Chapter 6: Strategic Management Flashcards
Strategic Positioning
Strategy that attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company
Corporate-level strategy
Focuses on the organization as a whole
Business-level strategy
Focuses on individual business units or product/service lines
Functional-level strategy
Plan of action by each functional area of the organization to support higher level strategies
Current reality assessment
Assessment to look at where the organization stands and see what is working and what could be different so as to maximize efficiency and effectiveness in achieving the organization’s mission
Strategy formulation
The process of choosing among different strategies and altering them to best fit the organization’s needs
Strategy implementation
The implementation of strategic plans
Strategic control
Monitoring performance to ensure that strategic plans are being implemented and taking corrective action as needed
Sustainable competitive advantage
Exists when other companies cannot duplicate the value delivered to customers
SWOT analysis
Also known as a situational analysis, the search for the Strengths, Weaknesses, Opportunities, and Threats affecting the organization
Organizational strengths
The skills and capabilities that give the organization special competencies and competitive advantages in executing strategies in pursuit of its mission
Organizational weaknesses
The drawbacks that hinder an organization in executing strategies in pursuit of its mission
Organizational opportunities
Environmental factors that the organization may exploit for competitive advantage
Organizational threats
Environmental factors that hinder an organization’s achieving a competitive advantage
VRIO
Is a framework for analyzing a resource of capability to determine its competitive strategic potential by answering four questions about its Value, Rarity, Imitability, and Organization
Forecast
A vision of projection of the future
Trend analysis
A hypothetical extension of a past series of events into the future
Contingency planning
Also known as scenario planning and scenario analysis; the creation of alternative hypothetical by equally likely future conditions
Scenario analysis
Also known as scenario planning and contingency planning; the creation of alternative hypothetical but equally likely future conditions
Benchmarking
A process by which a company compares its performance with that of high-performing organizations
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
Innovation strategy
Grows market share or profits by innovating improvements in products or services
Stability strategy
One of three grand strategies, this strategy involves little or no significant change
Defensive strategy
Also called retrenchment strategy, one of three grand strategies, this strategy involves reduction in the organization’s efforts
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
Diversification
Strategy by which a company operates several businesses in order to spread the risk
Related diversification
When a company purchases a new business that is related to the company’s existing business portfolio
Unrelated diversification
Occurs when a company acquires another company in a completely unrelated businesses
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
Porter’s 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
Porter’s four competitive strategies
Also called four 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
Cost-leadership strategy
One of Porter’s four competitive strategies; keeping the costs, and hence prices, of a product or service below those of competitors and to target a wide market
Differentiation strategy
One of Porter’s four competitive strategies; offering products or services that are of unique and superior value compared with those of competitors but to target a wide market
Cost-focus strategy
One of Porter’s four competitive strategies; keeping the costs, and hence prices, of a product or service below those of competitors and to target a narrow market
Focused-differentiation strategy
One of Porter’s four competitive strategies; offering products or services that are of unique and superior value compared to those of competitors and to target a narrow market
Execution
Using questioning, analysis, and follow-through in order to mesh strategy with reality, align people with goals, and achieve the results promised
