Management : Chapter 9

step 1: identify the organization's current mission, goals, and strategies

- every organization needs a mission - addressed the question what is the organization's reason for being in business

what are the types of corporate strategy?

- growth strategy - stability strategy - renewal strategy

why is strategic management important?

- has a positive impact on performance - helps managers decide how to act in face of change and uncertainty - helps complex and diverse organization work together

step 2: doing an external analysis

- managers need to conduct and external analysis. - influential factors such as competition, pending legislation, and labor supply are included in the external environment

examples of differentiation strategies

- quality - innovation strategies *transfer technology from one division to another * Invest in R&D * improve the process * first mover

competitive advantage can stem from

- quality - low cost - technology - other factors

step 3: doing internal analysis

- should lead to clear assessment of the organization's resources and capabilities

step 6: evaluating results

- the final step in the process is evaluating results - how effective have the strategies been at helping the organization reach its goals?

Porter's Five Forces Model

- threat of new entrants - threat of substitutes - bargaining power of buyers - bargaining power of supplies - current rivalry

focus strategy

A business strategy in which a company pursues a cost or differentiation advantage in a narrow industry segment

growth strategy

A corporate strategy that's used when an organization wants to expand the number of markets served or products offered, either through its current business(es) or through new business(es)

how are corporate strategies managed?

BCG matrix

other differentiation strategies

- customer service - mass customization - social media

Managers should "milk" cash cows for as much as they can, limit any new investment in them, and use the large amounts of cash generated to invest in ________ and _________ .

stars; question marks

what are the steps of strategic management process

step 1- identifying the organization's current mission, goals, and strategies step 2 - doing an external analysis step 3 - doing an internal analysis step 4 - formulating strategies step 5 - implementing strategies step 6 - evaluating results

Choosing a Competitive Strategy

- Cost leadership strategy - Differentiation strategy - Focus strategy - Stuck in the middle

step 5: implementing strageies

- a strategies is only as food as its implementation

step 4: formulating strategies

- after SWOT, managers develop and evaluate strategic alternatives and select strategies that are appropriate - need to be established for corporate, business and functional levels

three main types of strategies managers will formulate

- corporate - competitive - functional

stuck in the middle

an organization that has not been able to develop either a cost or differentiation advantage

first mover

an organization that's first to bring a product innovation to the market or to use a new process innovation

resources

an organization's assets that are used to develop, manufacture, and deliver products to its customers

capabilities

an organization's skills and abilities in doing the work activities needed in its business

competitive strategy

an organizational strategy for how an organization will compete in its business(es)

corporate strategy

an organizational strategy that determines what businesses a company is in or wants to be in, and what it wants to do with those businesses

strengths

any activities the organization does well or its unique resources

sustaining competitive advantage

business must not only develop a competitive advantage but they must also sustain it

A __________ describes how a business will compete in its primary market.

competitive strategy

What are the three main types of corporate strategies?

growth, stability, and renewal

business model

how a company is going to make money

The CEO is meeting with his top managers to determine how best to compete successfully in the company's market. This group is developing company's _________.

strategy

SWOT analysis

strengths, weaknesses, opportunities, threats

stability strategy

corporate strategy in which an organization continues to do what it is currently doing

economic moat

sustaining competitive advantage by protecting long-term profits and market share using various means - popularized by Warren Buffett as a way to visualize the concept of keeping a competitive advantage

cost leadership strategy

the organization competes on the basis of having the lowest cost in the industry

Defining the organizational mission forces managers to identify what __________.

the organization is in business to do

core competencies

the organization's major value-creating capabilities that determine its competitive weapons

strategies

the plans for how the organization will do what it's in business to do, how it will complete successfully, and how it will attract and satisfy its customers in order to achieve its goal

mission

the purpose of an organization

Strategic Business Unit (SBU)

the single independent business of an organization that formulate their own competitive strategies

strategic management

what managers do to develop the organization's strategies

competitive advantage

what sets an organization apart; its distinctive edge

stars

High market share/High anticipated growth rate

cash cows

High market share/Low anticipated growth rate

question marks

Low market share/High anticipated growth rate

dogs

Low market share/Low anticipated growth rate

differentiation strategy

a business or competitive strategy in which a company offers unique products that are widely valued by customers

renewal strategy

a corporate strategy designed to address declining performance

strategic management process

a six-step process that encompasses strategic planning, implementation, and evaluation

BCG Matrix

a strategy tool that guides resources allocation decisions on the basis of market share and growth rate of SBUs

functional strategies

a strategy used by an organization's various functional departments to support the competitive strategy

weaknesses

activities the organization does not do well or resources it needs but does not possess

People's Airlines offers what it calls "no frills" flights: no reserved seating, no snacks or meals on flights, small planes that fly to smaller airports away from the city centers. People's Airlines is likely following a _________ strategy.

cost leadership

In the BCG matrix, a __________ has a low anticipated growth rate and a low market share

dog

when an organization is analyzing its labor supply, it is studying its?

external environment

An organization that initially beings a product innovation to the market is known as the _________.

first mover

Ferrari sells very expensive, stylish, high-quality cars to very wealthy people. Ferrari follows a _______________ strategy

focus

When once gas station lowers its price penny, the station on the other corner of the intersection lowers its price, followed by the gas station on the block, and so on, until nearly every gas station in town has lowered its prices. this situation illustrates

intense rivalry among competitors

A cost leadership strategy requires a firm to ________.

maintain the lowest cost structure

threats

negative trends in the external environment

implementing strategies

no matter how effectively an organization has planned its strategies, performance will suffer if the strategies aren't implemented properly

Casey majored in marketing and really enjoyed studying market research as a subject. Through research on the Internet and in the university library, she discovers that this industry appears to have significant positive trends in employment. She interprets this as a(n) ________.

opportunity

opportunities

positive trends in the external environment

An organization's financial, physical, human, and intangible assets are known as the ________.

resources

A __________ strategy is used to deal with minor performance problems. it helps an organization stabilize operations, and capabilities, and prepare to compete once again.

retrenchment