Rothaermel Exercise DQ. 1.1.

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Rothaermel Exercise

DQ. 1.1.

Target relies on stakeholders for its development and profitrealization. The relationship between stakeholders and a firm is verycritical. Stakeholders involve all people who have an interest in thefirm (Rothaermel, 2015). They influence the development and continuedexistence of a firm. Employees are the one who offer services for aproper functioning of the target. Without the employees, the targetactivities will come to halt. Managers consult the employees beforemaking decisions on matters concerning competition. This is becausethe employees understand the target activities better and canrecommend the best competitive measures. Moreover, it is theemployees who help implement the competitive and hence, theirinvolvement is important. Customers also help in enhancements ofservices by giving feedbacks (Gronroos, 2008). The aim of the targetis to satisfy the customers to realize the highest profit. This typeof stakeholders matters a lot. Services and products are offered forpurchase to customers. If customer satisfaction is ignored, thetarget incurs challenges. Managers therefore focus on the feedbacksmade by the customers before making any conclusion or adjustments inthe target. Suppliers and local communities provide raw materials tothe target. The interest of suppliers local people influence thesteps taken by managers.

Target makes use of questionnaires, observation and feedbackcollection to understand the needs of customers. The informationgathered helps the target to differentiate according to the demandsof the customers (Rothaermel, 2015). For instance, customerexperience on certain products or services helps the target to knowwhere adjustments are needed. The cost of products may be too highfor them to afford. Information gathered from the above methods canalert the target to lower the price of the services or products. Thestakeholders’ retention can either negatively or positivelyaffected by the idea. Customers abandon the target while employeescan leave their job.

DQ. 1.2.

I would inform the BP managers that they should plan for enhancementof stakeholder relationships. By making use of a relationshipmanagement system, the BP’s managers can evaluate, monitor andenhance the stakeholder relationship (Rothaermel, 2015). Propermonitoring of the relationship of the gulf stakeholders is the firststep the managers should implement. This will ensure that activitiesthat are harmful are noticed and eliminated to ensure thatstakeholder retention is achieved. Moreover, I would advise themanagers to implement stakeholder engagement and recognition methods.The relationship in the region can be strengthened if thestakeholders are fully engaged in decision-making. Stakeholderengagement will imply that Gulf region values them and hence a betterrelationship. Furthermore, I will tell the managers that recognitionof stakeholders is a form of rewarding (Gronroos, 2008). Rewards willhelp create the link between stakeholders in Gulf region. This isbecause their achievements are recognized making them feel valued.

Promotions and advertisements can help create a good reputation. BPshould, therefore, plan for promotions and make them available forstakeholders. This method can be used to change the attitude thatstakeholders had with BP. Moreover, BP can advertise itself and hencerepair its spoiled reputation (Rothaermel, 2015). Stakeholders cantherefore, be manipulated to the belief that BP has changed. The useof stakeholder feedbacks can help avoid bad reputation by BP. Topmanagement should, therefore, plan and implement ways of collectingfeedbacks. The feedbacks will assist BP to adjust their areas ofweakness to ensure that stakeholder relationship is enhanced.

DQ. 1.3.

Firm effects involve the outcomes of actions implemented by managersto enhance performance in a firm. These effects may be because ofincreasing the number of employees or rewarding them with the aim ofachieving high performance. On the other hand, industry effectsencompass the results linked to the choice of an industry. Businessmodels of an industry are some of the things that lead to industrialeffects. Firm effects are termed more crucial because the basicaspects of performance influence them (Rothaermel, 2015). However, ifindustries become highly controlled and there is little difference instrategies and business models, industry effects become moreimportant. The performance, in this case, depends on the industryeffects and hence their focus.

DQ. 2.4.

In such a situation, competitors can implement scenario planning toaid them in survival. This method helps to anticipate and prepare forthe future and expected events. The competitors can apply forecastingtechniques like trend analysis (Gronroos, 2008). By employingscenario planning, the competitors will be able to evaluate theissues that are affecting them and their environments. Thecompetitors can then use the issues to create images of the expectedfuture. As a result, the process will assist the competitors to planand prepare for anything that would happen in the future. They willtherefore, be able to deal with future challenges and hence survivefrom the steep competition. Scenario planning being a long-termprocess will help the competitor not to collapse but withstand thecompetition. They will be able to operate as though they aresubjected to their normal environment through scenario planning.

However, not all industries succeed by use of scenario planning.Industries may collapse, face many challenges or succeed on theimplementation of the process. The reason behind the diversity of theoutcomes is the method of implementation of scenario planning.Planning requires correct estimations for correct predictions(Rothaermel, 2015). Most industries use poor methods of estimation,unqualified staff, and wrong tools when implementing the process. Asa result, variance in the benefits realized by different companies iswitnessed. In summary, the use of scenario planning does notguarantee the same outputs to all the industries since industriesdiffer in many aspects.

