Chapter 1 Flashcards
Strategy
Formulation of organizational objectives, competitive scopes, and action plans for gaining advantage
Strategic planning
Systemic determination of goals and the plans to achieve them
Emergent planning
A plan that changes incrementally due to enviro changes
Intended strategy
Plan formulated in the beginning
Realized strategy
Plan that actually happened
Strategic types
Corporate strategies
Business strategies
Corporate strategies
Organization level strategies. Divided into restructuring strategies, growth strategies, and stability strategies
Restructuring strategies
When goals are not achieved, org looks at addressing the issues. These can be done through turnaround, divestiture, and bankruptcy
Turnaround
(Retrenchment strategy) managers attempt to increase viability or profitability of the org. Includes:
-getting rid of unprofitable products
-layoffs
-increasing efficiency
-repositioning org with new products or services
Divestiture
Sale of a part of the org
Liquidation
Termination of a business and sale of its assets, that may allow for some resources to be salvaged
Bankruptcy
Company cannot afford to pay creditors and ceases to exist. Assets are divided among creditors.
Growth strategies
Growth can mean growth in revenue, sales, market shares. Several strategies:
-incremental
-international
-mergers
-acquisitions
Incremental growth
Achieved through expanding the client base, increased products and services, changing distribution networks and using tech
International growth
Operating business in a foreign market
Merger
Two orgs become one
Acquisition
When a company buys another
Business strategies
Plans to build a competitive focus in one line of business; build a strong competitive position
The strategic planning process (steps)
- Establish the mission, vision, and values
- Develop objectives
- Analyze the external environment
- Identify the competitive advantage
- Determine the competitive position
- Implement the strategy
- Evaluate the performance
Strategic planning - establish the mission, vision, and values
Mission statement: purpose for the orgs existence
Vision statement: define orgs long term goals
Values: basic beliefs that govern group and individual behaviour in the org
Strategic planning - develop objectives
Short term hard and soft goals
Hard goals: quantitative and relative to last year performance
Soft goals: targets of social conduct; ethical, environmental work culture goals.
- Analyze external enviro
Be aware of external threats and opportunities
- Identify the competitive advantage
Characteristics of a firm that enable higher rates of profit over the competition. Comes from three sources: tangible assets, intangible assets, capabilities
Tangible assets
Future economic resources that have substance
Ex. Land, inventory, cash, tech
Intangible assets
Future economic generated by past events, lack substance and form
Ex. Reputation, goodwill, copyright
Capabilities
Collective skills, abilities, and expertise of an org.
Sustain a competitive advantage: meet the VRIO criteria
Valuable: generate value/ reduce cost
Rare: competitors don’t have them
Inimitable: cannot be easily copied
Organized: firm can exploit the resource
Core competencies
Resources and capabilities that serve as the orgs competitive advantage
SWOT analysis
Strengths: what the company does well
Weakness: something the company does poorly or a poor state
Opportunities and threats: external enviro that are either beneficial or harmful
- Determine the competitive position
Decide on the basis of external enviro and internal competence.
Five competitive strategies
-Low-cost provider
-Broad differentiation
-Best cost provider
-Focused/ market niche strategy based on lower cost
-focused/ market niche strategy based on
Low cost provider
Provide a product or service at slower cost while also appealing to a wide range of customers
Broad differentiation
Differentiate product in a way that is appealing to a lot of customers
Best cost provider
Give more value for customers money with an upscale differentiation
Niche strategy based on a lower cost
Low cost product to a select group of customers
Niche strategy based on differentiation
Offer product/ service customized to a narrow market
- Implement strategy
Put strategy into action
- Evaluate performance
Did you meet financial targets, ability to meet benchmarked ratios
