Ch. 6: Planning, Strategy, and Competitive Advantage Flashcards
What is planning?
Identifying and selecting appropriate goals and courses of action; one of the four principal tasks of management.
What is strategy?
A cluster of decisions about what goals to pursue, what actions to take, and how to use resources to achieve goals.
What is a mission statement?
A broad declaration
of an organization’s purpose that identifies the organization’s products and customers and distinguishes the organization from its competitors.
What is a corporate-level plan?
Top management’s decisions pertaining to the organization’s mission, overall strategy, and structure.
What is a corporate-level strategy?
A plan that indicates in which industries and national markets an organization intends to compete.
What is a business-level plan?
Divisional managers’ decisions pertaining to divisions’ long-term goals, overall strategy, and structure.
What is a functional-level plan?
Functional managers’ decisions pertaining
to the goals that they propose to pursue to help the division attain its business-level goals.
What is a functional-level strategy?
A plan of action to improve the ability of each of an organization’s functions to perform its task- specific activities in ways that add value to an organization’s goods and services.
What is a time horizon?
The intended duration of a plan.
What is strategic leadership?
The ability of the CEO and top managers to convey a compelling vision of what they want the organization to achieve to their subordinates.
What is strategy formulation?
The development of a set of corporate, business, and functional strategies that allow an organization to accomplish its mission and achieve its goals.
What is SWOT analysis?
A planning exercise in which managers identify organizational strengths (S) and weaknesses (W)
and environmental opportunities (O) and threats (T).
What are the five forces of Michael Porter’s five forces model?
The level of rivalry among organizations in an industry: The more that companies compete against one another for customers—for example, by lowering the prices of their products or by increasing advertising—the lower is the level of industry profits (low prices mean less profit).
The potential for entry into an industry: The easier it is for companies to enter an industry—because, for example, barriers to entry, such as brand loyalty, are low—the more likely it is for industry prices and therefore industry profits to be low.
The power of large suppliers: If there are only a few large suppliers of an important input, then suppliers can drive up the price of that input, and expensive inputs result in lower profits for companies in an industry.
The power of large customers: If only a few large customers are available to buy an industry’s output, they can bargain to drive down the price of that output. As a result, industry producers make lower profits.
The threat of substitute products: Often the output of one industry is a substitute for the output of another industry (plastic may be a substitute for steel in some applications, for example; similarly, bottled water is a substitute for cola). When a substitute for their product exists, companies cannot demand high prices for it or customers will switch to the substitute, and this constraint keeps their profits low.
What is hypercompetition?
Permanent, ongoing, intense competition brought about in an industry by advancing technology or changing customer tastes.
What is low-cost strategy?
Driving the organization’s costs down below the costs of its rivals.
