Learning OrganizationsD6 discusses why learning organizations mu.docx

Learning Organizations
D6 discusses why learning organizations must document results
and provided guiding principles for program evaluation and
advice on what to measure, how to collect and analyze the
information, and, especially important, how to market the
results. Choose an organization you believe to be a learning
organization, provide a justification as to why the organization
is a learning organization and how it collects and analyzes the
information or assessment information on why the training
and/or learning was successful.
The requirements below must be met for your paper to be
accepted and graded:
· Write between 1,250 – 1,750 words (approximately 3 – 5
pages) using Microsoft Word in APA style, see example below.
· Use font size 12 and 1” margins.
· Include cover page and reference page.
· At least 80% of your paper must be original content/writing.
· No more than 20% of your content/information may come
from references.
· Cite all reference material (data, dates, graphs, quotes,
paraphrased words, values, etc.) in the paper and list on a
reference page in APA style.
References must come from sources such as, scholarly journals
found in EBSCOhost, CNN, online newspapers such as, The
Wall Street Journal, government websites, etc. Sources such as,
Wikis, Yahoo Answers, eHow, blogs, etc. are not acceptable for
academic writing.
A detailed explanation of how to cite a source using APA can be
found here (link).
Download an example here.
Grading Criteria Assignments

Maximum Points
Meets or exceeds established assignment criteria
40
Demonstrates an understanding of lesson concepts
20
Clearly presents well-reasoned ideas and concepts
30
Uses proper mechanics, punctuation, sentence structure, and
spelling
10
Total
100
Strategic Management Concepts:
A Competitive Advantage Approach
Sixteenth Edition
Chapter 5
Strategies in Action
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All
Rights Reserved
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1

Learning Objectives (1 of 2)
5.1 Identify and discuss eight characteristics of objectives and
ten benefits of having clear objectives.
5.2 Define and give an example of eleven types of strategies.
5.3 Identify and discuss the three types of “Integration
Strategies.”
5.4 Give specific guidelines when market penetration, market
development, and product development are especially effective
strategies.
5.6 Explain when diversification is an effective business
strategy.
Rights Reserved
After studying this chapter, you should be able to do the
following:
5-1. Identify and discuss eight characteristics of objectives and
ten benefits of having
clear objectives.
5-2. Define and give an example of eleven types of strategies.
5-3. Identify and discuss the three types of “Integration
Strategies.”
5-4. Give specific guidelines when market penetration, market
development, and product
development are especially effective strategies.
5-5. Explain when diversification is an effective business
strategy.
5-6. List guidelines for when retrenchment, divestiture, and
liquidation are especially effective
strategies.
5-7. Identify and discuss Porter’s five generic strategies.
5-8. Compare (a) cooperation among competitors, (b) joint
venture and partnering, and
(c) merger/acquisition as key means for achieving strategies.
5-9. Discuss tactics to facilitate strategies, such as (a) being a

first mover, (b) outsourcing,
and (c) reshoring.
5-10. Explain how strategic planning differs in for-profit, not-
for-profit, and small firms.
2
Learning Objectives (2 of 2)
5.6 List guidelines for when retrenchment, divestiture, and
liquidation are especially effective strategies.
5.7 Identify and discuss Porter’s five generic strategies.
5.8 Compare (a) cooperation among competitors, (b) joint
venture and partnering, and (c) merger/acquisition as key means
for achieving strategies.
5.9 Discuss tactics to facilitate strategies, such as (a) being a
first mover, (b) outsourcing, and (c) reshoring.
5.10 Explain how strategic planning differs in for-profit, not-
for-profit, and small firms.
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3
Long-Term Objectives
The results expected from pursuing certain strategies
2-to-5 year timeframe
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Without long-term objectives, an organization would drift
aimlessly toward some unknown end.
4
Table 5-1 Varying Performance Measures by Organizational

