive advantage can be achieved through flexibility—finding ways to adjust and tailor products and services to fit customer needs in ways that are difficult for one’s competitor to match.

Source: Management, 11th Edition - John R. Schermerhorn

MacroEnvironment - Customer Relationship Management & Competitive Advantage

Explain how Customer Relationship Management could be used to gain a competitive advantage?

Ans:

Customer relationship management is used to establish and maintain high standards of customer service. Known as CRM and introduced in the chapter-opening example of Salesforce.com, this approach uses the latest information technologies to maintain intense communication with customers as well as to gather and utilize data regarding their needs and desires. At Marriott International, for example, CRM is supported by special customer management software that tracks information on customer preferences. When you check in to a Marriott hotel, your past requests for things like a king-size bed, no smoking room, and Internet access are likely already in your record. Says Marriott’s chairman: “It’s a big competitive advantage.”

Source: Management, 11th Edition - John R. Schermerhorn

MacroEnvironment - Elements of General Environment and of Specific Environment

Describe the primary elements of the general environment and of the specific environment.

Ans:

The general environment consists of all the background conditions in the external environment of an organization. The primary elements of the general environment include the following:

•       Economic conditions –– health of the economy in terms of inflation, income levels, gross domestic product, unemployment, and job outlook.

•       Sociocultural conditions –– norms, customs, and values on such matters as human rights; trends in education and related social institutions; as well as demographic patterns in society.

•       Legal-political conditions –– prevailing philosophy and objectives of the political party or parties running the government, as well as laws and government regulations.

•       Technological conditions –– development and availability of technology, including scientific advancements.

•       Natural environment conditions –– nature and conditions of the natural environment, including levels public concern expressed through environmentalism.

        The specific environment (or task environment) consists of the actual organizations, groups, and persons with whom an organization interacts and conducts business. The primary elements of the specific environment are the organization’s important stakeholders, which include the following:

•       Customers ––consumer or client groups, individuals, and organizations that purchase the organization’s goods and/or use its services.

•       Suppliers ––providers of the human, information, and financial resources and raw materials needed for the organization’s operations.

•       Competitors –– organizations that offer the same or similar goods and services to the same consumer or client groups.

•       Regulators –– government agencies and representatives, at the local, state, and national levels, that enforce laws and regulations affecting the organization’s operations.

•       Investors/owners  individuals, groups, and other organizations/institutions that hold an equity interest in the business.

Source: Management, 11th Edition - John R. Schermerhorn

Chapter 4 - True / False & Multiple Choice

Chapter 4

True / False

1)   True

2)   True

3)   False

4)   False

5)   True

6)   True

7)   False

8)   False

9)   False

10)               False

11)               False

12)               False

13)               True

14)               True

15)               True

16)               True

17)               False

18)               False

19)               False

20)               True

21)               False

22)               True

23)               True

24)               True

25)               True

Source: Management, 11th Edition - John R. Schermerhorn

Multiple Choice

1)   C

2)   C

3)   B

4)   B

5)   D

6)   E

7)   D

8)   C

9)   B

10)               B

11)               A

12)               C

13)               A

14)               D

15)               C

16)               B

17)               D

18)               E

19)               B

20)               C

21)               A

22)               D

23)               A

24)               B

25)               C

Source: Management, 11th Edition - John R. Schermerhorn