Business Strategy Flashcards
1
Q
Why is Planning Important?
A
- Provides directions and basis for coordination for everyone in org
- Minimizes waste and redundancy
- Reduces uncertainty by developing a better understanding of firm’s external environment
- Unstable external environment complicates planning
- Residual Uncertainty - uncertainty that cannot be accounted for
- Establishes goals from broad objectives
- Makes it possible to measure performance
- Involves/engages all levels of organization
- Improves levels of job satisfactions
2
Q
Functional Structure
A
- Typically more efficient
- Split into groups by functions; marketing, R & D, engineering, etc.
3
Q
Divisional Structure
A
- Used if there are multiple business units
- Divided up into groups by divisions (i.e., men’s clothing, footwear, etc.)
4
Q
Functional Plans
A
- Aligned to Business Unit level planning
- Highly interrelated across SBUs
- Shorter planning horizons than corporate and SBU plans
- Examples: Marketing plans, production plans, capacity plans
5
Q
Tactical (Operational) Plans
A
- Narrow, specific impact to firm
- Allocation of specific resources for specific tasks/operations
- Short planning horizons
- Developed at lower levels of management
6
Q
Strategy
A
Goal-directed actions a firm takes to gain/sustain performance
7
Q
Good Strategy
A
- Diagnose the competitive challenge
- Create guiding policy to address challenge
- Develop set of coherent actions to implement guiding policy
8
Q
Cost Leadership
A
- Being lowest cost producer in industry
- Usually through experience and efficiency
- Pricing at or below industry average
- Attract price sensitive customers
9
Q
Differentiation
A
- Competitive advantage achieved as long as economic value is greater than competitors
- Being unique in industry with broad market
- Uniqueness allows firm to charge a premium price
10
Q
Focus Strategy
A
- Gaining competitive advantage by focusing on narrow market segment to develop cost focus/differentiation strategy (typically differentiation)
- Niche markets provide greater opportunities for differentiation
11
Q
Vision Statement
A
- Stretches capabilities of organization and creates meaningful long-term goals
- Vision statements are typically public facing
12
Q
Mission Statement
A
- What does organization do
- What are core values
- Typically have product or customer focus
13
Q
Traditional Top-Down Approach
A
- Best for stable sectors
- External: Opportunities and threats
- Internal: Strengths and Weaknesses
- Constantly communicated throughout the organization
- Funding and other resources approved and mobilized
- Performance is measured and reviewed, corrective action taken if needed
13
Q
Core Values
A
- Guiding principles of the firm
- Support company’s vision, shape culture, and reflect company’s identity and personality
14
Q
Strategic Planning Under Uncertainty
A
- Level 1: Clear enough future
- Level 2: Alternative but well defined futures
- Level 3: Range of possible futures
- Level 4: True ambiguity
15
Q
Scenario-Based Approaches
A
- Set planning score
- Identify/confirm environmental factors that will shape firm’s future
- Select 2-3 key variables and develop range of possible outcomes
- Create teams to map out plausible futures and identify likely opportunities and threats
- Chose preferred/dominant scenario and continue planning process
- Develop trigger points for alternative scenarios and develop contingency plans
16
Q
External Environment
A
- General Environment - Difficult for firm to have control over this
- Industry
- Market
- Firm