LevelOrganizational LevelBasis for Annual Bonus or Merit
PayCorporate75% based on long-term objectives
25% based on annual objectivesDivision50% based on long-term
objectives
50% based on annual objectivesFunction25% based on long-
term objectives
75% based on annual objectives
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Long-term objectives are needed at the corporate, divisional,
and functional levels of an organization.
5
Table 5-2 The Desired Characteristics of Objectives
Quantitative
Measurable
Realistic
Understandable
Challenging
Hierarchical
Obtainable
Congruent across departments
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Objectives are commonly stated in terms such as growth in
assets, growth in sales, profitability, market share, degree and
nature of diversification, degree and nature of vertical
integration, earnings per share, and social responsibility.
6
The Nature of Long-Term Objectives
Objectives

provide direction
allow synergy
assist in evaluation
establish priorities
reduce uncertainty
minimize conflicts
stimulate exertion
aid in both the allocation of resources and the design of jobs
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Objectives provide a basis for consistent decision making by
managers whose values and attitudes differ. Objectives serve as
standards by which individuals, groups, departments, divisions,
and entire organizations can be evaluated.
7
Financial Versus Strategic Objectives
Financial objectives include growth in revenues, growth in
earnings, higher dividends, larger profit margins, greater return
on investment, higher earnings per share, a rising stock price,
improved cash flow, and so on.
Strategic objectives include a larger market share, quicker on-
time delivery than rivals, shorter design-to-market times than
rivals, lower costs than rivals, higher product quality than
rivals, wider geographic coverage than rivals, achieving
technological leadership, consistently getting new or improved
products to market ahead of rivals, and so on.
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Two types of objectives are especially common in
organizations: financial and strategic objectives.
8

Not Managing by Objectives
Managing by Extrapolation
Managing by Crisis
Managing by Subjectives
Managing by Hope
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Mr. Derek Bok, former President of Harvard University, once
said, “If you think education is expensive, try ignorance.” The
idea behind this saying also applies to establishing objectives,
because strategists should avoid the following ways of “not
managing by objectives.”
9
Figure 5-1 A Comprehensive Strategic-Management Model
Source: Fred R. David, “How Companies Define Their
Mission,” Long Range Planning 22, no. 3 (June 1988): 40. See
also Anik Ratnaningsih, Nadjadji Anwar, Patdono Suwignjo,
and Putu Artama Wiguna, “Balance Scorecard of David’s
Strategic Modeling at Industrial Business for National
Construction Contractor of Indonesia,” Journal of Mathematics
and Technology, no. 4 (October 2010): 20.
Rights Reserved
10
Types of Strategies
Most organizations simultaneously pursue a combination of two
or more strategies, but a combination strategy can be

exceptionally risky if carried too far.
No organization can afford to pursue all the strategies that
might benefit the firm.
Difficult decisions must be made and priorities must be
established.
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Hansen and Smith explain that strategic planning involves
“choices that risk resources and trade-offs that sacrifice
opportunity.”
11
Alternative Strategies Defined and Exemplified (1 of 2)
Table 5-4 Alternative Strategies Defined and Recent Examples
GivenStrategyDefinitionExampleForward IntegrationGaining
ownership or increased control over distributors or
retailersAmazon began rapid delivery services in some U.S.
cities.Backward IntegrationSeeking ownership or increased
control of a firm’s suppliersStarbucks purchased a coffee
farm.Horizontal IntegrationSeeking ownership or increased
control over competitorsBB&T acquired Susquehanna
Bancshares.Market PenetrationSeeking increased market share
for present products or services in present markets through
greater marketing effortsUnder Armour signed tennis champion
Andy Murray to a 4-year, $23 million marketing deal.Market
DevelopmentIntroducing present products or services into new
geographic areaGap opened its first five stores in China.Product
DevelopmentSeeking increased sales by improving present
products or
services or developing new onesAmazon just began offering its
own line of baby diapers and wipes.
Rights Reserved

