Jessica Chapter 1
Porter's Five Generic Competitive Strategies
1. Low-cost provider strategy (provide a product at a lower cost than a competitor) 2. Broad differentiation strategy (provide a unique or superior value to buyer) 3. Best-cost provider strategy (give more value for money) 4. Focused or market niche strategy based on lower cost (low-cost product to select group) 5. Focused or market niche strategy based on differentiation (very narrow market)
Bankruptcy
A formal procedure in which an appointed trustee in bankruptcy takes possession of a business's assets and disposes of them in an orderly fashion
Value Proposition
A statement of the fundamental benefits of the products or services being offered in the marketplace
Mission Statement
An articulation of the purpose of the organization and the value it creates for customers (the why/purpose)
Turnaround strategy (retrenchment strategy)
An attempt to increase the viability of an organization
Competitive Advantage : Capabilities
Collective skills, abilities, and expertise of an organization
Discarded Strategy
Deemed inappropriate due to changing circumstances
Vision Statement
Defines an organization's long term goals uniting the organization's efforts (horizon planning) (where are we going)
Status quo strategy
Do not wish to see their companies grow; content to keep market share; doing what it has been doing
Hard Objectives/Goals
Goals that are an expression in measurable terms of what an organization intends to achieve; include numbers
Soft Objectives/Goals
Goals that define the targets of social conduct for the organization and may not always be quantifiable - Unmeasurable
Competitive Advantage : Intangible assets
Organizational assets that are not concrete, such as reputation, goodwill
Competitive Advantage : Tangible Assets
Organizational assets that have substance and can be consumed
Corporate Strategy
Organizational-level decisions that focus on long-term survival (MULTI-BUSINESS STRATEGY)
Business Strategy
Plans to build a competitive focus in one line of business
Errors in Strategic Planning
Relegating the process to official planners and not involving executives and managers Failing to use the plan as the guide to making decisions and evaluating performance Failing to align incentives and other HR policies to the achievement of strategy
Core Competencies
Resources and capabilities become this when they serve as a source of a firm's competitive advantage
International Growth
Seeking new customers or markets by expanding internationally
Dynamic Capabilities
The ability to adapt and renew competencies in accordance with changing business environment
Values
The basic beliefs that govern individual and group behaviour in an organization (how must we behave)
Competitive Advantage
The characteristics of a firm that enable it to earn higher rates of profit than its competitors
Strategy Formulation
The entire process of conceptualizing the mission of an organization, identifying the strategy, and developing long-range performance goals
Intended Strategy
The formulated plan
Realized Strategy
The implemented plan
Hurdle Rate
The percentage of return on investment necessary before a program is implemented
Emergent Strategy
The plan that changes incrementally due to environmental changes
strategy implementation (operational planning)
The process by which a strategy is put into action
Divestiture
The sale of a division or part of an organization
Program
The steps or activities necessary to accomplish a goal
Procedures
The steps required to get a job done
Liquidation
The termination of a business and the sale of its assets
Strategy Implementation
Those activities that employees and managers of an organization undertake to enact the strategic plan, to achieve the performance goals
Mergers
Two organizations combine resources and become one
Four Criteria of Sustained Competitive Advantage
Valuable: Are the resources and capabilities able to help generate value/reduce cost? Rare: Are the resources and capabilities not available to competitors? Inimitable: Are the resources and capabilities hard to copy by competitors? Organized: Are the resources and capabilities able to be exploited by the firm?
Harvest strategy
choose to milk the investment as current profitable situation will not last forever
Do-nothing strategy
don't do anything different; make no changes
Incremental Growth
expanding the client base, increasing the products or services, changing the distribution networks, or using technology.
Michael Porter
made a major contribution to the field of strategic management by grouping the ways organizations can compete into five generic competitive strategies
Pause and proceed with caution strategy
temporary strategy - until environmental conditions are more favourable for growth
Acquisitions
the purchase of a company by another company
Benefits of Strategy Formulation
Clarity, Coordination, Efficiency, Incentives, Change, Career Development