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Strategic Management: What is Strategy

Managing Strategically and Competitive Advantage

Managing strategically means making decisions and implementing strategies that allow an organization to develop and maintain competitive advantage.
Recognizing the impact of important and dynamic external factors
Capitalizing on organizational resources and capabilities
Competitive advantage is what sets an organization apart—in other words, its competitive edge.
Controlling or having something other organizations don't have
Doing something better than other organizations can
Doing something other organizations can't do
Competitive advantage is a necessary ingredient for an organization's long-term success and survival. This is true for all organizations, even not-for-profit and government agencies and departments.
Industrial Organization View (I/O)
The industrial organization (I/O) view suggests organizations look at the impact of important external factors. Focus is on:
The structural forces within an industry
The competitive environment, i.e., the firm's position within the industry
Michael Porter—the structure of an industry influences what is appropriate organizational conduct (i.e., its strategic decisions and actions), which in turn influences the organization’s performance.

Resources-Based View
Resources-based view emphasizes exploiting organizational resources in order to develop and maintain competitive advantage.
Organizations differ in culture, experiences, assets, and capabilities.
Links internal assets and capabilities with its environment.

There are key assets (resources) that give the firm a sustainable competitive advantage. There are five categories of resources:
• Financial assets encompass the actual and potential debt and equity used by the organization as well as any retained earnings or other financial holdings.
• Physical assets include machines, buildings, manufacturing facilities, raw materials, or any other tangible materials the organization has.
• Human resources include the experiences, characteristics, knowledge, judgment, wisdom, skills, abilities, and competencies of the organization's employees.
• Intangible assets include such things as brand names, patents, reputation, trademarks, copyrights, registered designs, and databases.
• Structural-cultural assets include the history, culture, work systems, organizational policies, working relationships, level of trust, and the formal reporting (organizational) structure being used.

Information Systems Strategies

Information Systems Strategies
Information system is a set of interrelated components used to collect, process, store, and disseminate information supporting decision making, analysis, and management control.
System Technology
Manual or computer-based
Types of Information Systems
• Transaction Processing System (TPS)—basic business systems reporting day-to-day work
• Office Automation System (OAS)—includes all work done by clerical workers
• Knowledge Work System (KWS)—used primarily by engineers, analysts, scientists, etc.
• Management Information System (MIS)—summarizes and reports on basic functions
• Decision Support System (DSS)—powerful data analysis for decision making
• Executive Support System (ESS)—assist upper-level managers with complex decisions
Current Information Systems Strategies
• Electronic data sharing or Electronic Data Interchange (EDI)
• Customer call or contact centers
• Internet and World Wide Web

EQ, What is Emotional Intelligence?

The term emotional intelligence was coined in 1990 by Peter Salovey of Yale University and John Mayer of the University of New Hampshire.

Emotional Intelligence, or EQ, refers to the ability to tap into, label and express feeling appropriately, respond empathically and use information about one's own feelings and those of others to make decisions and choices. Emotional intelligence went mainstream due to Daniel Goleman's best-selling book Emotional Intelligence, published in 1995.

Emotional intelligence, or EQ, refers to the ability to tap into, label and express feeling appropriately, respond empathically and use information about one's own feelings and those of others to make decisions and choices. Five major categories capture the skills involved in emotional intelligence:
1. Knowing one's emotions, or self-awareness. People who recognize their feelings as they happen are better pilots of their own lives, 'having a surer sense of how they really feel about personal decisions from whom to marry to what job to take.'
2. Managing emotions. Poor emotional managers constantly battle feelings of distress, while good ones bounce back from life's setbacks and upsets.
3. Motivating oneself. People who can control their impulses can channel their energies to meet their own goals.
4. Recognizing emotions in others, or empathy. People who are attuned to how others feel get along well with people.
5. Handling relationships, or social competence. "People skills" allow us to get and give to each other with maximal gratification.
In the end, knowing one’s emotional state allows the possibility of expressing feeling appropriately or perhaps consciously suppressing it. Self-awareness allows us to take an emotional upset into account before acting on the powerful impulses it generates. EQ stands for empathy, reading other people’s feelings accurately, social skills like teamwork, persuasion, leadership, and managing relationships, emotions, motivation etc. Failure of EQ has its price in corporate America. Emotional clumsiness is to be discouraged unless one is a brilliant scientist. EQ means being connected.

I believe that trust is built by the following components:
* Communicating openly
*Self-awareness. Know Thyself first
*Accountability
*Responsibility
*Being genuine
* Being able to follow through when you have committed to a goal, person, or objective
* Demonstrating competency
*Respecting others (regardless of title, influence, or power)
* Honesty. It is great to be honest. People know they can come to you with their most private issues.
* Being able to listen: Listening skills are also important.

