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COB 300A- Management
Chapter 6- Strategic Management
33
Management
Undergraduate 3
03/15/2011

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Term
strategic management
Definition
Star managers realize a grand design using ____.
Term
strategy
Definition
large-scale action plan that sets the direction for an organization
Term
strategic management
Definition
process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals
Term
strategic planning
Definition
where an organization is going over the next year or more, how it's going to get there, and how it'll know if it got there or not
Term
1) provide direction and momentum
2) encourage new ideas
3) develop a sustainable (over time) competitive advantage --> this is the most important
Definition
Name 3 reasons why strategic management and strategic planning are important.
Term
1) being responsive to customers
2) innovation
3) quality
4) effectiveness
Definition
What 4 areas does an organization need to stay ahead in to have a sustainable competitive advantage?
Term
5 steps of the strategic management process
Definition
1) establish the mission and vision
2) establish the grand strategy w/environmental scanning
3) formulate the strategic plans (using, e.g. Porter)
4) carry out the strategic plans
5) maintain strategic control

Feedback: revise actions if necessary, based on feedback (for each step)
Term
grand strategy
Definition
after an assessment of current organizational performance, ___ explains how the organization's mission is to be accomplished
Term
1) growth strategy
2) stability strategy
3) defensive strategy (retrenchment)
Definition
Name 3 common grand strategies
Term
growth strategy
Definition
a grand strategy that involves expansion- as in sales revenues, market share, # of employees, or # of customers
Term
defensive strategy
Definition
a grand strategy that involves reduction in the organization's efforts; retrenchment
Term
stability strategy
Definition
a grand strategy that involves little or no significant change
Term
retrenchment
Definition
when a company pulls back to its core services
Term
competitive intelligence
Definition
gaining information about one's competitors' activities so that you can anticipate their moves and react appropriately
[ex. industry benchmarking, web info, professional mole, patents]
Term
1) public prints & advertising
2) investor information (ex. from SEC)
3) informal sources (ex. trade shows)
Definition
what are 3 sources that can be used to gain competitive intelligence?
Term
1) threat of new entrants
2) bargaining power of suppliers
3) bargaining power of buyers
4) threat of substitute products or services
5) rivalry among competitors
Definition
what are Porter's 5 competitive forces?
Term
environmental scanning
Definition
careful monitoring of an organization's internal and external environments to detect early signs of opportunities and threats that may influence the firm's plans
Term
1) cost-leadership
2) differentiation
3) cost-focus
4) focus-differentiation
Definition
what are Porter's 4 competitive strategies?
Term
cost-leadership & differentiation
Definition
which of Porter's strategies apply to a WIDE market?
Term
cost-focus & focus-differentiation
Definition
which of Porter's strategies apply to a NARROW market?
Term
cost-leadership strategy
Definition
keep the costs, and hence prices, of a product or service below those of competitors and to target a wide market
Term
differentiation strategy
Definition
offer products that are unique and superior value compared to those of competitors but to target a wide market; primary, most used strategy
Term
cost-focus strategy
Definition
keep the costs of a product below those of competitors and to target a narrow market
Term
focused-differentiation strategy
Definition
offer products that are of unique and superior value compared to those of competitors and to target a narrow market
Term
1) cost-leadership: Walmart

2) differentiation: mp3 players w/FM radios

3) cost-focus: low cost cigarettes/beer

4) focused-differentiation: adult model rockets
Definition
Give an example(s) of each of Porter's strategies
Term
single-product strategy
Definition
when a company makes and sells only one product within its market
Term
Benefit- focus (experts in 1 product)

Risk- vulnerability (if ppl. stop buying)
Definition
what are the benefits and risks of a single-product strategy?
Term
diversification
Definition
operating several businesses in order to spread the risk
Term
1) unrelated
2) related
Definition
what are the 2 types of diversification?
Term
unrelated diversification
Definition
operating several businesses under one ownership that are not related to one another; independent business lines [ex. GE]
Term
related diversification
Definition
when an organization under one ownership operates separate businesses that are related to one another; ___ business lines [ex. Burberry]
Term
1) reduced risk- b/c of more than 1 product (makes up for slackers)

2) management efficiencies- administration spread over several businesses (overhead costs spread throughout businesses)

3) synergy- providing a one-stop shop for customers (the sum is greater than the parts- strengths in one business can be applied to another)
Definition
what are the 3 advantages of related diversification?
Term
synergy
Definition
the economic value of separate, related businesses under one ownership and management is greater together than the businesses are worth separately
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