Chapter 6 Flashcards
Harvard Business School professor Michael Porter is recognized as
one of the most influential businesses school professors.
According to Porter, strategic positioning attempts to
achieve sustainable competitive advantage by preserving what is distinctive about a company. It means he says, performing different activities from rivals, or performing similar activities in different ways.
What are the three key principles that underlie strategic positioning
- Strategy is the creation of a unique and valuable position.
- strategies requires trade-offs in competing
- Strategy involves creating a “Fit” among activities
What are the three levels of strategy?
Corporate, business, and functional level strategy.
Corporate level strategy focuses on
the corporation as whole
Business level strategy focuses on
individual business units or product/service lines.
Functional level strategy is a
plan of action by each functional area of the organization to support higher-level stratifies.
What are the five steps of the strategic management process?
- Establish
- Assess the current reality
- Formulate corporate, business, and functional strategies
- Strategic implementation
- Maintain strategic control
What is the SWOT Analysis?
Also known as a situational analysis, the search for the Strengths, Weaknesses, Opportunities, and Threats affecting the organization
The SWOT Analysis is divided into two parts:
Internal strengths and weaknesses (internal environment) and external opportunities and threats (external environment)
What are organizational strengths?
The skills and capabilities that give the organization special competencies and competitive advantages in executing strategies in pursuit of its mission.
What are the organizational weaknesses?
The drawbacks that hinder an organization in executing strategies in pursuit of its mission
What are the organizational opportunities?
Environmental factors that the organization may exploit for competitive advantage.
What are the organizational threats?
environmental factors that hinder an organization’s achieving a competitive advantage
What is the VRIO?
is a framework for analyzing a resource or capability to determine its competitive strategic potential by answering four questions about its value, rarity, imitability, and organization.
What is a forecast?
is a vision or projection of the future
What is a trend analysis?
A hypothetical extension of a past series of events into the future
What is contingency planning?
Also known as scenario planning and scenario analysis; the creation of alternative hypothetical but equally likely future conditions
What is benchmarking?
A process by which a company compares its performance with that of high-performing organizations.
What are the three methods of corporate level strategy?
- The growth strategy
- The stability strategy
- The defensive strategy
What is the BCG Matrix?
A management strategy by which companies evaluate their strategic business units on the basis of (1) their business growth rates and (2) their share of the market. Was developed by the Boston Consulting Group
What is the Growth Strategy?
One of three grand strategies, this strategy involves expansion—as in sales revenues, market share, number of employees, or number of customers or (for nonprofits) clients served.
What is the stability strategy?
One of three grand strategies, this strategy involves little or no significant change
What is the defensive strategy?
Also called retrenchment strategy, one of three grand strategies, this strategy involves reduction in the organization’s efforts.
What is the diversification strategy?
The strategy of moving into new lines of business, such as Amazon purchasing Hole Foods. Is called diversification. Strategy by which a company operates several businesses in order to spread the risk
When a company purchases a new business that is related to the company’s existing business portfolio, the organization is implementing?
Related diversification
What is called when a company acquires another company on a completely unrelated business?
Unrelated diversification
What is the vertical integration?
Diversification strategy where a firm expands into businesses that provide the supplies it needs to make its products or that distribute and sells its products
What is the Porter’s Five competitive forces OR model for industry analysis?
Model proposes that business-level strategies originate in five primary competitive forces in the firm’s environment:
(1) threats of new entrants,
(2) bargaining power of suppliers,
(3) bargaining power of buyers,
(4) threats of substitute products or services, and (5) rivalry among competitors
What is Porter’s four competitive strategies OR generic strategies?
(1) cost leadership,
(2) differentiation,
(3) cost-focus, and
(4) focused differentiation. The first two strategies focus on wide markets, the last two on narrow markets.
