Chapter 8: Managing Strategy and Strategic Planning

Effective strategies address three organizational issues

- distinctive competence - scope -resource deployment

Single product strategy

A firm that does not diversify is implementing a single-product strategy.

additional sources of competitive advantage to international firms

global efficiencies, multimarket flexibility, and worldwide learning.

Strategic management

is a comprehensive and ongoing process aimed at formulating and implementing effective strategies.

A corporate-level strategy

is the plan an organization uses to manage its operations across several businesses

A corporate level strategy

is the plan an organization uses to manage its operations across several businesses.

Four business levels strategies according to Miles and Snow

According to Miles and Snow, organizations may choose one of four business-level strategies: prospector, defender, analyzer, or reactor.

related diversification strategy

An organization pursues a strategy of related diversification when it operates a set of businesses that are somehow linked. Related diversification reduces the financial risk associated with any particular product, reduces the overhead costs of each business, and enables the organization to create and exploit synergy.

unrelated diversification strategy

An organization pursues a strategy of unrelated diversification when it operates a set of businesses that are not logically associated with one another.

BCG Matrix

The BCG matrix classifies an organization's diversified businesses as dogs, cash cows, question marks, or stars according to market share and market growth rate.

GE Business Screen

The GE Business Screen classifies businesses as winners, losers, question marks, average businesses, or profit producers according to industry attractiveness and competitive position.

Porter's Generic Strategies

Differentaion strategy- distinguish itself from competitors through the quality of its products or services (Rolex) Overall cost leadership - attempts to gain a competitive advantage by reducing its costs below the costs of competing firms. (Kodak) Focus strategy- organization concentrates on a specific regional market, product line, or group of buyers. (Waterman)

Sustained competitive advantage

a competitive advantage that exists after all attempts at strategic imitation have ceased.

Backward vertical integration

an organization begins the business activities formerly conducted by its suppliers.

Using SWOT analysis,

an organization chooses strategies that support its mission and (1) exploit its opportunities and strengths, (2) neutralize its threats, and (3) avoid its weaknesses

Forward vertical integration

an organization stops selling to one customer and sells instead to that customer's customers.

Strategy implementation

at the business level takes place in the areas of marketing, sales, accounting and finance, and manufacturing. Culture also influences strategy implementation.

Strategy

comprehensive plan for accomplishing the organization's goals

Strategy formulation

set of processes involved in creating or determining the strategies of an organization

Strategic imitation

the practice of duplicating another organization's distinctive competency and thereby implementing a valuable strategy

Managing Diversification; Portfolio Management technique

use to make decisions about what businesses to engage in and how to manage these multiple businesses to maximise corporate performance