In a few words, I use humor, listening skills, compassion, presence, and consistency to gain the trust of others.

At this point, it’s convenient to quote Warren Bennis:
“…trust becomes the emotional glue that can bond people to an organization. These are the factors that generate trust -- at work or in a partnership, a marriage, or a friendship: competence, constancy, caring, candor, congruity. What I call congruity -- or authenticity, feeling comfortable with oneself -- is a further reflection of character. It is at the heart of any honest relationship. But congruity goes beyond simply knowing yourself; it is being consistent, presenting the same face at work as at home. Candor is perhaps the most important component of trust. When we are truthful about our shortcomings, or acknowledge that we do not have all the answers, we earn the understanding and respect of others.”

Leadership Topic: What To Avoid in the Negotiation Process

Here’s a list of things to avoid in the negotiation process:
Too much warm-Up.

This approach calls for the negotiator to get down to business. Instead of talking about other topics such as traffic jams, football, baseball, the weather, and political issues, the manager or interviewer would do a better job of discussing the relevant topic. There’s no time to devote to a certain buildup. If it has to be used, the interviewer will make sure that it reduces anxiety.

Direct Questions.

Inexperienced interviewers sometimes make the mistake of transforming the interview into a game of “twenty questions.” In this approach, the interviewee may end up directing the interview depending on the phrasing of the questions. Subordinates are smart enough to say what will please the interviewer. Interviewers should avoid questions that can be answered with a simple yes or no.

Arguing.
Little is gained from an argument, particularly in the early stage of the interview. Yet, everyone has a strong human tendency to correct the other person. Resist being defensive even when criticized. The difficult part comes when even unconscious feelings are revealed through facial expression.

Advice-Giving.
Once you have heard the entire story of the interviewee, you may want to give advice. Make sure to get the complete picture as the employee sees it. Active Listening at the Wrong Time. Non-directive listening is not the solution to every problem. When someone is legitimately asking for information, for a helping hand, or for some resource you can provide him, he may have no need to talk things out. It’s worth noting empathetic listening does not necessarily mean that you agree with the other person’s message, only that you are trying to understand it. Some authorities argue that the interviewer should accept the interviewee’s feelings.

Masterminding.
Many people who use the Nondirective interview tend to violate its spirit. They hope, by asking shrewd questions, to manipulate the interviewee into believing that he is thinking through his problem by himself, though the way questions are worded inevitably forces the interviewee to arrive at the interviewer’s own predetermined conclusion.

Leadership Topic: The Three Schools of Bargaining Ethics

There are three schools of bargaining ethics: Utilitarian Theory.

This theory holds that actions and plans should be judged by their consequences. In its classical formulation, utilitarianism claims that behaviors that are moral produce the greatest good for the greatest number. Its strength as an ethical guide is that it facilitates calculative shortcuts (e.g., own loyalty to an individual, coalition, or organization). It can also encourage entrepreneurship, innovation and productivity. A good example could be the various groups of Asian high tech workers in the Silicon Valley. Highly educated in math, physics, engineering, they transform places such as Fremont, CA with their economic power. Their innovation, entrepreneurship and productivity become legendary in the Valley to the point that outsourcing by American companies exploiting low labor costs and know-how end up forming a large part of the GDP of India and Vietnam. The Utilitarian theory’s weaknesses as an ethical guide are that it can result in an unjust allocation of resources, particularly when some individuals or groups lack representation or voice. On the political scene, we can cite the lack of representation and disenfranchising of African-Americans in the recent elections in Florida and other parts of the country.

The Theory of Rights. It’s a theory of moral rights that asserts that human beings have certain fundamental rights that should be respected in all decisions. Several fundamental rights have been incorporated into the American legal system in the form of the Constitutional Bill of Rights. Advocates of moral rights have suggested the following: 1. The right of free consent (Did consumers consent to have their private, financial and Trust funs data stored by ChoicePoint?). 2. The right to privacy (the paparazzi may learn a few things here as they chase famous people. Britney Spears and her husband could use it. Pamela Anderson could too). 3. The right of freedom of conscience. 4. The right of free speech. 5. The right to due process (Even criminals, drug dealers and murderers have access to this right. Scott Peterson was given the right to due process) .

The Theory of Justice requires decision makers to be guided by equity, fairness, and impartiality. Canons of justice may specify three types of moral prescriptions: distributive rules, principles of administering rules and compensation norms.

Leadership Topic: What Is Conflict? Cuban Missile Crisis is an Example

Conflict arises because change disrupts the existing balance of resources and power, thereby straining relations between the people involved. It is a negotiation situation in which there is a conflict of interests, positions or what one wants isn’t necessarily what the other wants. Professor E. Wertheim, College of Business Administration, Northeastern University, writes, “Conflict that requires resolution is neither good nor bad. Conflict is inevitable between people working alongside each other in close proximity for any length of time.

