BU 470 Strategic Management Assignment 04

Part A:

Describe the strategic management process. What does it mean to manage strategically?


Strategic management process is the full set of commitments, decisions, and actions that are required by the organization which helps the organization to achieve strategic competitiveness and earn above-average returns. The first step of the strategic management process is to analyse the external environment and internal organization to determine its resources, capabilities, and core competencies—the sources of its “strategic inputs.” After the analysis of the external and internal environment, the company formulates the strategies which includes business level strategy, corporate level strategy, international strategy etc. After the formulation of the strategy, the organization implements the strategy. The dynamic strategic management process must be maintained as ever-changing markets and competitive structures are coordinated with a firm’s continuously evolving strategic inputs. To manage strategically, the organizations should work on strategies and change the strategies according to the changing environment.

What are the three types of organizational strategies and how are they different?


The three types of organizational strategies includes business level strategy, corporate level strategy and cooperative strategies. Business level strategy is the strategy which is adopted by the organization to have a competitive edge over its rivals. Corporate level strategy is the strategy which determines the business which helps the company to company to compete and manage different businesses, The last strategy is the cooperative strategy where the form forms the partnership with other firms to share their resources and capabilities.

The Sarbanes-Oxley Act of 2002 (SOX) has had a significant impact on strategic management practices and strategies. Discuss how the Sarbanes-Oxley Act of 2002 reformed corporate governance.


The Sarbanes-Oxley Act of 2002 instructed the SEC to consider the development of global accounting standards. At one point, U.S. GAAP appeared to be a likely choice for becoming the global standard. In fact, many developing countries tended to utilize U.S. GAAP as a foundation for their country-specific standards. The Sarbanes Oxley is the act which focuses to fixing different auditing effects of the US organization. The main focus of this act is brings accurate and reliable picture of the company. With the Sarbanes Oxley act of 2002, the companies need to incorporate corporate governance in its firm. With the help of corporate governance the company are required to manage the relationship among the stakeholders and to determine and control the strategic directions and performance of the organization.

Part B:

Compare and contrast the industrial organization (I/O) and resource-based views (RBV) on competitive advantage.

How does each develop a competitive advantage?

What is their focus?

What are their determinants of profitability?


The industrial organization is the model of above average returns which explains the external environment of the organization and the company. This model focuses on the external environment. The firm’s performance is believed to be determined primarily by the range of industry properties, including the economies of scale, barriers of market entry, diversification, product differentiation and degree of concentration of the firm.

Resource based model assumes that the organization has collection of unique resources as well as capabilities. Each organization has unique set of resources as well as capabilities which helps the firm to earn above average returns. With the help of the resources and capabilities of the company the company is able to attain ability of a firm to outperform its rivals. With the unique resources as well as resources the company is able to attain competitive edge.

What makes organizational resource-based views unique?


Resources are valuable when they allow a firm to take advantage of opportunities or neutralize threats in its external environment. They are rare when possessed by few, if any, current and potential competitors. Resources are costly to imitate when other firms either cannot obtain them or are at a cost disadvantage in obtaining them compared with the firm that already possesses them. And they are nonsubstitutable when they have no structural equivalents. Many resources can either be imitated or substituted over time. Therefore, it is difficult to achieve and sustain a competitive advantage based on resources alone

Part C:

Analyze the two perspectives on the environment.


External environment is the environment which is used to analyse the environment in which the firm operates. The two perspective on the environment is PESTLE analysis and five force model.

Explain the primary responsibility of managers in conducting external analysis across managerial levels.


External environment analysis is the primary responsibility of the managers as it helps in analysing the environment in which the organization is operating. With this the managers are able to analyse the general, economic, social, political, legal environment in which the firm is operating and helps in developing the internal strategies which will help the company to compete and sustain in the market.

Describe the benefits of conducting an external analysis.


Firms understand the external environment by acquiring information about competitors, customers, and other stakeholders to build their own base of knowledge and capabilities. A firm’s strategic actions are influenced by the conditions in the three parts (the general, industry, and competitor) of its external environment. With the help of the external environment analysis, the organization is able to analyse the environment in which the firm is operating.

Part D:

Define and present the characteristics of distinctive organizational capabilities.


The firm combines individual tangible and intangible resources to create capabilities. In turn, capabilities are used to complete the organizational tasks required to produce, distribute, and service the goods or services the firm provides to customers for the purpose of creating value for them.

xamples of Firms’ Capabilities

Functional Areas Capabilities Examples of Firms
Distribution Effective use of logistics management techniques Walmart
Human Resources Motivating, empowering, and retaining employees Microsoft
Management Information Systems Effective and efficient control of inventories through point-of-purchase data collection methods Walmart
Marketing Effective promotion of brand-name productsEffective customer serviceInnovative merchandising Procter & GambleRalph Lauren Corp.McKinsey & Co.Nordstrom Inc.Crate & Barrel
Management Ability to envision the future of clothing Hugo BossZara
Manufacturing Design and production skills yielding reliable productsProduct and design qualityMiniaturization of components and products KomatsuWitt Gas TechnologySony
Research & Development Innovative technologyDevelopment of sophisticated elevator control solutionsRapid transformation of technology into new products and processesDigital technology CaterpillarOtis Elevator Co.Chaparral SteelThomson Consumer Electronics

Outline the steps in the identification of distinctive organizational capabilities.


Step 1: Prepare current product-market profile.

Step 2: Identify sources of competitive advantage and disadvantage in the main product-market segments.

Step 3: Describe all the organizational capabilities and competencies.

Step 4: Sort the core capabilities and competencies according to strategic importance.

Step 5: Identify and agree on the key capabilities and competencies.

Describe the criteria involved in judging organizational strengths and weaknesses.


The strengths and weaknesses of the company is analysed by the resources, capabilities of the company. The firms are able to identify their strengths and weaknesses in resources, capabilities, and core competencies. Strengths are the resources that an organization possesses and capabilities that an organization has developed. Both can be exploited and developed into a sustainable competitive advantage. Weaknesses are the resources and capabilities that are lacking or deficient. Prevent an organization from developing a sustainable competitive advantage

Discuss the internal audit approach and why it is important.


An internal audit thoroughly assesses an organization’s various internal functional areas. Internal Audit is important as it helps the organization in analyzing the primary function of the organization. With the analysis of the primary functions, the company will be able to analyze the resources as well as internal ability of the company. The main primary functions of the company which helps in internal audit are:

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