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Learn key theories, apply theory to practice, and develop critical thinking skills for making evidence-based decisions in business. Understand the elements of value creation, product and service offerings, customer service, and building systems of work. Explore the role of managers in developing dynamic capabilities, stakeholder analysis, competitive intelligence, and industry analysis. Gain insights into decision-making traps and ethical considerations in business.
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BUSS5000/Critical Thinking in BusinessWeek 7 Week 1 Extras pack Critical Thinking, Strategy Models, and Case Study Approach.
You need to follow three components Business Mindset Thinking like a manager Evidence-based decisions Business Skills Writing and discussing Applying theory to practice Business Content Learning key theories Understanding cases
2. What do Businesses do & how do they do it? They: • Create Value – focus on delivering customer value • Provide Products & Services – what do they offer to the marketplace • Focus on Customer Service – key sources of competitive advantage • Build Systems of Work – the resource-based view of firm success A good framework is the Input / Output Model: TRANSFORMATION INPUTS OUTPUTS
2. What do Businesses do & how do they do it? The Input / Output Model: This is where managers do lots of critical thinking • Like: • Capital • Materials • People TRANSFORMATION • Like: • Products • Services OUTPUTS INPUTS • Like: • Business Analytics • Accounting • Finance • Logistics • Marketing etc This is where lots of value-adding takes place ! This is what we teach at SGSM
3. The Role of Managers Some Companies to Explore Augier and Teece (2009) argue for a “dynamic capabilities” approach, where managers in the modern 21st Century economy (where there is lots of market and technological change) need to develop key capabilities in order to: • Sense and then seize new opportunities • Reconfigure and protect knowledge assets, competencies and complementary assets • Achieve sustained competitive advantage and this all requires lots of critical thinking skill!
Stakeholder Analysis Who are your stakeholders? 'People or small groups with the power to respond to, negotiate with, and change the strategic future of the organization' Eden, C. and Ackerman, F. 1998, The Journey of Strategic Management, Sage Publications, London.
Thinking Model 2 – Levels of Intelligence SI = BI + CI2 + KM
Critical Questioning: What do we NEED TO KNOW? What do we ALREADY KNOW? WHY do we NEED to KNOW IT? WHEN do we need to know it? WHAT WILL WE DO with the information? WHAT will it COST to get it or not to have it? These are the type of critical questions you would ask in complex problem solving. Competitive Intelligence – What Questions do I ask?
Links between Socratic Questioning and 8 Elements of Thought/Reasoning
Links between Socratic Questioning and 8 Elements of Thought/Reasoning
Intuitive Decision-making Feelings/emotions Ethical values or culture Knowledge, skills and training Past experiences Using data Source: Taking the Mystery out of Intuitive Decision-making – Burke and Miller 1999.
Decision-making Traps (Hammond, Keeney and Raiffa 1998) • The Anchoring Trap • Status quo Trap • Confirming Evidence Trap • Estimating and forecasting Traps • Recallability Trap • Prudence Traps • Overconfidence • Sunk Costs • Framing Source: The Hidden Traps in Decisionmaking (Hammond, Keeney and Raiffa 1998)
Potentialentrants Threat ofnew entrants Bargaining powerof suppliers Suppliers Competitive Rivalry Buyers Bargaining powerof buyers Substitutes Threat ofsubstitutes Industry Analysis Porter’s Five Forces Model
Requirements for Competitor Analysis Identifying competitors Determining objectives Assess resources & capabilities Identifying Competitor strategies Avoid, Attack/Befriend Estimate reaction pattern Decided competitive posture (A, A or B)
Market position on strategy Market leader • Attack • Defend/protect current share • Expand total share • Attack • Defend/protect • Expand total share Challenger • Deploy assets • Reconfigure markets • Redefine markets Follower Nicher • Avoid direct confrontation • Minimize cost • Imitate-watch & learn • Get smart • Segment market carefully - growth potential • Develop & protect unique capabilities
Resource Based View (RBV) Theory Competitive advantage based on internal assets or resources & deploying of them better than competitors to attain sustainable competitive advantage (SCA) Sustainable Competitive Advantage: The ability of an organization to deliver value to consumers, at a profit, in one or more ways that competitors. Organizational capabilities refer to a firm’s capacity to exploit a particular marketing opportunity. Resources include organizational capabilities or assets Capabilities are complex bundles of skills and accumulated knowledge, deployed through organizational processes (Marketing, managerial, operational, innovation capabilities).. Capabilities and Competitive Advantage
Value Chain Analysis Source: Michael E. Porter (1985), Competitive Advantage: Creating and Sustaining Superior Performance, New York: Simon & Schuster.
Ethical and Social Issues and Critical Thinking Growing stakeholder concerns and calls for congruence between economic value creation and societal objectives Porter, M. 2011.The New Competitive Advantage: Creating Shared Value (Chile 2011)