Defined and exemplified in Table 5-4, alternative strategies that
an enterprise could pursue can be categorized into 11 actions.
12
Alternative Strategies Defined and Exemplified (2 of 2)
[Table 5-4 continued]StrategyDefinitionExampleRelated
DiversificationAdding new but related products or
servicesFacebook acquired the text-messaging firm WhatsApp
for $19 billion.Unrelated DiversificationAdding new, unrelated
products or servicesKroger and Whole Foods Market are
cooking meals, becoming restaurants.RetrenchmentRegrouping
through cost and asset reduction to reverse declining sales and
profitStaples closed 250 stores and reduced by 50% the size of
other stores.DivestitureSelling a division or part of an
organizationSears Holdings divested its Land’s End division to
Sears’ shareholders.LiquidationSelling all of a company’s
assets, in parts, for their
tangible worthThe Trump Taj Mahal in Atlantic City, New
Jersey, faces liquidation.
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Figure 5-2 Levels of Strategies with Persons Most Responsible
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Strategy making is not just a task for top executives. Middle-
and lower-level managers also must be involved in the strategic-
planning process to the extent possible. In large firms, there are
actually four levels of strategies: corporate, divisional,
functional, and operational.
14

Integration Strategies
Forward Integration
involves gaining ownership or increased control over
distributors or retailers
Backward Integration
strategy of seeking ownership or increased control of a firm's
suppliers
Horizontal Integration
a strategy of seeking ownership of or increased control over a
firm's competitors
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Forward integration and backward integration are sometimes
collectively referred to as vertical integration. Vertical
integration strategies allow a firm to gain control over
distributors and suppliers, whereas horizontal integration refers
to gaining ownership and/or control over competitors.
15
Forward Integration Guidelines
When an organization’s present distributors are especially
expensive
When the availability of quality distributors is so limited as to
offer a competitive advantage
When an organization competes in an industry that is growing
When an organization has both capital and human resources to
manage distributing their own products
When the advantages of stable production are particularly high
When present distributors or retailers have high profit margins
Rights Reserved

Forward integration involves gaining ownership or increased
control over distributors or retailers.
16
Backward Integration Guidelines
When an organization’s present suppliers are especially
expensive or unreliable
When the number of suppliers is small and the number of
competitors is large
When the organization competes in a growing industry
When an organization has both capital and human resources
When the advantages of stable prices are particularly important
When present suppliers have high profit margins
When an organization needs to quickly acquire a needed
resource
Rights Reserved
Backward integration is a strategy of seeking ownership or
increased control of a firm’s suppliers.
17
Horizontal Integration Guidelines
When an organization can gain monopolistic characteristics in a
particular area or region without being challenged by the federal
government
When an organization competes in a growing industry
When increased economies of scale provide major competitive
advantages
When an organization has both the capital and human talent
needed
When competitors are faltering due to a lack of managerial
expertise

Rights Reserved
Seeking ownership of or control over a firm’s competitors,
horizontal integration is arguably the most common growth
strategy.
18
Intensive Strategies
Market Penetration Strategy
seeks to increase market share for present products or services
in present markets through greater marketing efforts
Market Development
involves introducing present products or services into new
geographic areas
Product Development Strategy
seeks increased sales by improving or modifying present
products or services
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Market penetration, market development, and product
development are sometimes referred to as intensive strategies
because they require intensive efforts if a firm’s competitive
position with existing products is to improve.
19
Market Penetration Guidelines
When current markets are not saturated with a particular
product or service
When the usage rate of present customers could be increased
significantly
When the market shares of major competitors have been
declining while total industry sales have been increasing
When the correlation between dollar sales and dollar marketing
expenditures historically has been high