DQ 3: 1

External environment affects a given firm and its operations. Allbusinesses are susceptible to negative effects that result from shiftin the external environment. These comprise of decisions made bypoliticians such increment of taxation. Regulation work to in someinstances work to reduce the profit earned by firms. These compriselaws aimed to regulate the amount of waste production. Competitorsentering the market pose a great challenge to the existing firm. Theycome up with new technologies and marketing strategies unknown to themarket. This induces competition for the current customers and themarket shares for the firms significantly reduce profit earned by agreat margin(Rothaermel, 2015). Managers should be aware and monitorthe trend in the external market to avoid unexpected collapse. Abrupt changes are difficult to facilitate, as they required fundsand additional labor that is costly (Zahra, 2013).

Competition in inevitable in all markets. Competitors work tooutcompete their opponents by acquiring the largest market share. Itis imperative for the managers to monitors all the activities of thecompetitor that comprise of general pricing of products, initiativesemployed for customers services and sales promotions. This enablesthe manager to adjust to the laid policies to work in relation to thecompetitor to avoid losing of customers and hence competingeffectively.

Changes in the law systems are always bound to occur. Businessesdealing production of goods may be subjected to heavy taxation. Ensuring training of the workforces and competency in performancereduces the chances of violation of the laws and consequentlyreduction of the of taxation paid in terms of waste and gases emittedto the surrounding. The managers should work to avoid any fining asit slows the achievement of the set target (Zahra, 2013). Technologyaid in better performance of firms and increase the returns due toquality and quantity of goods produced. Managers should frequentlycheck their opponent’s advancement in technology and upgrade.Understanding of external environment is key to success.

DQ 3:2

The five Porters forces determine the level of competition to existwith a market affecting the attractiveness a company and as a result,the profits earned. When competition is low, bargaining power ofsuppliers and buyers low and absence of close substitutes or newentrants, business is regarded as attractive in the market and theprofits is easily realized. When a company is unattractive, thefive-force work to decline the profit earned due to factors such asincreased bargaining power to the customers and clients. There isalso poor response to the vertical competition that comprise oftreats from rivals, substitutes and new entrants (Rothaermel, 2015).

Change of one force calls for immediate adjustment in terms ofpractices and strategies employed by a given company. When porter’sforces are strong, they indicate strong competition and profit earnedby a firm is utilized in completion leading to poor performances. Verizon a cellphone producer has thrived due to the financialhindrances exhibited by competitors such as AT &amp T, Sprint, U. SCellular and Ting. The bargaining powers of the buyers seem to bethe highest due to its excellent coverage, speed, urban and ruralcoverage and reliability compared to the rest of the providers.

DQ. 4:1

Managers of a given firms need to constantly study internalresources, activities carried out and capability of a firm. Resources strengthen competencies that are key for continuedperformance of a business amidst challenging environment. Resourcessuch as culture of an organization propel a company forward leadingto increased revenue, satisfaction, share price and market value.Talents displayed by different employees are key to competitiveadvantage. It is imperative for study and consideration to identifyvarious gaps that need to be considered during the next recruitmentof employees (Rothaermel, 2015).

Various companies exhibit various capabilities that facilitateachievement of the set targets. They align all the elements ofperformance delivering the desired results. Business owners need tocarefully analyze the capabilities of the business in terms of theworkforce collaboration and their numbers. An optimum number ofemployees are capable of increased production with optimum profitaccumulation. Study of capability gives a firm an insight on how toincrease the number of employees or merge some cores to harvest thelarges shared in the market. Strong and effective activities in thefirm indicate powerful internal resources and capabilities and viceversa. Examination of the activities performance by differentprofessional in the firm such as synergistic performance is a sign ofeffective activities (Rothaermel, 2015).

Great insight is derived from the above study. The managers are ableto evaluate the current condition of the business and compare theperformance with the goals. This gives them a reliable insight duringdecision-making process. The factors that lead to nonperformance andviable performance are identified. The managers are able to build onthe weakness through studying their neighbors strategic plans. Itprovides a background for immense development within the set time.The cost of production are reduces which consequently resultsincreased profit margin.

DQ 4:2 a

McDonalds Company comprise of various activities, which includeacquiring raw materials from its preferred suppliers. Raw materialsacquired comprise of milk, beef, flour, sugar, yeast and vegetablesthat form main activities. The company has warehouses that containcleaning supplies, paper products and foods ready for consumption assupport activities.

Value addition to the customers

McDonald’s chains offer quality services and products compared toother outlets. They are safe to consumers and affordable. Informationconcerning the composition of the products is well labelled andcustomers choose products depending on their health conditions. Cupscontaining hot coffee are covered to eliminate any possible injury.Signs are indicated in any area likely to harm the customers.

Most of the chains have automated system. It detects any occurringshortage and informs the supply center for response without waitingof manual ordering that takes time to process. McDonald’s chainscontain cost by choosing the suppliers and utilizing suppliers for along period (Watson, 2012). Apart for reducing their cost ofconstantly looking for new suppliers, they receive quality rawmaterials.

