·         They’re intended to create a defendable position in an industry in order to outperform competitors

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   • Businesses that don’t consistently pursue either a cost leadership or differentiation strategy

What are growth strategies at the corporate level?

·         They generate top-line (i.e., revenue) growth

·         They include vertical integration, horizontal growth, and diversification

·         buying or creating a business in a stage of the industry (e.g., parts or raw materials) that you once bought from

·         backward integration for less than half of the supplies needed

·         the opposite of backward integration

jargon used by businesspeople, what is a “vertical strategy”?

·         It means finding new industries to sell essentially the same product to

·         Related terms are “vertical markets” and “industry verticals”

·         In the academic discipline of strategy, we call it “market development”

What are stability strategies?

·         Pause – stop aggressive growth to allow the organization to cope with past growth

·         No change – continue the current strategy

·         Profit – short-term asset liquidation and cost cutting (travel, advertising, training, and R&D are typical targets) … it’s not a sustainable strategy

What are retrenchment strategies?

·         Selling the company

·         Divestiture – selling one business unit while retaining others

·         Turnaround – often performed when a company remains solvent, but is having disappointing results

·         Chapter 11 bankruptcy – protects the company from its creditors while the company reestablishes solvency

·         slow growth but high market share relative to the competition; “milk” the profits by making enough investment to keep the cash cow healthy, and use the cash to fund other businesses

What are core competencies?

·        Assets and capabilities central to the company’s activities and history

·        Strategists should think carefully before doing business away from their core

·        Not all core competencies are distinctive competencies

What are distinctive competencies?

·        a firm’s core competencies that are superior to its competitors’

What kind of distinctive competencies lack long-term sustainability?

·        Those subject to obsolescence due to market or tech. changes

·        Transparent … because competitors are aware of them

·        Transferable … because competitors can buy them

·        Replicable … because competitors can make them

·        Often capabilities based on tangible assets … because intangible assets tend to be more difficult to understand and replicate

o   Leverage is the proportion of debt (versus equity) used to finance a business

o   Solvency is having sufficient total assets to cover debts

What are examples of key indicators of value chain-related strength or weakness?

·        Effectiveness in various stages of the company’s value chain

o   inbound logistics, operations, outbound logistics, inventory management, quality management, flexibility

·        Does the scope of the company’s value chain fit its capabilities?

What is a TOWS matrix, and how does it support strategy formulation?