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| a plan on how to accompish goals |
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| a comprehensive and ongoing management process aimed at formulating and implementing effeective strategies which align the organization with its environment to achieve major organizational goals |
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| strategies that promote a superior alignment between the organization and its environment and the achievement of its goals. |
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something an organization does exceptionally well
ex. wal-marts low prices |
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| range of markets in which an organization will compete |
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how an organization will distribute its resources across the areas in which it competes
"what do I want to be known for?" |
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distinctive competence
scope
resource deployment |
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| types of strategic alternatives |
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business-level strategy
corporate-level strategy |
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the set of strategic alternatives that an organization chooses from as it conducts business in a particular industry or a particular market.
how do we compete- implement |
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the set of strategic alternatives that an orgaization chooses from as it manages its operations simultaneously across several industries and several makets
what business are we in? |
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| the set of processes involved in creating or determining the organisations strategies |
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the methods by which strategies are operationalized or executed within the orgainzation
process which we achieved our strategy |
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a plan, chosen and implemented to support specific goals, that is the result of a rational, systematic, and planned process of strategy formulation and implementation
ex. vw brought back old beatle |
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a pattern of action that develops over time, in the absence of goals or missions, or despite goals and missions.
ex. red swingline brought back bc of the demand for them after the movie office space premiered |
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strength
weakness
opportunity
threat |
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are skills and abilities enabling an organization to conceive of and implement strategies
if everyone offers the same thing/service, people then choose based on price |
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| common organization strengths |
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| organizational capabilities possessed by numerous competing firms |
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| are useful for competitive advantage and superior performance |
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| imitation of distictive competencies |
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| duplication another firms distictive competence |
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| sustained competitive advantage |
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greatest strength
occurs when a distinctive competence cannot be easily duplicated |
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| strategic imitation is difficult when? |
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Definition
distictive competence is based on unique historical circumstances
the competences is based on a complex phenomenon, such as organizational culture
difficult for other compines to understand/recreate |
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| organizational weaknesses |
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| are skills and capabilities that do not enable an organization to choose and implement strategies that support its mission |
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| weaknesses can be overcome by: |
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Definition
investments to obtain the strenghts needed
modification of the organizations mission so it can be accomplished with the current workforce |
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| a situation in which an organization fails to implement strategies being implemented by competitors |
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| organizational opportunities |
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internal
are areas in the organizations envirionment that may generate high performance |
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external
areas in the organizations environment that make it difficult for the organization to achieve high performance |
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| Porter's generic strategies |
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differentiation strategy
overall cost leadership strategy
focus strategy |
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| an ogranization seeks to distinguish itself from competitors through the quality of its products or services |
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| overall cost leadership strategy |
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| an organizations attempt to gain competitive advantage by reducing its cost below the cost of competing firms |
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| an organization concentrates on a specific regional market, product line, or group of buyers |
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| implementing Porter's generic strategies- differentiation strategy |
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| distinguished products or services |
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| implementing Porter's generic strategies- overall cost leadership strategy |
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Definition
| to support cost leadership and sales are likely to focus on simple product attributes and how these product attributes meet customer needs in a low0cost and effective manner |
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| implementing Porter's generic strategies- focus strategy |
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Definition
| this strategy is implemented via the same approaches used for differentiation and cost leadership, depending on which one (differentation or cost leadership) is the proper basis for competing in or for a specific market segment, product category, or group buyers |
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| Miles and Snow's strategy types |
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Definition
prospector
defender
analyzer
reactor |
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encourages creativity to seek out new market opportunities and to take risks
develops the flexibility to meet changing market conditions by decentralizing its organizational structure |
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| focuses on defending its current markets by lowering its costs and/or improving the performance of its current products |
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| incorporates elements of both the prospector and the defender strategies to maintain business and to be somewhat innovative. |
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| has no clear strategy, reacts to changes and events |
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| an organization using this strategy must encourage creativity to seek out new market opportunities and to take risks |
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| to support this strategy, an organization will focus on defending its current markets by lowering its costs and/or improving the performance f current products |
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| organizations using this strategy incorporate elements of both the prospector and the defender strategies in an attempt to maintain current business and to be somewhat innovative. |
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introduction stage
growth stage
mature stage
decline stage |
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| focus on getting the product out the door without sacrificing quality |
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ppl want it
focus on ensuring quality and delivery, and begin to differntiate product |
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| focus on low costs and new products. essential stage if company is goint to survive in the long-run |
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| formulating corporate-level strategies |
