HCM 407- Section 2 Flashcards
Prospective Strategy is:
planning process that analyzes and design means to prospectively address the aforementioned issues and produce some form of written document to guide future decisions.
• Well laid plans
• Better where environmental pressures and rapid changes occur because these factors cause realized strategy to differ much more from that intended.
Emergent Strategy is:
a retrospective analysis looks backward to see what actually happened.
• Trial and Error
• Experimentation and adaption to new market conditions produce patterns that can be identified retrospectively.
• Emergent plan realizes that often prospective plans are not translated into action
Levels of organizational Strategy:
Corporate level strategy
Business Level-strategy
Functional Level Strategy
Corporate Level Strategy
which consists of top executives, corporate staff, and generally a board of directors.
• The apex of decision making in an organization.
• Oversees the strategy for the complete organization.
• Define the mission and overall strategic goals of the organization, allocate capital funds to the different SBUs, and decide which business to enter and exit.
Business Level-strategy
focus on specific product lines, such as vaccines, pharmaceuticals, and diagnostics.
Functional Level Strategy
must support the business and corporate strategies.
• Strategies at this level may be driven by a specific product or service line.
Four types of market Structure
Perfect Competition
Oligopoly
Monopoly
Monopsony
Perfect Competition
market structure in which the following five criteria are met.
- All firms sell an identical product
- All firms are price takers- they cannot control market price of products sold.
- All firms have a relatively small market share
- Buyers have complete information about the product being sold at the prices charged by each firm
- The industry is characterized by freedom of entry and exit.
Oligopoly
market structure in which a small number of firms have the large majority of share. Similar to a monopoly except rather than one firms, two or more dominate the market. Tend to set pries and due to the small market one org will affect the others more completely.
Monopoly
market containing a single firm that has or is close to total control of the sector. Monopolies are typically forced to divest assets to satisfy anti-monopoly laws.
Monopsony
buyer’s monopoly. Market condition similar to monopoly except that a large buyer, not a seller, controls a large proportion of the market and drives prices down. Such as buying things from suppliers at much lower prices due to market dominance.
Strategic Plan
The strategic plan often includes several smaller, more focused strategies within it. Types of these plans include corporate strategies, general business strategies and marketing strategies. The strategic plan, regardless of its type, analyzes the internal and external aspects that affect the business and outlines the specific steps needed to meet company goals
Business Plan
The business plan provides a detailed review of your entire small business. It provides specifics on your business’ operations, its staff, marketing strategy and financial status. Rather than focus on one specific area of the business, the business plan outlines the entire operation and justifies the finances that are needed to maintain operations while forecasting its projected sales.
Generic Strategies
A combination of a target market and the type of competitive advantage sought
Broad Low-Cost Strategy
targets a wide customer segment and seeks to achieve competitive advantage in the market by maintaining low costs and underpricing its competitors to earn higher profits. Ex. Walmart, Dell
Focused Low-Cost Strategy
competes on the basis of costs but targets only subsets of the mass market. This strategy refines the broad low-cost approach by narrowing its customer base and possibly undercutting the pricing of generalists. Ex. Aldi
Broad Differentiation Strategy
offer products and services that have unique features and appeal to a wide segment of a market. Most effective in large markets where buyer preferences and values are diverse, many organizations offer common products and product innovation is rapid
Ex. Pepsi, Ford
Focused Differentiation Strategy
targets a narrow industry niche or customer segment. Products or services are differentiated via the ways in Exhibit 3.8
Ex. Rolls-Royce, Rolex, concierge medicine
Middle Strategy
also called best-cost strategy because it intends to offer customers the optimal mix of distinctive value and attractive costs simultaneously. Middle strategies are more successful in markets where buyers desire a degree of product differentiation but at the same time are price sensitive
Ex. grocery stores, community hospitals
Porters Five Forces
Threat of new entrants Threat of substitutes Bargaining power of buyers Bargaining power of suppliers Industry rivalry
Describe Threat of new entrants
Profitable markets that yield high returns will attract new firms. This results in many new entrants, which eventually will decrease profitability for all firms in the industry.
Describe threat of substitutes
The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives.
Describe bargaining power of buyers
The bargaining power of customers is also described as the market of outputs: the ability of customers to put the firm under pressure, which also affects the customer’s sensitivity to price changes.
Describe bargaining power of suppliers
The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm when there are few substitutes.
Describe industry rivalry
For most industries the intensity of competitive rivalry is the major determinant of the competitiveness of the industry.
Understand who organizational stakeholders are and their importance in creating the company’s strategic intent
- Stakeholders and organizations share benefits and support
- Organizations exist for the benefit of their stakeholders
- Key Stakeholders: stakeholders powerful enough to influence the actions and outcomes of the organization
Know what a SWOT analysis is and how it is used
- A summary of the external, competitive and internal analysis of the organization
- Strengths: internal, weaknesses: internal, opportunities: external/competitive, threats: external/competitive
Know what strategic intent is and how it’s used in strategic planning
A compelling statement about where an organization is going that succinctly conveys a sense of what that organization wants to achieve in the long term. Strategic intent answers the question: “What exactly are we trying to accomplish?”
Be informed about the concept of value chains and their uses
a set of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market. The concept comes from business management and was first described and popularized by Michael Porter
Understand the importance of implementing strategy
is very important.
Need implementation and execution, achieving short term wins, and sustain and maintain.
Identify and remove obstacles
