Planning, Strategy, Competitive Advantage Flashcards
Strategy
Cluster of decisions about what goals to pursue, actions to take, how to use resources to achieve goals
3 steps in planning
Determine mission and goals
Formulate strategy
Implement strategy
Mission statement
Broad declaration of organizations purpose
Why planning is important
Gives direction and purpose
Get managers participating in decisions
Coordinates managers of different functions
Controls managers
Corporate level plan
Top managements decisions pertaining to organizations, mission, overall strategy, and structure
Corporate level strategy
Plan that indicates in which industries and national markets an organization intends to compete
Business level plan
Divisional managers decisions pertaining to division’s long term goals, overall strategy, and structure
Business level strategy
Outlines specific methods of a division, business unit, or organization will use to compete effectively against rivals in industry
Functional level plan
Functional manager’s decisions pertaining to goals they propose to pursue to help division attain business level goals
Functional level strategy
Plan of action to improve ability of each of an organizations functions to perform its task-specific activities in ways that add value to an organizations goods and services
Time horizon
Intended duration of plan
Long term plan length
5 years or more
Intermediate term plan length
1-5 years
Short term plan length
Less than 1 year
Standing plans
Use in programmed decision situations
Policies
Rules
Standard operating procedure
Single use plans
Developed for one time non programmed issue
Programs
Project
Strategic leadership
Ability of CEO and top managers to convey a compelling vision of what they want the organization to achieve to their subordinates
Swot
Internal: strengths and weaknesses
External: opportunities and threats
Five forces that shape strategy
Threat of new entrants Bargaining power of suppliers Threat of substitute product/service Bargaining power of buyers Rivalry among existing competitors
Low cost strategy
Drive organizations total costs down below total costs of rivals
Focused low cost strategy
Serving only one segment of the overall market and trying to be the lowest cost organization serving that segment
Differentiation
Distinguishing an organizations products from the products of competitors on dimensions such as product design, quality, or after sales service
Focused differentiation strategy
Serving only one segment of the overall market and trying to be the most differentiated organization serving that segment
Stuck in the middle
Attempting to simultaneously pursue both a low cost strategy and a differentiation strategy
Difficult to achieve low cost with added costs of differentiation
Concentration on a single industry
Reinvesting a company’s profits to strengthen its competitive position in its current industry
Vertical integration
Expanding a company’s operations either backwards into an industry that produces inputs for products or forward into an industry that uses, distributes, or sells its products
Diversification
Expanding company’s business operations into new industry to produce new kinds of valuable goods or services
Related diversification
Entering new business or industry to create a competitive advantage in one or more of an organizations existing divisions or businesses
Unrelated diversification
Entering new industry or buying a company in a new industry that is not related in any way to an organizations current businesses or industries
Global strategy
Selling the same standardized product and using the same basic marketing approach in each national market
Multi domestic strategy
Customizing products and marketing strategies to specific national conditions
Helps gain local market share
Raises production costs
Steps to implement plan
Allocate responsibility to appropriate individuals or groups
Draft detailed action plans that specify how a strategy is to be implemented
Establish timetable that include precise, measurable goals linked to attainment of action plan
Allocate resources to responsible parties
Hold specific parties responsible for attainment of corporate, divisional, and functional goals
Planning
Identifying and selecting appropriate goals and courses of action for an organization
