Chap 7: Corporate Level Strategy Flashcards
Refers to the art of a troop leader or a general
Strategy
Comes from the Greek word strategia
Strategy
Defines strategy as the analysis, decision, an action that enables a company to succeed
Dess et al (2012)
The analysis, decision, and action that enables a company to succeed
Strategy
Define it as the comprehensive plan, it states have a company will achieve its mission and objectives
Wheelen and hunger (2010)
A comprehensive plan that states how a company will achieve its mission and objectives
Strategy
A plan formulated after an extensive critical analysis of a company’s resources
Strategy
Represent the category of companies based on their common strategic orientation and combination of structure, culture, and processes
Strategic type
These are businesses with a few product lines, and they intend to defend them from new products entering the market. Therefore, most concern is how to improve their operating activities, in terms of cost reduction. Being cost and efficiency oriented they are unlikely to make bolder steps to innovate and move the new areas.
Defenders
These are companies with bloodlines of products. Product development innovation in the new market are the essence of their strategy orientation. Creativity for them is more important than efficiency in operations.
Prospectors
These are multi divisional companies that compete in at least two types of industries, one stable and one variable, while maintaining stability and flexibility.
Analyzers
These are businesses that do not have firm or consistent strategic orientations. They adopt piecemeal or quick response strategies, which are often times ineffective to meet the pressures changes and challenges of the environment
Reactors
Types of strategies according to hierarchy
Corporate strategy
Business strategy
Functional strategy
Usually formulated with a top level management, is a comprehensive master plan that describes the overall direction of a company
Corporate strategy
Occurs at the business or product unit, describes how a Company improves its competitive position in a specific industry.
Business strategy
A plan taken by functional areas that is intended to maximize the productivity of a resource to achieve competitive advantage
Functional strategy
The process of developing a comprehensive plan to effectively manage the external environmental strategic forces relative to a company’s strengths and weaknesses
Strategy formulation
It is concerned with the overall direction of a company and is considered the general or grand strategy of the company
Corporate strategy
A corporate strategy that accompany may adopt if it aims to expand its present operating activities
Growth strategy
Occurs when a company expands its operation domestically, or globally
Internal growth
Happens when a company enters into mergers, acquisitions or strategic alliances
External growth
Is appropriate to adapt when a company can reasonably determine that its current product lines have real growth potentials finish
Concentration strategy
Results in a horizontal integration where a Company operates in various geographic locations
Horizontal growth strategy
A company ships goods to other foreign countries
Exporting
A company enters into an agreement with another company from another country to produce or sell the products of the former
Licensing
A company enters into an agreement with a franchise, or do use the name and system of the latter
Franchising
A company combines its resources with other companies from foreign countries to produce new products
Joint venture
A company purchases a foreign company
Acquisition
A company constructs its own plant and invest with other assets in a foreign country
Green-field development
A Company constructs operating facilities and transfers the same to the host country when completed
Turnkey operations
A company constructs facilities, operates them when completed, and turns them over to the host country
BOT (build, operate, transfer) scheme
A company takes over the functions of a supplier and a distributor
Vertical growth strategy
A company takes 100% control of the value chain
Full integration
A company acquire is not more than 50% of its requirements from outsiders
Taper integration or backward integration
A company purchases most of its requirements from outsiders
Quasi-integration or forward integration
A company enters into an agreement with other companies to provide the goods to each other over a specified period of time
Long-term contracts
An appropriate growth strategy when the original industry appears to have matured, plateaud and consolidated already
Diversification strategy
More appropriate in a less attractive industry in for a company with a strong competitive position
Concentric diversification strategy
Happens when a company enters another industry, which is not related to the industry where it presently belongs
Conglomerate diversification strategy
A company plans to continue its current activities without substantial change in its direction
Stability strategy
A company takes a temporary time out from its major activities while observing changes in its external environment
Pause or proceed-with-caution strategy
When an industry is not facing turbulent variables, and the company is enjoying the fruits of its continued successful activities
No-change strategy
A temporary plan for a company and its desire to increase its profits when revenues are declining
Profit strategy
The strategy to be adapted when a company experiences poor competitive position and operating performance and competitive advantage
Retrenchment strategy
Is adapted when a company is not yet critically bleeding financially
Turnaround strategy
Is adopted by a company that has a weak competitive position in an industry, and does not have the capability to implement a complete turnaround strategy
Captive company strategy
Implies that a business is selling the entire company, including all the business units in divisions
Sell out
Occurs when a company only sells its division or business unit that does not operate profitably
Divestment
This strategy is adopted when a company has a weak competitive position in an industry and is not able to look for a strong partner to whom its business unit can be a captive.
Sell-out or divestment strategy
Is adapted when a company that is suffering heavy losses terminates its operations
Bankruptcy or liquidation strategy
A company gives up its management to a court and settles some financial obligations in return.
Bankruptcy
Involves the conversion of non-cash assets to cash through selling to settle financial obligations
Liquidation
It is intended for the gathering of reliable and relevant information as a basis, when making a sound forecast about an industry, and the capability of a company to exploit its resources for competitive advantage
Conduct a critical environmental analysis
