Strategic Scope Flashcards
What is the definition for an organizations scope
The range of activities that a firm performs internally, the breadth of its product and service offerings, the extent of its geographic market presence, and its mix of businesses
What is market penetration
When the organization pursues a larger market share in the existing market with the same product
What is product development
When the organization focuses on growing within its existing market by introducing new products
What is market development?
When the organization decides to sell its existing products in a new market
What is diversification
When the organization decides to extend its scope, to start performing entirely new activities
What is diversification strategy
The expansion of the scope of the product line to exploit new markets. A key objective is to spread the companys risk over several product lines
When would an organization pursue a diversification strategy
When their original markets are saturated or declining
Strategic fit exists when:
There is a potential for sharing expertise or assets
Assets can be shared to lower costs
Brand identity can be transferred to support customer recognition
What is the industry attractiveness test for diversification
When analysts use the five forces framework to assess the intensity of competitive forces and market growth trends
What is the cost of entry test for diversification
Will the potential profit outweigh the investment
What is the better off test for diversification
Whether diversifying the organization creates synergy
What are some reasons a global strategy can be attractive
-It can provide access to new customers
-It can lower costs and improve competitive position
-It can be a response to negative conditions in the home country
What is a profit sanctuary?
Created when an organization expands into a foreign market and enjoys a strong and protected competitive position
What are the three major types of international strategies
Multidomestic, global, and transnational
What is a multicountry strategy
Where each countrys market is self-contained
What is a multinational strategy
A strategy where one out-compete’s rivals by focusing on opportunities to achieve cross-business and cross-country coordination
What is a transnational strategy
A strategy that aims at achieving some degree of both standardization and local responsiveness
What is a horizontally integrated firm
One that produces or sells similar products in various geographical locations
What is a vertically integrated firm
One where functions that were previously performed by suppliers are now done internally
What is horizontal scope
the range of products and service segments that the firm serves within its product or service market
What is horizontal scope
the range of products and service segments that the firm serves within its product or service market
How can an organzation accomplish horizontal growth
-By developing its new capabilities entirely in house
-By acquiring new capabilities
-By outsourcing the capability
What are some challenges with vertical integration
-It cannot be assumed the new competencies will come naturally, easily, or quickly
-It increased investment in teh industry
-It may not be cost efficient
-Capacities may not match optimally
What is backward integration
The process of buying or owning elements of hte production cycle and channel of distribution back toward raw material suppliers
What is forward integration
The process of buying or owning elements of the production cycle
What is outsourcing
The process of having suppliers provide goods and services that were previously provided internally
