strategic management chapter 6

competitive strategy examples

backward, forward, horizontal integration. Market penetration, Market development, product development

aggressive strategy examples

backward, forward, horizontal integration. Market penetration, Market development, product development, diversification related or unrelated

Grand strategy Matrix

based on two evaluative dimensions: competitive position and market (industry) growth

when a firm's directional Vector is located in the competitive quadrant lower right what does this mean

it indicates competitive strategies

board of directors duties and responsibilities

1. Control and oversight over management two. Adherents illegal prescriptions three. Consideration of stakeholders interest 4. Advancement of stakeholders rights

what are some limitations of the space Matrix

1. It is a snapshot in time 2. There are more than four dimensions that firms could or should be rated on 3. The directional Vector could fall directly on an access, or could even go nowhere if the coordinate is 0 0 4. Implications of the exact angle of the vector within a quadrant are unclear 5. The relative attractiveness of alternative strategies generated is unclear 6. the underlying internal and external factors are not explicitly considered

what are the eight steps that the process of constructing a SWOT Matrix can be summarized in

1. List the firm's key external opportunities 2. List of firms key external threats 3. List the firm's key internal strengths 4. List the firm's key internal weaknesses 5. Match internal strengths with external opportunities, and record the resultant SO strategies in the appropriate cell 6. Match internal weaknesses with external opportunities, and record the resultant wo strategies 7. Match internal strengths with external threats, and record the resultant St strategies 8. Match internal weaknesses with external threats, and record the resultant WT strategies

the Boston Consulting Group BCG Matrix graphically portrays differences among divisions based on two dimensions

1. Relative market share position on the x axis two. Industry growth rate on the y-axis

the process of developing a space Matrix can be summarized in 6 steps

1. Select a set of variables to defined financial position FP, competitive position CP, stability position SP, and Industry position IP two. Assign a numerical value ranging from positive one worst to positive 7 best to each of the variables that make up the F he and I P Dimensions. Assign a numerical value ranging from -1 best to -7 worst to each of the variables that make up the SP and CP dimensions. On the F P & C P axis, make comparisons to competitors. On the I P & S P access, make comparisons to other Industries. On the Espy access, no that is -7 denotes highly unstable industry conditions, whereas -1 denotes highly stable three. Compute an average score for FP, CP, I pee, and SP by summing the values given to the variables of each Dimension and then by dividing by the number of variables included in their respective dimension four. Plot the average scores for FP, i p, s p, and CP on the appropriate access in the space Matrix 5. Add the two scores in the x-axis and plot the result in point on X. Add the two scores on the y-axis and plot the resulting point on why. Plot the intersection of the new x y coordinate 6. draw a directional Vector from the origin of the space Matrix 00 through the new xy-coordinate. That doctor, being located in particular quadrant, reveals particular strategies the organization should consider

what are the four important differences between the BCG Matrix in the IE Matrix

1. The X and Y axes are different 2. The IE Matrix requires more information about the divisions then does the BCG Matrix three. the Strategic implications of each Matrix are different 4. The IE Matrix has nine quadrants versus for in a BCG Matrix

what is the average number for board of directors

12

conservative strategy examples

Market penetration, Market development, product development, related diversification

the six steps of the quantitative strategic planning Matrix include

Step 1. Make a list of the firm's key external opportunities and threats and internal strengths and weaknesses in the left column of the qspm Step 2. A sound wave to each key external and internal Factor step three. Examine the stage two matching matrices, and identify alternative strategies that the organization should consider implementing step forward. Determine the attractiveness scores as, defined as numerical values that indicate the relative attractiveness of each strategy considering a single external or internal Factor step 5. Compare the total attractiveness scores. Total attractiveness scores are defined as a product of multiplying the weight step 2 by the as step step six. Compute the sound total attractiveness score. The sum total of attractiveness score stas reveals which strategy is most attractive and each set of alternatives

what is arguably the most important strategic decision facing multi-divisional firms

allocating resources across divisions

when a firm's directional Vector is located in the aggressive quadrant upper right what does this mean

an organization is in an excellent position to use its internal strengths to take advantage of external opportunities, overcome internal weaknesses, and avoid external threats

firms located in quadrant 1 the grand strategy Matrix

are in an excellent strategic position. strategies utilize include Market development, Market penetration, product development, forward, backward, horizontal integration, related diversification

business portfolio

autonomous divisions also called segments or profit centers of an organization

quadrant 3 organizations the grand strategy Matrix

compete and slow growth industries and have wheat competitive its positions. Strategies implemented here include retrenchment, related diversification, unrelated diversification, divestiture, liquidation

stage 3 is called the

decision stage

relative market share position rmsp

defined as a ratio of a division's own market share or revenues in a particular industry to the market share or revenues held by the largest rival firm in that industry

Dogs (BCG Matrix)

divisions in Quadrant 4 lower right, have a low relative market share position and compete in a slow or no market growth industry. They are dogs in the firm's portfolio. Because of their weak internal and external position, these businesses are often liquidated, divested, or trim down through retrenchment. When a division first becomes a dog, retrenchment can be the best strategy to pursue because many dogs have bounced back, after strenuous asset and cost-reduction, to become viable, profitable divisions

Question Marks (BCG Matrix)

divisions in quadrant 1 the upper right, have a low relative market share position, yet they compete in a high-growth industry. Generally these firms cash needs are higher and their cash generation is low. These businesses are called question marks because the organization must decide whether to strengthen them by pursuing an intensive strategy such as Market penetration, Market development, or product development or to sell them

