·         Explain the Balanced Scorecard concept, including the major components of the framework and the characteristics of a properly constructed scorecard. (Pages 202-203, EXHIBIT 7.1)

A systematic way of measuring the performance of a company’s strategy:

Includes the following:

Financial  – Shareholder perspective

Internal business process –What should we do better than anyone else to please our stakeholders

Learning and growth – how will we sustain our ability to change and improve?

Customer – how should we be viewed by our customers?

A well constructed scorecard balances these factors short- and long-term measures, financial/nonfinancial measures, and internal/external performance perspectives.

Low cost leadership- because of economies of scale, cost cutting technologies, and high sales volumes, this strategy maximizes profit margins by keeping costs low and sales competitive and with high volumes.

Differentiation – A strategy that captures a niche in the market and customizing the product to their needs provides brand loyalty as well as higher prices.

Focus – Aimed at a particular market segment. (Geographical segment or customer demographic) Meets the needs of this segment either through low cost or differentiation.

From these three choices, there are a total of 6 possible combinations that firms will most likely pursue. 

·         Explain Michael Treacy and Fred Wiersema’s alternative approach to Michael Porter’s generic competitive strategies: the value disciplines. (Pages 206-211)

Customer intimacy – never losing sight of the needs of the customer, all things are tailored to the customer and much is spent to know your customer base

Operational excellence – Through efficient and lean operations, a firm moves to lead an industry in price and convenience

Product leadership – Produce the technology first and then wait for the market demand to pick up, provides first mover advantage 

·         Explain each of the following 15 grand strategies. (Pages 211-235, EXHIBIT 7.8, EXHIBIT 7.11, EXHIBIT 7.12, EXHIBIT 7.14, EXHIBIT 7.15, EXHIBIT 7.18)

Concentrated growth – focused on a single market, growth targeted through applying direct resources

Market development – penetrating new markets with existing products, through the use of new distribution channels, or other advertising campaigns

Product development – Developing new products or moving existing into new segments

Innovation – seek to gain high profit by creating and gaining customer acceptance of new product (make existing products obsolete)

Horizontal integration – expansion through the acquisition of firms in the same industry or that utilize similar marketing approaches

Vertical integration – The purchasing of companies that sit either up or down stream that can supply raw materials or provide an outlet to sell products

Concentric diversification – acquiring a business that is related to our firm in terms of technology, markets or products

Conglomerate diversification – the purchase of a business because of the profitability of  the company

Turnaround – a strategy of reducing costs and selling off assets in order to realign a company with increasing profits

Divestiture – sale of a firm or major component of a firm

Liquidation – the rapid divestiture of assets for the salvageable value of the assets

Bankruptcy – an event that occurs due to the company not being able to stay in business due to debt.

Joint ventures – starting a business venture, where co-ownership exists for the benefits of both companies.

Strategic alliances – a comprehensive agreement between businesses that involves the mingling of talent as well as assets.

Consortia –      An Asian term defining a group of large interlocking relationships between businesses of the same industry

– focused on a single market, growth targeted through applying direct resources

penetrating new markets with existing products, through the use of new distribution channels, or other advertising campaigns

Developing new products or moving existing into new segments

seek to gain high profit by creating and gaining customer acceptance of new product (make existing products obsolete)

expansion through the acquisition of firms in the same industry or that utilize similar marketing approaches

acquiring a business that is related to our firm in terms of technology, markets or products

an event that occurs due to the company not being able to stay in business due to debt.