78 Flashcards
define strategy?
A comprehensive plan for accomplishing an organization’s goals.
Strategic management
A comprehensive and ongoing management process aimed at formulating and implementing effective strategies; a way of approaching business opportunities and challenges.
Effective strategy
A strategy that promotes a superior alignment between the organization and its environment and the achievement of strategic goals.
What are the three components of a strategy?
distinctive competence
scope
resource deployment
What are the two Levels of Strategy?
business level strategy
corporate level strategy
What is Strategy formulation
is the set of processes involved in creating or
determining the strategies of the organization
• it focuses on the content of strategies.
What is Strategy implementation
is the methods by which strategies are
executed within the organization
• it focuses on the processes which achieve
strategies.
What is Deliberate strategy
is a chosen plan of action implemented to
support specific goals.
What is Emergent strategy
is a developed pattern of actions in the
absence of mission and goals or despite
mission and goals.
SWOT is an acronym standing for ?
SWOTis an acronym standing for Strengths, Weaknesses, Opportunities, and Threats.
What are Organizational strengths?
• are skills or capabilities enabling an organization to
conceive of and implement its strategies.
– SWOT analysis divides strengths into common
strengths and distinctive competencies.
SWOT analysis divides strengths into two kinds of strengths, __________ strengths and _______________
a common strength
and
competencies
A common strength is
A common strength is a skill or capability held by
numerous competing firms.
A competitive parity is
Competitive parity exists when large numbers of
competing firms can implement the same strategy.
distinctive competence
A distinctive competence is a strength
possessed by a small number of firms.
Organizations that exploit these competencies
often obtain a competitive advantage.
Strategic imitation
is duplicating another’s
competence into a valuable strategy.
Sustained competitive advantage
exists after
all attempts at strategic imitation have ceased.
What are Organizational weaknesses?
are skills and capabilities that do not enable (and
may limit) an organization to choose and
implement strategies that support its mission.
There are two ways to address weaknesses
invest to obtain strengths or modify mission.
A competitive disadvantage
exists when a
firm is not implementing valuable strategies
implemented in competing firms.
Evaluating opportunities and threats requires
analyzing the environment
What are Organizational opportunities
are areas in the environment that, if exploited, may
generate higher performance.
What are Organizational threats
areas in the environment that increase the difficulty
of an organization’s achieving high performance.
What are the three approaches to formulating business-level strategy
Porter’s Generic Strategies
The Miles and Snow Typology
Product Life Cycle Strategies
What are the 3 strategies of Porters Generic Strategies, explain each.
Differentiation strategy
– seeks to distinguish itself from competitors
through the quality of its products and services.
Overall cost leadership strategy
– seeks to gain a competitive advantage by
reducing its costs below competing firms.
Focus strategy
– concentrates on a specific regional market,
product line, or group of buyers.
explain the prospector category?
encourages creativity and flexibility and is often
decentralized.
explain the defender category?
focuses on lowering costs and improving
performance of current products.
explain the analyzer category?
maintains current businesses and is somewhat
innovative in new businesses.
explain the reactor category?
has no consistent approach to strategy.
What are the different states of The Product Life Cycle Strategy, explain each
is a model portraying how sales volume for
products change over the life of the product.
• Different stages call for different strategies.Growth stage
• Sales continue to grow.
• Focus on quality/delivery and begin to differentiate.
– Maturity stage
• Demand begins to slow.
• Focus on low costs and search for new products.
– Decline stage
• Total sales decline.
• Firms may close, or differentiate and cut costs.
Diversification
– An organization operates multiple businesses
not logically associated with one another.
• Presumed benefits:
o Businesses should have stable performance over time
and resource allocation advantages.
• Actual disadvantages:
o Lack of knowledge at the corporate level about unrelated
businesses.
o Fails to exploit important synergies used by competitors.
What is Single-product strategy
an organization manufactures one product or
service and sells in a single geographic market.
Managers of international firms face more complexity and uncertainty when formulating strategies. However, they may exploit three sources of competitive advantage.
Global efficiencies include:
– Location efficiencies
– Economies of scale
– Economies of scope
Multimarket flexibility
gives firms the ability to respond to change in
one region by making changes in other regions.
Worldwide learning
gives firms the advantage of adopting best
practices from wherever they originate.
There are three Strategic alternatives. Explain each
Home replication strategy -
Multidomestic strategy -
Global strategy -
Home replication strategy
• A company uses the core competency it developed
at home as its main competitive weapon.
– Multidomestic strategy
• A company manages itself as a collection of
subsidiaries, each with a domestic market.
– Global strategy
• A company views the world as a single
marketplace, standardizing products to address
the needs of customers worldwide.
Define Decision making
Is the act of choosing one alternative from among a set of alternatives.
What are the Actual disadvantages:
Lack of knowledge at the corporate level about unrelated
businesses.
o Fails to exploit important synergies used by competitors.
When implementing a diversification strategy, organizations face two important questions.
How will they move from a single-product
strategy to some form of diversification?
– Once diversified, how will they manage
diversification effectively?
Most organizations do not start out completely diversified. They start out as a single business, pursing a particular business level strategy. Success in this strategy then creates resources and strengths that the organization can use in related businesses.
You can become a diversified firm 3 ways.