Cash Cows (BCG Matrix)

divisions in quadrant 3 lower left, have a high relative market share position but can pee in a low growth industry, call the cash cows because they generate cash in excess of their needs, they are often melt. Many of today's Cash towels were yesterday's Stars. Cash Cow division should be managed to maintain their strong position for as long as possible. Product development or diversification may be attractive strategies for strong cash cows. However, as a cash cow division becomes weak, retrenchment or divestiture can become more appropriate

Stars (BCG Matrix)

divisions in quadrant to the upper left, represent the organization's best long-run opportunities for growth and profitability, and are therefore called Stars. Divisions with a high relative market share and a high industry growth rate to receive substantial investment to maintain or strengthen their dominant position. Forward, backward, and horizontal integration, Market penetration, Market development, and product development are appropriate strategies for these divisions to consider

firms in quadrant II need to

evaluate their present approach to the marketplace. Strategies utilized here include Market development, Market penetration, product development, horizontal integration, divestiture, liquidation

what are some of the limitations to the SWOT Matrix

first, what does not show how to achieve a competitive advantage. second, SWAT is a statistic assessment or snapshot in time. third a SWOT analysis may lead the firm to overemphasize a single internal or external factor in formulating strategies. fourth, there are no weights, ratings, or numbers in a SWOT analysis. finally, the relative attractiveness of alternative strategies is not provided

stage 2 focuses on

generating feasible alternative strategies by wine and key external and internal factors

when in the organization's directional Vector appears in a conservative quadrant upper left what is this mean

imply staying close to the firm's basic competencies and not taking excessive risks

what does stage 3 involve

it involves a single technique that uses input information from stage 1 to objectively evaluate fees for alternative strategies identify and Stage 2. it reveals the relative attractiveness of alternative strategies and this provides an objective basis for selecting specific strategies

the BCG Matrix allows a multi-divisional organization to

manage its portfolio of businesses by examining these two dimensions for each division relative to other divisions in the organization

stage two is called the

matching stage

seven principles of good governance

one. Never have more than two of the firm's Executives current or past on the board two. Never allow a firm's Executives to serve on the boards audit, compensation, or nominating committee three. Require all board members to own a large amount of the firm's equity 4. Require all board members to attend at least 75% of all meetings 5. Required aboard to meet annually to evaluate its own performance, without the CEO, Coo or top Management in attendance six. Never allow the CEO to be chairperson of the board seven. Never allow interlocking directorships where are they Rector or CEO sits on another's directors board

reasons not to disclose financial information by segment or division

one. Rival firms can obtain free competitive information two. Performance failures can be hidden three. Rivalry among segments can be reduced

reasons to disclose financial information by segment or division

one. Transparency is a good thing in today's world of sarbanes-oxley Act of 2002 two. Investors will better understand the firm, which can lead to Greater support three. Managers and employees will better understand the firm, which should lead to Greater commitment four. Disclosure enhances the communication process both within the firm and with Outsiders

the internal external Matrix and the Boston Consulting Group Matrix are both called

portfolio matrices

defensive strategy examples

retrenchment, divestiture, liquidation

what are commonly considered to be determining factors of an organization's financial position or FP

return on investment, leverage, liquidity, working capital, and cash flow

what are the three stages of the strategy formulation analytical framework

stage 1 the input stage, stage to the matching stage, stage 3 the decision stage

strategy analysis and choice largely involves making

subjective decisions based on objective information

when organizations directional Vector may be located in the defensive quadrant lower left what does this mean

suggest the firm should focus on improving internal weaknesses and avoiding external threats

Quadrant 4 of the grand strategy Matrix involves

that businesses have a strong competitive position but are in a slow growth industry. strategies included in this quadrant include related diversification, unrelated diversification, and joint ventures

what is stage 1 summarize

the basic input information needed to formulate strategies

stage one of the strategy formulation analytical framework consist of

the external Factor evaluation Matrix, the internal Factor evaluation Matrix, and the competitive profile Matrix

what is stage 1 also referred to as

the input stage

all nine techniques included in the strategy formulation analytical framework require

the integration of intuition and Analysis

strategy is sometimes defined as

the match in organization makes between its internal resources and skills and the opportunities and risks created by external factors

Region 2

the prescription for divisions that Fonda sells 3 5 or 7 can be described as hold and maintain strategies. Market penetration and Market development are two commonly employed strategies for these types of divisions

region one of the IE Matrix

the prescription for divisions that fall into cells 1 2 or four can be described as grow and build. Intensive Market penetration, Market development, and product development or integrative backward integration, forward integration, and horizontal integration strategies can be most appropriate for these divisions. This is the best region for division given their High IFE & EFE scores. Successful organizations are able to achieve a portfolio of businesses positioned in region 1

Region 3

the prescription for divisions that fall into cells 6, 8 and 9 can be described as harvest or divest strategies such as retrenchment or divestiture utilized here

what techniques are utilized in stage 3

the quantitative strategic planning Matrix. this is a more robust way to determine the relative attractiveness of strategies

what techniques are included in stage 2

the strengths weaknesses opportunities threats also known as SWOT Matrix, the Strategic position and action evaluation space Matrix, the Boston Consulting Group Matrix, the internal external Matrix, and the grand strategy Matrix

the axes of the space Matrix represent two internal dimensions and two external Dimensions what are they

the two internal Dimensions include financial position and competitive position. The two external dimensions include stability position and Industry position. these four factors are perhaps the most important determinants of an organization's overall strategic position

the term stability position or SP refers to

the volatility of profits and revenues for firms in a given industry. It is based on the expected impact of changes and core external factors such as technology, economy, demographic, seasonality, and so on. The higher the frequency and magnitude of changes in a given industry, the more unstable the SP becomes