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Definition
strategic business units
diversification
single product strategy
related diversification
unrelated diversification |
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Definition
| each busniness or group of businesses within an organization engaged in serving teh same markets, customers, or products |
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| the number of businesses and organization is engaged in and the extent to which theses businesses are related to one another |
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simplicity
an orgaization manfuactures one product or service and sells it in a single geographic market. |
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a strategy in which an organization operates in several different businesses, industries, or markets that are somehow linked
avoids the disadvantages and risks of a sing-product strategy
alcohol and tobacco |
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| bases of relatedness in implementing related diversification |
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Definition
similar technology
common distribution and marketing skills
common name brand and reputation
common customers |
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| advantages of related diversification |
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Definition
- reduces organization's dependence on any one of its business activities and thus reduces economic risk
- reduces overhead costs associated with managing any one business through economies of scale and economies of scope
allows an organization to exploit its strengths and capabilities in more than one business
- synery exist among a set of businesses when the businesses value together is greater than their economic value seperately |
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| unrelated diversification |
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Definition
| a strategy in which an organization operates multiple businesses that are not logically associated with one another |
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| advantages of unrelated diversification |
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Definition
- stable corporate-level performance over time due to business cycle differences among the multiple businesses
- allocation of resources to areas with highest return potentials to maximize corporate performance |
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| disadvantages of unrelated diversification |
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Definition
firms with unrelated strategies fail to exploit important synergies, putting them at a competitive disadvantage to firms with related diversification strategies
- poor performance due to the complexity of managing a divesity of business |
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| becoming a diversified firm |
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Definition
- internal development of new products
- replacement of suppliers and customers |
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| internal development of new products |
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| developing products and services within the boundaries of traditional business operations |
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| replacement of suppliers and customers |
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Definition
backward vertical integration
forward vertical integration |
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| backward vertical integration |
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Definition
buying supplier
beginnin a business that funishes resources previously handled by a supplier |
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| forward vertial integration |
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Definition
| beginning a business previouls handled by an intermediary and selling mroe directly to customers |
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| becoming a diversified firm |
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| the purchase of one firm by another firm of appoximately the same size |
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| larger firm purchases smaller on |
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| purposes of mergers and acquisitons |
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to acquire complementary products or services liked by a common technology and common customers
to creat or exploit synergies that reduce the combined organizations' costs of doing business to increase revenues |
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| major tools for managing diversification |
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Definition
organization structure
portfolio management techniques |
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| portfolio management techniques |
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Definition
methods that diversified organizations use to make decisions about what businesses to engage in and how to manage these multiple businesses to maximize corporate performance
- the bcg matrix
the ge business screen |
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Definition
a method of evaluating businesses relative to the growth rate of their market and the organizations share of the market
classifies the types of businesses that a diversified organization can engage as:
Dogs
cash cows
question marks
stars |
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Definition
| have small market shares and no growth |
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Definition
have large shares of mature markets
potential growth rate is not there |
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| have small market shares in quickly growing markets |
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| have large shares of rapidly growing markets |
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a method of evaluating business in a diversified portfolio along two dimensions, each of which contains multiple factores
- industry atractiveness
- competitive positoin (strength) of each firm in the portfolio
in general, the more attractive the industry and the more competitive a business is, the more resources an organizatoin should invest in that business |
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| developing international and global strategies |
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Definition
global efficiencies
multimarket flexibility
worldwide learning |
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location efficiencis
economies of scale
economies of scope |
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| seeking lower input cost locations |
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| larger facilities result in lower costs |
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| international businesses may respond to a change in one country by implementing a change in another country |
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| the diverse operating encirionments of multinational corporations (MNCs) contribute to organizational learning that can be transferred to other operating environments |
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| strategic alternatives for international business |
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Definition
home repication strategy
multidomestic strategy
global strategy
transnational strattegy |
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Definition
works best
utilizing a core competency or a firm-specific advantage developed at home as a main competitive weapon in foreign markets |
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| used by firms that manage a portfolio of international business as relatively autonomous and independent units |
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viewing the world as a single market place and having as a primary goal the creation of standardized goods andservices that will address the needs of customers worldwide works
companies doing exactly the opposite of those using a mulitdomestic strategy (they are standardizing across alll countries). |
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Definition
| pursue both centralization and decentralization at the same time, using whichever approach makes more sense in the particular circumstance |
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| Hagen das used distinctive strategy by selling ice cream as fashion to take on Mars who had a monopoly on ice cream |
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diversification
would not expand from gambling to narcotics |
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