Topic 2B Strategy (chapter 6) Flashcards
Benchmarking
A process by which a company compares its performance with that of high-performing organizations
Business- level strategy
Focuses on individual business units or product/service lines
Contingency Planning
Creation of alternative hypothetical but equally likely futures conditions
Also called scenario planning and scenario analysis
Corporate- level strategy
Focuses on the organization as a whole
Differentiation strategy
Offer products that are of unique and superior value compared to those of competitors and target a wide market.
Diversification
Moving into and/ or operating new lines of business
Products may be related or unrelated
Execution
Consists of using questioning, analysis, and follow-through in order to mesh strategy with reality, align people with goals, and achieve results promised
Focused- differentiation strategy
Offer products that are of unique and superior value compared to those of competitors and target a narrow market.
Forecast
A vision or projection of the future
Functional- level strategy
Plan of action by each functional area of the organization to support higher level strategie
Market
can be thought of as a group of customers with similar needs or preferences
Organizational opportunities
Environmental factors that the organization may exploit for competitive advantage
Organizational strengths
The skills and capabilities that give the organization special competencies and competitive advantages in executing strategies in pursuit of its mission
Organizational threats
Environmental factors that hinder an organization’s achieving a competitive advantage
Organizational weaknesses
The drawbacks that hinder an organization in executing strategies in pursuit of its mission
Porter’s 4 competitive strategies
- Cost- leadership strategy
- Differentiation strategy
- Cost- focus strategy
- Focused- differentiation strategy
Related diversification
When a company purchases a new business that is related to the company’s existing business portfolio
Scenario analysis
Also known as scenario planning and contingency planning; the creation of alternative hypothetical but equally likely future conditions
Strategic control
Monitoring the execution of strategy and taking corrective action, if necessary
Sustainable competitive advantage
Exists when other companies cannot duplicate the value delivered to customers
SWOT analysis
A situational analysis in which a company assesses its strengths, weaknesses, opportunities, and threats
Trend analysis
Hypothetical extension of a past series of events into the future
Unrelated diversification
Occurs when a company acquires another company in a completely unrelated businesses
Vertical integration
Firm expands into businesses or activities that provide the supplies (product inputs) it needs or that distribute and sell its products
VRIO
A framework for analyzing a firm’s resource or capability to determine its competitive strength or power
What is a strategy, or strategic plan?
Sets the long term goals and direction for the organization
Consists of a company’s action plan for outperforming its competitors and achieving superior profitability
What key 3 principles underlie strategic positioning?
- Strategy is the creation of a unique and valuable position
- serve a few needs, many customers
- serve broad needs, few customers
- serve broad needs, many customers - Strategy requires trade-offs in competing
- “trade-offs” require focus; you can’t be “all things to all people” - Strategy involves creating a “fit” among the activities managed by a business
Ex) supply chain management
- manufacturing
- marketing/ sales
A company’s strategy needs to have what, to draw customers in?
Distinctive element
What is the 1st step of the strategic management process?
- Establish the mission, vision, and values statements
What is the 2nd step of the strategic management process
- Assess the current reality
Assessment tools:
- competitive intelligence
- SWOT analysis
- VRIO
- forecasting
- benchmarking
What is the 3rd step of the strategic management process
- Formulate corporate corporate, business, and functional strategies
What is the 4th step in the strategic management process
- Execute the strategies
What is the 5th step in the strategic management process
- Maintain strategic control
VRIO: value meaning…
Is the resource or capability valuable?
VRIO: Rarity meaning….
Is the resource or capability currently controlled by only a few firms or no other firms?
VRIO: Imitability meaning…
Is the resource or capability costly or difficult for other firms to imitate?
VRIO: Organization meaning…
Is the firm organized to exploit the resource or capability?
Cost- leadership strategy
Keep the costs, and hence prices, of a product or service below those of competitors and target a wide market.
Cost-focus strategy
Keep the costs of a product below those of competitors and target a narrow market
Wide Markets
consists of a broad group of customers that purchase a range of different types of products
EX) The market for all kinds of chocolate products
Narrow Market
usually consists of a subset of customers (a “segment” or “niche”) within a broader market
EX) The market for expensive, luxury chocolate suitable for gifts
What are the 4 key steps of keeping a strategic plan on track:
- engage people
- keep it simple
- stay focused
- keep moving
