Chapter 6: Strategic Management Flashcards
How exceptional managers realize a grand design
Strategy that attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company
Strategic positioning
Focuses on the organization as a whole
Corporate-level strategy
Focuses on individual business units or product/service lines
Business-level strategy
Plan of action by each functional area of the organization to support higher level strategies
Functional-level strategy
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
Current reality assessment
The process of choosing among different strategies and altering them to best fit the organization’s needs
Strategy formulation
The implementation of strategic plans
Strategy implementation
Monitoring performance to ensure that strategic plans are being implemented and taking corrective action as needed
Strategic control
Exists when other companies cannot duplicate the value delivered to customers
Sustainable competitive advantage
Also known as a situational analysis, the search for the Strengths, Weaknesses, Opportunities, and Threats affecting the organization
SWOT analysis
The skills and capabilities that give the organization special competencies and competitive advantages in executing strategies in pursuit of its mission
Organizational strengths
The drawbacks that hinder an organization in executing strategies in pursuit of its mission
Organizational weaknesses
Environmental factors that the organization may exploit for competitive advantage
Organizational opportunities
Environmental factors that hinder an organization’s achieving a competitive advantage
Organizational threats
PESTEL
Political
Economic
Social
Technological
Environmental
Legal
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
VRIO
VRIO
Value
Rarity
Imitability
Organization
A vision or projection of the future
Forecast
A hypothetical extension of a past series of events into the future
Trend analysis
The creation of alternative hypothetical but equally likely future conditions
Scenario analysis
A process by which a company compares its performance with that of high-performing organizations
Benchmarking
3 common corporate-level grand strategies
Growth, stability, and defensive
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
Growth strategy
Grows market share or profits by improving existing products and services or introducing new ones
Innovation strategy
One of three grand strategies, this strategy involves little or no significant change
Stability strategy
Also called retrenchment strategy, one of three grand strategies, this strategy involves reduction in the organization’s efforts
Defensive strategy
A management strategy by which companies evaluate their strategic business units on the basis of their business growth rates and their share of the market
BCG matrix
Strategy by which a company operates several businesses in order to spread the risk
Diversification
When a company purchases a new business that is related to the company’s existing business portfolio
Related diversification
Occurs when a company acquires another company in a completely unrelated businesses
Unrelated diversification
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
Vertical integration
Model proposes that business-level strategies originate in five primary competitive forces in the firm’s environment: threats of new entrants, bargaining power of suppliers, bargaining power of buyers, threats of substitute products or services, and rivalry among competitors
Porter’s model for industry analysis
Also called four generic strategies; cost leadership, differentiation, cost-focus, and focused-differentiation. The first two strategies focus on wide markets, the last two on narrow markets
Porter’s four competitive strategies
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
Cost-leadership strategy