When increased economies of scale provide major competitive
advantages
Rights Reserved
Market penetration strategy seeks to increase market share for
present products or services in present markets through greater
marketing efforts when current markets are not saturated with a
particular product or service.
20
Market Development Guidelines
When new channels of distribution are available that are
reliable, inexpensive, and of good quality
When an organization is very successful at what it does
When new untapped or unsaturated markets exist
When an organization has the needed capital and human
resources to manage expanded operations
When an organization has excess production capacity
When an organization’s basic industry is rapidly becoming
global in scope
Rights Reserved
Market development involves introducing present products or
services into new geographic areas.
21
Product Development Guidelines
When an organization has successful products that are in the
maturity stage of the product life cycle
When an organization competes in an industry characterized by
rapid technological developments
When major competitors offer better-quality products at

comparable prices
When an organization competes in a high-growth industry
When an organization has strong research and development
capabilities
Rights Reserved
Product development strategy seeks increased sales by
improving or modifying present products or services.
22
Diversification Strategies
Related Diversification
value chains possess competitively valuable cross-business
strategic fits
Unrelated Diversification
value chains are so dissimilar that no competitively valuable
cross-business relationships exist
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The two general types of diversification strategies are related
diversification and unrelated diversification.
23
Synergies of Related Diversification
Transferring competitively valuable expertise, technological
know-how, or other capabilities from one business to another
Combining the related activities of separate businesses into a
single operation to achieve lower costs
Exploiting common use of a known brand name
Using cross-business collaboration to create strengths

Rights Reserved
Related diversification value chains possess competitively
valuable cross-business strategic fits.
24
Related Diversification Guidelines
When an organization competes in a no-growth or a slow-
growth industry
When adding new, but related, products would significantly
enhance the sales of current products
When new, but related, products could be offered at highly
competitive prices
When new, but related, products have seasonal sales levels that
counterbalance an organization’s existing peaks and valleys
When an organization’s products are currently in the declining
stage of the product’s life cycle
When an organization has a strong management team
Rights Reserved
Related diversification should be considered when these
circumstances exist.
25
Unrelated Diversification Guidelines (1 of 2)
When revenues derived from an organization’s current products
would increase significantly by adding the new, unrelated
products
When an organization competes in a highly competitive or a no-
growth industry, as indicated by low industry profit margins and
returns
When an organization’s present channels of distribution can be
used to market the new products to current customers
When the new products have countercyclical sales patterns

compared to present products
When an organization’s basic industry is experiencing declining
annual sales and profits
Rights Reserved
Unrelated diversification is when value chains are so dissimilar
that no competitively valuable cross-business relationships
exist.
26
Unrelated Diversification Guidelines (2 of 2)
When an organization has the capital and managerial talent
needed to compete successfully in a new industry
When an organization has the opportunity to purchase an
unrelated business that is an attractive investment opportunity
When there exists financial synergy
When existing markets for an organization’s present products
are saturated
When antitrust action could be charged against an organization
that historically has concentrated on a single industry
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Note that a key difference between related and unrelated
diversification is that the former should be based on some
commonality in markets, products, or technology, whereas the
latter is based more on profit considerations.
27
Defensive Strategies (1 of 3)
Retrenchment
Regroups through cost and asset reduction to reverse declining
sales and profits

Divestiture
Selling a division or part of an organization
Often used to raise capital for further strategic acquisitions or
investments
Liquidation
Selling all of a company’s assets, in parts, for their tangible
worth
Rights Reserved
In addition to integrative, intensive, and diversification
strategies, organizations also could pursue defensive strategies
such as retrenchment, divestiture, or liquidation.
28
Retrenchment
occurs when an organization regroups through cost and asset
reduction to reverse declining sales and profits
also called a turnaround or reorganizational strategy
designed to fortify an organization’s basic distinctive
competence
Rights Reserved
Retrenchment occurs when an organization regroups through
cost and asset reduction to reverse declining sales and profits.
29
Retrenchment Guidelines
When an organization has a distinctive competence but has
failed consistently to meet its goals
When an organization is one of the weaker competitors in a
given industry

