9. Managing Strategy Flashcards
Strategies
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.
Business model
how a company is going to make money
Why Is Strategic Management Important? (3 reasons)
- It results in higher organizational performance.
- It requires that managers examine and adapt to business environment changes.
- It coordinates diverse organizational units, helping them focus on organizational goals.
Mission
-The statement of the purpose of an organization.
The scope of its products and services
Goals
The foundation for further planning.
Step 2: Doing an external analysis
The environmental scanning of specific and general environments. (Focuses on identifying opportunities and threats)
Step 3: Doing an internal analysis
- 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.
SWOT analysis
An analysis of the organization’s strengths, weaknesses, opportunities, and threats.
Resources
An organization’s assets that are used to develop, manufacture, and deliver a product to its customers.
Capabilities
An organization’s skills and abilities in doing the work activities needed in its business.
Strengths
any activities the organization does well or any unique resources that it has.
Weaknesses
activities the organization does not execute well or needed resources it does not possess.
Core competencies
The organization’s major value-creating capabilities that determine its competitive weapons.
Step 4: Formulating strategies
- 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.
Step 5: Implementing strategies
- 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
Step 6: Evaluating results
- How effective have strategies been?
- What adjustments, if any, are necessary?
Corporate strategy
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.
Strategic Business Unit
the single independent businesses of an organization that formulate their own competitive strategies.
Types of Corporate Strategies
Growth – expansion into new products and markets.
Stability – maintenance of the status quo.
Renewal – examination of organizational weaknesses that are leading to performance declines.
Vertical integration
Backward vertical integration – the organization becomes its own supplier.
Forward vertical integration – the organization becomes its own distributor.
Horizontal integration
a company grows by combining with competitors.
Diversification
- 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.
Stability Strategy
a corporate strategy in which an organization continues to do what it is currently doing.
Renewal Strategy
– 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.
BCG matrix
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)
Competitive strategy
an organizational strategy for how an organization will compete in its business(es).
Competitive advantage
What sets an organization apart; its distinctive edge.
- Quality as a Competitive Advantage
- Design Thinking as a Competitive Advantage
- Sustaining Competitive Advantage
Porters Five Forces
- Threat of new entrants.
- Threat of substitutes
- Bargaining power of buyers
- Bargaining power of suppliers
- Current rivalry
Cost leadership strategy
when an organization competes on the basis of having the lowest costs (costs or expenses, not prices) in its industry.
Differentiation strategy
a company that competes by offering unique products that are widely valued by customers.
Focus strategy
involves a cost advantage (cost focus) or a differentiation advantage (differentiation focus) in a narrow segment or niche.
Stuck in the middle
– 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.
Functional strategy
the strategies used by an organization’s various functional departments to support the competitive strategy.
Strategic leadership
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.
Strategic flexibility
the ability to recognize major external changes, to quickly commit resources, and to recognize when a strategic decision was a mistake.
Customer Service Strategies
companies emphasizing excellent customer service need strategies that cultivate that atmosphere from top to bottom.
Innovation Strategies
First Mover – an organization that brings a product innovation to the market or uses new process innovations.
