Week 3 strategy and strategic management Flashcards
what is strategic management?
The set of managerial decisions and actions that involve managers developing and implementing strategies to achieve strategic goals.
what is involved in strategic management? 4 steps
- Identification of the corporate mission and major corporate goals
- Analysis of the organisation’s internal and external environment (SWOT analysis)
- Development and selection of strategies
- Strategy implementation and evaluation
what does strategic management focus on integrating?
management, marketing, finance/accounting, production/operations, research and development, and computer information systems to achieve organisational success.
what is SWOT analysis?
A method of analysing an organisational competitive situation
Internal: Strength and weakness
External: opportunities and threats
what is a good strategy?
support mission and exploit oppo and strengths, neutralise threats, avoid weakness
Briefly explain strengths (Internal)?
- skills/capabilities allow org to conceive and implement strategies. resources/capabilities used for competitive advantage
COMMON STRENGTHS - capabilities possessed by large number of competing business
DISTINCTIVE COMPETENCIES - strength possessed by only small number. exploitation => above average performance.
e.g. patent, cost adv, reputation, brand name
explain weaknesses (internal)?
Skills and capabilities that do not enable an organisation to choose and implement strategies to support mission
The absence of strengths can be viewed as a weakness
solution my making investments to obtain needed strengths and modify mission
e.g. opposite of strength
Opportunities (external)?
•Areas in the environment that, if exploited, may generate high performance •External environmental analysis may reveal certain new opportunities for profit and growth
eg. new market, emerging tech, reduction of regulation,less trade barrier
Threats (external)?
- Areas in the environment that increase the difficulty of an organisation achieving high performance
- Changes in the external environmental that may present threats to the firm
- e.g. shift consumer taste, substitute products, regulations, political, trade barriers
what is Michael porters 5 competitive forces?
- potential entrants
- suppliers
- substitute products
- buyers
- industry competition
what is strategy?
• A strategy outlines the basic steps that management plans to take to reach a long-term objective or a set of objectives
• A strategy is a comprehensive master plan stating HOW the
corporation will achieve its mission and objectives.
describe/identify 3 levels of strategy?
• Corporate level - a corporation’s overall direction and the
management of its businesses.
• Business level - emphasizes improving the competitive
position of a corporation’s products or services in a specific
industry or market segment.
• Functional level - concerned with developing a distinctive
competence to provide a company or business unit with a competitive advantage
list the 4 corporate level strategies?
- growth/expansion
- stability
- defensive or retrenchment
- combination
what is involved in growth/expansion strategy?
- Concentration;
- Diversification
- Vertical Integration
stability strategy?
• Continuous improvement or status quo
Applied when the organisation is satisfied with present course.
Selected by default rather than a conscious plan
defensive or retrenchment strategy?
- Turnaround: downsizing existing company or division
- Divestiture/divestment: selling off existing division or subdivision
- Liquidation: selling company’s assets, in parts, for their tangible worth
combination strategy?
• Use of multiple strategies
Growth strategy: Concentration?
• Concentrating on existing specialization
• Engages in increasing product line, market
sector or function.
• Sell products in a single geographic market
e.g. dove skincare products
Growth strategy: Concentration strength/weakness?
Major strength: By concentrating all effort on one product and one market, the organisation is likely to be successful
Major weakness: If the product is not accepted or is replaced the organisation will suffer
Growth strategy - Diversification: what is it and 2 types of it?
The number of different businesses in which an organisation is engaged and the extent to which these are related to each other
•2 types of diversification strategies
i. Related diversification
ii. Unrelated diversification
Growth strategy - Diversification
Related diversification:
advanatges aswell
An organisation operates in several linked businesses
•Bases of relatedness vary but may include technology, common distribution/market skills, brand name, reputation, customers.
- Advantages:
- Reduces reliance on a single product
- Economies of scale (spread costs over several businesses)
- Exploits strengths in more than one business, synergies
Understanding the business and of knowing what the industry opportunities and threats are
Growth strategy - Diversification
Unrelated diversification:
advatnages?
An organisation operates multiple businesses that are not logically associated with one another - no direct fit between business
Advantages (in theory):
•This strategy should produce stable performance over time (portfolio of assets minimises risks)
•Effective planning processes should mean that resources can be distributed annually so as to maximise overall organisational performance
Growth strategy - Vertical Integration?
A strategy that allows an organisation to create value
by producing its own inputs or distributing its own outputs
Strategy Implementation?
The means by which strategies are executed within the organisation (focus on how the strategy is achieved)