When an organization is plagued by inefficiency, low
profitability, and poor employee morale
When an organization fails to capitalize on external
opportunities and minimize external threats
When an organization has grown so large so quickly that major
internal reorganization is needed
Rights Reserved
Sometimes called a turnaround or reorganizational strategy,
retrenchment is designed to fortify an organization’s basic
distinctive competence.
30
Divestiture Guidelines
When an organization has pursued a retrenchment strategy and
failed to accomplish improvements
When a division needs more resources to be competitive than
the company can provide
When a division is responsible for an organization's overall
poor performance
When a division is a misfit with the rest of an organization
When a large amount of cash is needed quickly
When government antitrust action threatens a firm
Rights Reserved
Divestiture is selling a division or part of an organization and is
often used to raise capital for further strategic acquisitions or
investments.
31
Liquidation

selling all of a company’s assets, in parts, for their tangible
worth
can be an emotionally difficult strategy
Rights Reserved
Selling all of a company’s assets, in parts, for their tangible
worth is called liquidation; it is associated with Chapter 7
bankruptcy. Liquidation is a recognition of defeat and
consequently can be an emotionally difficult strategy.
32
Liquidation Guidelines
When an organization has pursued both a retrenchment strategy
and a divestiture strategy, and neither has been successful
When an organization’s only alternative is bankruptcy
When the stockholders of a firm can minimize their losses by
selling the organization’s assets
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Liquidation is pursued when bankruptcy is the only option
available.
33
Figure 5-3 Porter’s Five Generic Strategies
Source: Based on Michael E. Porter, Competitive Strategy:
Techniques for Analyzing Industries and Competitors (New
York: Free Press, 1980), 35–40.
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Probably the three most widely read books on competitive
analysis in the 1980s were Michael Porter’s Competitive
Strategy (1980), Competitive Advantage (1985), and
Competitive Advantage of Nations (1989). According to Porter,
strategies allow organizations to gain competitive advantage
from three different bases: cost leadership, differentiation, and
focus. Porter calls these bases generic strategies.
34
Michael Porter's Five Generic Strategies (1 of 3)
Cost Leadership emphasizes producing standardized products at
a very low per-unit cost for consumers who are price-sensitive
Type 1
low-cost strategy that offers products or services to a wide
range of customers at the lowest price available on the market
Type 2
best-value strategy that offers products or services to a wide
range of customers at the best price-value available on the
market
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Cost leadership generally must be pursued in conjunction with
differentiation. A number of cost elements affect the relative
attractiveness of generic strategies, including economies or
diseconomies of scale achieved, learning and experience curve
effects, the percentage of capacity utilization achieved, and
linkages with suppliers and distributors.
Companies employing a low-cost (Type 1) or best-value (Type
2) cost leadership strategy must achieve their competitive
advantage in ways that are difficult for competitors to copy or
match.
35

Type 3
Differentiation is a strategy aimed at producing products and
services considered unique industry-wide and directed at
consumers who are relatively price-insensitive
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Different strategies offer different degrees of differentiation.
Differentiation does not guarantee competitive advantage,
especially if standard products sufficiently meet customer needs
or if rapid imitation by competitors is possible.
36
Type 4
low-cost focus strategy that offers products or services to a
niche group of customers at the lowest price available on the
market
Type 5
best-value focus strategy that offers products or services to a
small range of customers at the best price-value available on the
market
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A successful focus strategy depends on an industry segment that
is of sufficient size, has good growth potential, and is not
crucial to the success of other major competitors.
37
Means for Achieving Strategies
Cooperation Among Competitors
Joint Venture/Partnering
Merger/Acquisition