DQ 4:2 b

Changes are essential for effective performance. Nevertheless,McDonald’s decision to healthier menu needed not to interfere withtraditional value activities. In the past, many customers wereaccustomed to cheap cheeseburgers that came in combination with friesand a drink. All customers with enormous appetite could quenchthemselves at a very low cost. This special offer was withdraw are islikely to affect the used customers. McDonald should made healthierchanges without withdrawing traditional chain activities that werehighly valuable to the customers. Customers could have been advisedon health benefits concerning the products with time.


All firms are based primarily on the applicationof a collection of tangible or intangible resource at the disposal ofthe company for the competitive advantage based on the resource-basedview (Oliver, 2007). The resources, which are heterogeneous in natureand not necessarily perfectly mobile, are required to turn ashort-term competitive advantage into the resource that is valuable.

Valuable- the resource must allow the firm to usevalue-creating strategy by reducing its weakness or outperforming itscompetitors. This makes transaction cost lower than discounted rentsflow during the creation of values strategy. Secondly, the rare ofthe resource and such resource needs to be rare (Oliver, 2007). Inan ideal competitive strategy, price normally reflects the commonlydiscounted future above normal returns. Other criteria will be a useof non-substitutable–value looks to be independent of other threefactors, potentially value creating, rare and perfectly imitable thenit lacks substitutability. In case competitors become able to counterthe value-creating strategy of other firms then the price will bedriven down up to a point where it will be equal to discounted futurerate. Lastly, in imitable which means a single firm controls thevaluable resource. Competitive advantage will be sustainable of thecompetitor cannot duplicate the strategy.

These four criteria focus on ensuring theefficiency of the firm, which allows the firm to have competitiveadvantage hence making it in a better position to acquire keycompetencies. All these criteria are independent and lack one maycost a firm dearly.

SG. 5:1

A customer in an organisation refers to a personwho purchases services or goods from a business or a store. It canalso be a thing or a person of a particular kind that has to dealwith (Gronroos, 2008). Student refers to someone who is beingtrained to do something. Moreover, specifically here a student issomeone who is receiving training on development of scorecard from anorganization. Students normally high Skills and Company can hire astudent to develop its scorecard since the students are usuallycheaper to hire.

Methods of creating value-First, measuring addsvalue more by making the customers understand the product well. Thiswill make the client happy even if they are not going shop instantly,they will start to access the product. Moreover, adding lead willenable the client to easily access the product making it easy forthem to acquire them (Gronroos, 2008). The customers will be able totake a stand and become a consistent supporter of a certain industry,which has provided the lead. It is also essential to teach the clienton how to follow the product. Inspiring is another way of makingpeople work better and invest in that business. Many people getinspiration from creativity and art. Lastly, it is better listeningto the customers demand will assist in providing what customers bestprefers.

The key Core competencies that are needed includeskills, attitude and knowledge. When the expertise has these keycompetencies, he or she will be able to handle difficult situation(Gronroos, 2008). They will also be able to use modern technology inthe provision of goods and services.

Shareholders including taxpayers who invest theirresources in an organisation view the competence leaders as peoplewho can be entrusted with their resources. The shareholders are everwill to invest in universities (Gronroos, 2008). This is because theyview universities as source of knowledge to the students. Students’education is very essential as education provides the studentsvariety of skills to work in different organisation. This meansuniversities are potential source of competent leaders necessary forfuture management of stakeholders’ resource.

SG. 5.2

This bottom line measures profits while at thesame time measuring the impact of the organisation on planet andpeople. It expresses the company’s sustainability and effects onboth local and global scale. Given the definition, this means thismethod will result in a business that is all rounded. The business tobe started using this method takes care of the environment whilemaintaining highest possible profits (Norman &amp MacDonald, 2004).Surely, the primary reason anyone starts a business is to acquireprofit. However, a company started using this method assures bothprofits and sustainability. This mean it is not easy for a businessevaluated using this method before starting hardly fail unlike whenanother method is used.

Moreover, this concept of triple bottom line isresponsible to all stakeholders. It involves everybody eitherindirectly or directly together with the planet, which is the home ofeveryone. This means any family member who is willing to join thecompany will be at liberty to do it (Norman &amp MacDonald, 2004). The company will be able to employ many workers, which are frequentlymotivated. This means the business will be ran by good peoplemaintained in the enterprise. These organisations focus on people,an essential resource for organisation. In the world, good people arein limited supply and if this business makes them available, then itremains the best enterprise (Norman &amp MacDonald, 2004). Investingin such enterprises boosts significantly the possibility of running abusiness at profits and eliminates common mistakes. Financial bottomlines are forever in an organization are shared. The profit acquiresunder this concepts helps sustain and empower the community. TheTriple Bottom Line will help in improving both environment andpeople.


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Norman, W., &ampMacDonald, C. (2004). Getting to the bottom of “triple bottom line”.&nbspBusiness Ethics Quarterly,&nbsp14(02),243-262.

Oliver, C.(2007). Sustainable competitive advantage: Combining institutionaland resource- based views.&nbspStrategicmanagement journal,18(9),697-713

Rothaermel, F. T. (2015). Strategic management. McGraw-Hill.

Watson, J. L. (2012). Golden arches east: McDonald`s in East Asia.Stanford University Press.

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