Strategic Management/Planning/Policy Strategy Formulation. This is the first step within the process, and the very first thing you do within the strategy formulation process is create mission and vision statements. Therefore, this video focuses on the concepts and tools needed to create vision and mission statements.
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Building on the last video, scarcity of resource, we’re now going to talk about Choice and Opportunity Cost. I’m going in this direction as this topic will feed into strategic advantages from an economics view point. As you can probably tell macro economics ties directly in with the strategic planning process so lets get going with Choice and Opportunity cost:
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Government and NGOs, nonprofits do not create resources, they use them. Because of this they do not have the ability to scale and therefore cannot create wide scale change or implement solutions on a wide scale basis. Business however does create resources and does scale, so does this mean business is the solution rather than the problem?
Views: 93 Aaron Pittelkau
Yesterday I talked about societal problems, and business possibly being the solution. Within that conversation I spoke quite about resources and value, and how NGO’s and government just don’t have the ability to make large impacts due to their inability to scale. So I thought what the heck, lets talk about economics on a macro level as it pertains to the economic problem of scarce resources. So, Economics is about making choices, and guess what? You make economic choice everyday. You make a choice whether to have a part job or a full time job, or you make a choice to focus on school, or to live in a dorm or off campus, to live in a house or an apartment, you make choices whether to study accounting or use that time to study fashion design or for a training cert, to get married or stay single, or pack a lunch instead of eating out. You probably know more about econ than you even realize. But lets dig into it a little more.
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Let’s say you and your significant are both independent contributors and have tight schedules and each of you can only spare an hour a day to do tasks like, lets say iron shirts and create content. Each of you must create a minimum of 1 piece of content a day, and each of you prefers ironed shirts when you have time. Lets say it takes you a half hour to create one thing of content. Your significant other uses a different process to create content so it takes them a full hour. But your significant other is awesome and ironing shirts and it only takes them 5 minutes to iron one shirt. You take twice as long or 10 minutes to iron the same shirt.
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Comparative advantage though doesn’t apply to just individuals but company’s, regions of countries, or countries with the lowest opportunity cost of producing a particular good should specialize in producing that good. Because of such factors as climate, workforce skills, natural resources, and capital stock, certain parts of the country and certain parts of the world have comparative advantage in producing particular goods. For instance, my home state, Washington State should produce apples to Florida’s oranges, and software India to hardware in Taiwan – resources are allocated most efficiently across the country and around the world when production and trade conform to the law of comparative advantage
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Change Management, what to do, and what not to do to successfully implement change.
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The second part of strategy formulation is industry analysis which is also sometimes called or referred to as external audit or environmental scanning. An industry analysis focuses on identifying and evaluating trends and events that are beyond the control of your company, for instance population shifts from one region to another, increased or even decreased foreign competition, a population that is getting younger or older, and market volatility, just as some examples. An industry analysis shows you your key opportunities and any threats that will challenge your organization allowing decision makers to create strategies that take advantage of the opportunities and avoid or mitigate the impact of the threats. Towards the end I also go through the step by step process of how to create an External Factor Evaluation Matrix
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In the last video on the economic problem, scarcity of resources, we talked quite a bit about choices. Well, as you probably realized an economy results from the choices that millions of individuals make in attempting to satisfy their unlimited wants. A key assumption is that individuals, in making choices, rationally select alternatives they perceive to be in their best interest. By rational, we mean making the best decision you can given the available information. People may not know with certainty which alternative will turn out to be the best so they simply select the alternatives they expect will produce the most satisfaction. In general, rational self-interest means that individuals try to maximize the expected benefit achieved with a given cost or to minimize the expected cost of achieving a given benefit.
Views: 41 Aaron Pittelkau