Private-Equity Acquisitions
First Mover Advantages
Outsourcing/Reshoring
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For collaboration between competitors to succeed, both firms
must contribute something distinctive, such as technology,
distribution, basic research, or manufacturing capacity.
Joint venture is a popular strategy that occurs when two or more
companies form a temporary partnership or consortium for the
purpose of capitalizing on some opportunity.
A merger occurs when two organizations of about equal size
unite to form one enterprise. An acquisition occurs when a large
organization purchases (acquires) a smaller firm or vice versa.
Private equity (PE) firms are acquiring and taking private a
wide variety of companies almost daily in the business world.
First mover advantages refer to the benefits a firm may achieve
by entering a new market or developing a new product or
service prior to rival firms.
Outsourcing involves companies hiring other companies to take
over various parts of their functional operations, such as human
resources, information systems, payroll, accounting, customer
service, and even marketing.
38
Table 5-5 Nine Reasons Why Many Mergers and Acquisitions
FailIntegration difficulties
Inadequate evaluation of target
Large or extraordinary debt
Inability to achieve synergy
Too much diversification
Managers overly focused on acquisitions
Too large an acquisition
Difficult to integrate different organizational cultures

Reduced employee morale due to layoffs and relocations
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Some key reasons why many mergers and acquisitions fail are
provided in Table 5-5.
39
Table 5-6 Eleven Potential Benefits of Merging With or
Acquiring Another FirmTo provide improved capacity
utilization
To make better use of the existing sales force
To reduce managerial staff
To gain economies of scale
To smooth out seasonal trends in sales
To gain access to new suppliers, distributors, customers,
products, and creditors
To gain new technology
To gain market share
To enter global markets
To gain pricing power
To reduce tax obligations
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Table 5-6 presents the potential benefits of merging with or
acquiring another firm.
40
Table 5-7 Five Benefits of a Firm Being the First MoverSecure
access and commitments to rare resources.
Gain new knowledge of critical success factors and issues.
Gain market share and position in the best locations.
Establish and secure long-term relationships with customers,

suppliers, distributors, and investors.
Gain customer loyalty and commitments.
Rights Reserved
First mover advantages are analogous to taking the high ground
first, which puts one in an excellent strategic position to launch
aggressive campaigns and to defend territory.
41
Copyright
Rights Reserved
Exercise 6A
Perform a SWOT Analysis for Hershey Company
Purpose
The SWOT Matrix is the most widely used of all strategic
planning tools and techniques because it is conceptually simple
and lends itself readily to discussion among executives and
managers. The SWOT Matrix is effective in formulating
strategies because it clearly matches a firm’s internal strengths
and weaknesses with the firm’s external opportunities and
threats to generate feasible strategies that should be considered.
This exercise gives you practice in developing a SWOT for a
large corporation.
Instructions
Step 1 Develop a SWOT Matrix for Hershey Company.
Follow all the SWOT guidelines provided in the chapter,
including notation (for example, S4, T3) at the end of each
strategy. Include two strategies in each of the four (SO, ST,

WT, WO) quadrants. Be specific regarding your strategies,
avoiding generic terms such as forward integration. Use the
Cohesion Case material and your answers to Assurance of
Learning Exercise 1B on page 35.
Step 2 Turn in your team-developed SWOT Matrix to your
professor for a classwork grade.
Exercise 5c
What Strategies Should Hershey Pursue in 2017?
Purpose
In performing strategic-management case analysis, you can find
information about the respective company’s actual and planned
strategies. Comparing what is planned versus what you
recommend is an important part of case analysis. Do not
recommend what the firm actually plans, unless in-depth
analysis of the situation reveals those strategies to be best
among all feasible alternatives. This exercise gives you
experience conducting library and Internet research to
determine what Hershey is doing in 2015–16 and should do in
2017.
Instructions
Step 1 Go to the www.hersheycompany.com website and
click on Newsroom. Read through the most recent 10 press
releases.
Step 2 Determine two strategies that Hershey is actually
pursuing. Give some pros and cons of those two new Hershey
strategies

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