chapter 8

Strategy

A cluster of decisions about the goals the organization will pursue, the actions it will take, and how it will use resources to achieve those goals

Corporate-Level Plan

A plan that outlines the entire organization's mission, goals, strategy, and structure

Franchising

A special kind of arrangement in which a foreign organization buys the rights to use a brand name and operational know-how in exchange for a lump-sum payment and a share of the products

Joint Venture

A specific kind of strategic alliance in which two or more companies agree to share the ownership of a new business

Synergy

Performance gains that result from the coordination of the actions of individuals and departments

Hypercompetition

Permanent, intense, ongoing competition that results from changing customer tastes or advancing technology

Single-Use Plans

Plans used for nonprogrammed decisions, in situations that occur infrequently and thus require one-of-a-kind actions

Standing Plans

Plans used for programmed decisions, in situations that occur repeatedly

what are the five steps of the planning and implementing strategy

make specific individuals and groups responsible for implementation write detailed action plans create a timetable with specific, measurable goals allocate resources to responsible individuals or groups hold specific individuals or groups responsible for goal attainment

flexibility

managers should be willing to change plans when the situation changes

Accuracy

managers should use all available information in the planning process

intermediate-term plans

one to five years

short-term plans

one year or less

unity

only one central plan is in place at a time

continuity

planning should be ongoing and implemented at all levels

An increase in local competition, an increase in labor cost, or a fall in the economy are all _____ to an organization.

potentil threats

single-use plans

programs and projects

what does differentiation strategy focus on

serving only one segment of the market by offering differentiated products to that narrow market segment

what does low-cost strategy focus on

serving only one segment of the market by trying to be the lowest-cost provider in that segment

the CEO and top managers must demonstrate ____________________ when determining the organization's mission and goals

strategic leadership

time horizon of plans

long-term plans, intermediate-term plans, Short-term plans, rolling plans

what are the formulating business-level strategies

low-cost strategy and differentiation strategy

Mission Statement

A broad declaration of the organization's purpose and how the organization will be distinguishable from its competitors

Licensing

Allowing a foreign firm to manufacture and distribute a product in return for a negotiated fee

Functional-Level Strategy

An action plan to achieve task-specific activities in a way that adds value to the organization's goods and services

Strategic Alliance

An agreement in which organizations share resources or know-how with a foreign company, and share the risks and rewards

Time Horizon

Describes a plans intended duration

Business-Level Plan

Establishes a particular division's long-term goals, strategy, and structure

Functional-Level Plan

Establishes the goals that functional-level managers will pursue to achieve business-level goals

Diversification

Expanding the company's operations to new industries in order to produce and provide new kinds of products

Business-Level Strategy

Indicates how a particular division will compete against its rivals

Unrelated Diversification

Involves entering a new business or industry not related in any way to the company's current businesses or industries

Related Diversification

Involves entering a new business or industry to produce a competitive advantage in an already-existing division or business

Vertical Integration

Involves expanding operations either backward or forward

Scenario Planning

Involves generating multiple forecasts and analyzing how to respond in each of those conditions

Strategy Formulation

Involves the development of corporate, business, and functional-level strategies that will allow the organization to achieve its goals and accomplish its mission

Importing

Making products abroad and selling them at home

Exporting

Making products at home and selling them abroad

A planning exercise that analyzes the internal strengths and weaknesses as well as the external opportunities and threats of the external environment is referred to as:

SWOT analysis

Corporate-Level Strategy

States which industries and markets the organization will compete in

SWOT Analysis

The identification of internal strengths and weaknesses and external opportunities and threats

Planning

The process in which managers identify and select appropriate goals and courses of action

Multidomestic Strategy

When a company customizes its products and marketing strategies in each national market

Global Strategy

When a company sells the same basic product everywhere, using the same basic marketing approach

Wholly Owned Foreign Subsidiary

When a production operation is established in a foreign country without any involvement of a local firm

when McDonald's buys chicken ranches to provide eggs to its restaurant it is engaging in

backward vertical integration

when coca-cola buys a company that makes artificial sweetener that it will use to produce its sugar-free beverages it is engaging in

backward vertical integration

The cell phone division of a multinational corporation has granted its research and development department funds to create new technologies to ensure the organization stays ahead of its competitors in the market. This decision by the cell phone division is an example of the organization's _____ strategy.

business-level

when campbell sold Godiva chocolates and invested its money in its for core soup business it is engaging in

concentration in a single industry

when nike reinvests profits into its sportswear product development it is engaging in

concentration in a single industry

what are the formulating Corporate-level strategies

concentration on a single industry, vertical integration, diversification, international expansion

scenario planning is also known as

contingency planning

three levels in organization

corporate level plan, business-level plan, functional level plan

The highest level of decision making, which involves decisions by the members of the top management concerning the organization's goals, overall strategy, and structure, is the _____ plan.

corporate-level

three steps in the planning process

determine the organization's mission and goal known as the mission statement formulate the strategy implement the strategy

In general, ______ refers to the corporate-level strategy of expanding a company's business operations into a new industry in order to produce new kinds of valuable goods or services.

diversification

what is the least risky international expansion strategy

exporting and importing

long-term plans

five years or more

_____ is a corporate-level strategy in which a company expands its business operations and enters a new industry that uses, distributes, or sells the company's products.

forward vertical integration

when Apple opened stores to sell the computers and other electronic devices it is engaging in

forward vertical integration

when Gallo wines opened a new division to make the bottles it would use for the wines it produces it is engaged in

forward vertical integration

The decisions pertaining to the goals that a department's manager proposes to pursue to help the division attain its business-level goals is called a(n) _____.

functional-level plan

what are some examples of international expansion

global strategy, multi domestic strategy, exporting and importing, licensing and franchising, strategic alliance and joint ventures, wholly owned subsidiaries

A company intends to expand internationally but wants avoid risk or uncertainty to the highest degree possible. The organization is most likely to pursue its global operations through _____.

importing and exporting

what is forward vertical integration

into an industry that uses, distributes, or sells the product

what is backward vertical integration

into an input industry

four reasons why planning is important

it gives the organization direction and purpose it allows managers to participate in decision making about the organizations future it coordinates the activities of managers in different divisions and functional groupings it can be used as a control mechanism, because it establishes standards and benchmarks to be achieved

what does hypercompetition do to planning and strategy formulation

it makes it more difficult

five forces model

level of rivalry among firms in the industry potential for entry into the industry the power of large suppliers the power of large consumers the threat of substitute products

what is related to diversification

synergy

what is the strategy and planning at a textbook company

textbooks developed interactive software

determine the mission by defining the business by identifying

the customers, their needs, and how to satisfy those needs

Henri Fayol's effective plans that have four qualities

unity, continuity, accuracy, flexibility

rolling plans

updates annually to take into account changes in the environment

what international expansion strategy has the most risk

wholly owned subsidiaries