Conflict does not have to be a bad thing if handled constructively. Conflict can be healthy and creative. It usually is an ongoing process that occurs against a backdrop of continuing relationships and events.

Going back to what is dubbed "Cuban Missile Crisis" pitting JFK against the premier of Soviet Union over the presences of missiles in nearby Cuba, each succeeding American government has maintained the sanctions against the island nation. At the same, it's worth mentioning the rise of the powerful Cuban community in Miami. They have successfully lobbied each administration to isolate Castro and his socialist regime.

That's why travel to the island has been restricted. Under current rules, someone who wants to travel there must belong to either one of these groups. "The Treasury Department's action marks the latest development emerging from President Bush's call for more stringent enforcement of provisions that forbid most travel to Cuba. Under current rules, there are exceptions that cover working journalists, relatives of Cuban citizens, providers of humanitarian aid and others."

CNN reports the following, "President Kennedy imposed economic sanctions against Cuba in 1963 during the Cold War. The basic goal is to isolate the Cuban government economically and deprive it of U.S. dollars, the government says."

Leadership Topic: "Power Organizes Around Scarce and Critical Resources."

French and Raven define power as the ability to influence an individual’s psychological field, including behavior, opinions, attitudes, goals, needs, and values. The bases of power have to do with the relationship between O and P which is the source of that power.

When people use power outside their range, power will be reduced. “Any attempt to utilize power outside the range of power will tend to reduce the power.” (Schmidt, S. p. 87). Furthermore, we see power as the ability to get things done or to achieve the goals of the organization. (Schmidt, S. p. 90).

Power is activity-based or situational. “Because power derives from activities rather than individuals, an individual’s or subgroup’s power is never absolute and derives ultimately from the context of the situation.” The second part of the question has to do with the meaning of “power organizes around scare and critical resources.” An example will shed a lot of light on this statement. Power rarely organizes around abundant resources. No one can control the access to oxygen which is readily available. Power can’t be organized around it.

However, Saudi Arabia, Mexico, Venezuela, Kuwait and other countries form OPEC which is a powerful organization regulating, monitoring the availability of crude oil on the market. In the United States, a person does not become powerful because he or she can drive a car. There are simply too many others who can drive with equal facility. However, if you go to some villages in Mexico, Haiti, Ethiopia, Bangladesh, and the Dominican Republic, owning a car may be a source of power. Since power revolves around scare and critical activities, the control and organization of those activities become a major battleground in struggles for power.

Even relatively abundant or trivial resources can become the bases of power if one can organize and control their allocation and the definition of what is critical. Professional groups such as lawyers organize themselves to control various legal aspects.

Key Elements of Negotiation: Which one is the most important?

The key elements of negotiation are Planning, Negotiation Phases, Narrowing Differences and Closure. I would say that Planning is the most important element in any negotiation. Planning allows you to define the problem that needs to be solved, get a clear idea of the needs, positions, and interests of the parties. It starts with such basic ideas as a party (or a group or company) determining in private (often with the help of colleagues, stakeholders, staff, confidants or counselors) what it is the party actually wants. Often, these wants reflect true “needs.” And some will take an inflexible attitude toward obtaining these “needs.” That is called taking a position or positional bargaining. Once the other party’s interests are determined, once we are sure of our own position, we may want to spend time on getting a bargaining session started.

Looking at the landscape of interests, we must keep in mind the three C’s. 1. Interests we share in common—The parties want the same things for the same reasons 2. Some interests are complementary ---We want the same result as the other party, though to serve different needs or interests. 3. Some interests are conflicting—What is in our interests are in (apparent) opposition to those of the other party. There is also another factor in planning which allows you to separate the problem from the people. Those of us who have been negotiating can remember instances such as forceful, argumentative, or domineering personalities try to steamroll over quiet, more passive individuals. The first group tends to get their way all the time. We all know people who seem to get their way more often than not. We must careful to establish the difference between bullying and negotiating.

In the planning stage, we also find pre-negotiation, face-to-face planning and post-negotiation review. At this point, it’s worth mentioning that in the planning stage, the parties may want to consider who will be part of the negotiation team. The gender aspects of negotiation comes into play. It makes good sense in many situations to mix and match the gender composition of negotiating teams to work more effectively with other teams. In the end, determining our needs and interests and those of the other parties will help us negotiate much better. I believe that Panning is very important. It helps us consider and rank priorities which are the sequence in which issues are tackled. Do we go from the toughest to the easiest issues? Planning also involves taking a look at the resources and constraints, timing and power play. It helps us to assess the opposition before meeting it head on.
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