9. Managing Strategy

Question 1

Strategies

Answer 1

The plans for how the organization will do what it’s in business to do, how it will compete successfully, and how it will attract and satisfy its customers in order to achieve its goals.

Question 2

Business model

Answer 2

how a company is going to make money

Question 3

Why Is Strategic Management Important? (3 reasons)

Answer 3

1. It results in higher organizational performance.
2. It requires that managers examine and adapt to business environment changes.
3. It coordinates diverse organizational units, helping them focus on organizational goals.

Question 4

Mission

Answer 4

-The statement of the purpose of an organization.

The scope of its products and services

Question 5

Goals

Answer 5

The foundation for further planning.

Question 6

Step 2: Doing an external analysis

Answer 6

The environmental scanning of specific and general environments. (Focuses on identifying opportunities and threats)

Question 7

Step 3: Doing an internal analysis

Answer 7

• Assessing organizational resources, capabilities, and activities:
• > Strengths create value for the customer and strengthen the competitive position of the firm.
• > Weaknesses can place the firm at a competitive disadvantage.

Question 8

SWOT analysis

Answer 8

An analysis of the organization’s strengths, weaknesses, opportunities, and threats.

Question 9

Resources

Answer 9

An organization’s assets that are used to develop, manufacture, and deliver a product to its customers.

Question 10

Capabilities

Answer 10

An organization’s skills and abilities in doing the work activities needed in its business.

Question 11

Strengths

Answer 11

any activities the organization does well or any unique resources that it has.

Question 12

Weaknesses

Answer 12

activities the organization does not execute well or needed resources it does not possess.

Question 13

Core competencies

Answer 13

The organization’s major value-creating capabilities that determine its competitive weapons.

Question 14

Step 4: Formulating strategies

Answer 14

• Develop and evaluate strategic alternatives.
• Select appropriate strategies for all levels in the organization that provide relative advantage over competitors.
• Match organizational strengths to environmental opportunities.
• Correct weaknesses and guard against threats.

Question 15

Step 5: Implementing strategies

Answer 15

• Implementation – effectively fitting organizational structure and activities to the environment.
• The environment dictates the chosen strategy; effective strategy implementation requires an organizational structure matched to its requirements

Question 16

Step 6: Evaluating results

Answer 16

• How effective have strategies been?

- What adjustments, if any, are necessary?

Question 17

Corporate strategy

Answer 17

an organizational strategy that determines what businesses a company is in or wants to be in, and what it wants to do with those businesses.

Question 18

Strategic Business Unit

Answer 18

the single independent businesses of an organization that formulate their own competitive strategies.

Question 19

Types of Corporate Strategies

Answer 19

Growth – expansion into new products and markets.

Stability – maintenance of the status quo.

Renewal – examination of organizational weaknesses that are leading to performance declines.

Question 20

Vertical integration

Answer 20

Backward vertical integration – the organization becomes its own supplier.

Forward vertical integration – the organization becomes its own distributor.

Question 21

Horizontal integration

Answer 21

a company grows by combining with competitors.

Question 22

Diversification

Answer 22

• Related diversification – when a company combines with other companies in different, but related industries.
• Unrelated diversification – when a company combines with firms in different and unrelated industries.

Question 23

Stability Strategy

Answer 23

a corporate strategy in which an organization continues to do what it is currently doing.

Question 24

Renewal Strategy

Answer 24

– a corporate strategy designed to address declining performance.

• > Retrenchment strategy – a short-run renewal strategy used for minor performance problems.
• > Turnaround strategy – when an organization’s problems are more serious, more drastic action is needed.

Question 25

BCG matrix

Answer 25

a strategy tool that guides resource allocation decisions on the basis of market share and growth rate of SBUs. (Stars, Cash cows, Question marks, Dogs)

Question 26

Competitive strategy

Answer 26

an organizational strategy for how an organization will compete in its business(es).

Question 27

Competitive advantage

Answer 27

What sets an organization apart; its distinctive edge.

• Quality as a Competitive Advantage
• Design Thinking as a Competitive Advantage
• Sustaining Competitive Advantage

Question 28

Porters Five Forces

Answer 28

1. Threat of new entrants.
2. Threat of substitutes
3. Bargaining power of buyers
4. Bargaining power of suppliers
5. Current rivalry

Question 29

Cost leadership strategy

Answer 29

when an organization competes on the basis of having the lowest costs (costs or expenses, not prices) in its industry.

Question 30

Differentiation strategy

Answer 30

a company that competes by offering unique products that are widely valued by customers.

Question 31

Focus strategy

Answer 31

involves a cost advantage (cost focus) or a differentiation advantage (differentiation focus) in a narrow segment or niche.

Question 32

Stuck in the middle

Answer 32

– when costs are too high to compete with the low-cost leader or when its products and services aren’t differentiated enough to compete with the differentiator.

Question 33

Functional strategy

Answer 33

the strategies used by an organization’s various functional departments to support the competitive strategy.

Question 34

Strategic leadership

Answer 34

the ability to anticipate, envision, maintain flexibility, think strategically, and work with others in the organization to initiate changes that will create a viable and valuable future for the organization.

Question 35

Strategic flexibility

Answer 35

the ability to recognize major external changes, to quickly commit resources, and to recognize when a strategic decision was a mistake.

Question 36

Customer Service Strategies

Answer 36

companies emphasizing excellent customer service need strategies that cultivate that atmosphere from top to bottom.

Question 37

Innovation Strategies

Answer 37

First Mover – an organization that brings a product innovation to the market or uses new process innovations.