New Products Replace suppliers or customers Mergers and acquisitions
What is Backward vertical integration
an organization conducts activities formerly
conducts by its suppliers.
What is Forward vertical integration
an organization begins activities formerly
conducted by its customers.
Becoming a Diversified Firm
Another common way to diversify is
through mergers they are
is the purchase of one firm by
another firm of approximately the same size.
Becoming a Diversified Firm
Another common way to diversify is
through acquisitions they are
is the purchase of a firm by a
firm that is considerably larger.
The two major tools for managing diversification are
organization structure
and portfolio management techniques.
Portfolio management techniques Two important portfolio management techniques are
methods of determining which businesses to
engage in and how to manage these businesses to
maximize corporate performance.
The BCG matrix
is a method of evaluating businesses relative
to the growth rate of their market and the organization’s share
of the market.
Stars, Cash Cows, Questions Marks, and Dogs
Dogs are businesses that have a very small share of a market that
is not expected to grow. do not invest or sell ASAP
Cash cows are businesses that have a large share of a market that
is not expected to grow substantially.
Generate high profits - Milked for cash to support question marks
and stars. Who have greater growth potential
Question marks are businesses that have only a small share of a
quickly growing market. Future performance is uncertain invest
carefully
Stars are businesses that have the largest share of a rapidly
growing market. – Cash cows support to ensure preeminent position
GE Business Screen
a method of evaluating businesses along two
dimensions: (1) industry attractiveness and
(2) competitive position;
Explain Evidence-Based Management (EBM) and the five principles
uses rationality and evidence when making
decisions.
1. Build a culture of truth.
2. Obtain the best evidence and let it guide actions.
3. Encourage experimentation and learning by
doing.
4. Look for risks and drawbacks in
recommendations.
5. Avoid basing decisions on beliefs.
Behavioral Elements in Decision Making ,Explain the Administrative Model
The administrative model argues that
decision makers:
– use incomplete and imperfect information;
– are constrained by bounded rationality;
– and tend to “satisfice” when deciding.
When faced with a decision situation mangers actually?
use incomplete imperfect information are constrained by bounded rationality and tend to safice and end up with a decision that may or may not serve the interests of the organization
Define Decision making
Is the act of choosing one alternative from among a set of alternatives.
What are the two Types of Decisions, explain each
Programmed decision
•One that is fairly structured or recurs with some frequency, or both.
Nonprogrammed decision
•Is relatively unstructured and occurs much less often.
List the 3 Decision Making Conditions and explain each
State of certainty
A condition in which the decision maker knows with reasonable certainty what the alternatives are and what conditions are associated with each alternative.
State of risk
A condition in which the availability of each alternative and its potential payoffs and costs are all associated with probability estimates.
State of uncertainty
A condition in which the decision maker does not know all the alternatives, the risks associated with each, or the consequences each alternative is likely to have.
Most major decisions in organizations today are made under a state of
uncertainty
Describe The classical model of decision making
– is a prescriptive approach that tells managers
how they should make decision;
– assumes that managers are logical and
rational and their decisions will be in the best
interests of the organization.
When faced with a decision situation, mangers should?
• obtain complete and perfect information • eliminate uncertainty • evaluate everything rationally and logically " ... and end up with .. a decision that best serves the interests of the organization.
What are the 6 Steps in the rational decision-making model
1 recognizing and defining the decision situation
2 identifying alternatives
3 evaluating alternatives
4 selecting the best alternative
5 implementing the choosen alternative
6 following up and evaluating the results
Explain Evidence-Based Management (EBM) and the five principles
uses rationality and evidence when making
decisions.
1. Build a culture of truth.
2. Obtain the best evidence and let it guide actions.
3. Encourage experimentation and learning by
doing.
4. Look for risks and drawbacks in
recommendations.
5. Avoid basing decisions on beliefs.
Behavioral Elements in Decision Making
Administrative Model Political forces Intuition Escalation of commitment Risk propensity Ethics
Explain the Administrative Model
argues that
decision makers:
– use incomplete and imperfect information;
– are constrained by bounded rationality;
– and tend to “satisfice” when deciding.
When faced with a decision situation mangers actually?
use incomplete and . .. and end up with a imperfect information ~ • are constrained by . bounded rationality • tend to satisfice decision that may or may and end up with a decision that may or may not serve the interest of the organization
Define satisficing
searching for alternatives until one is found that
meets some minimum standard of sufficiency.
Define coalition
is an informal alliance formed to
achieve a common goal.
Explain Risk Propensity
is the extent to which a
decision maker gambles when deciding.
Group and Team Decision Making in Organizations
Forms of group and team decision making.
What are the most common methods of group and team decision making?
– Interacting groups and teams
• Members openly discuss, argue about, and agree
on the best alternative. The most common form.
– Delphi groups
• A group is used to achieve a consensus of expert
opinion.
– Nominal groups
• A structured technique used to generate creative
and innovative alternatives or ideas.
What are some Advantages of Group and Team decision making
- more information and knowledge are available
2 more alternatives are likely to be generated
3 more acceptance of the final decision is likely
4 enhanced communication of the decision may result
5 better decisions generally emerge
What are some Disadvantages of Group and Team decision making
1 the process takes longer than individual decision making so it is costlier
2 compromise decision resulting from indecisiveness may emerge
3 one person may dominate the group
4 groupthink may occur
