Chapter 2 Bus Strat

is primarily concerned with strengthening the company's market position and building competitive advantage in a single business company or a single business unit of a diversified multibusiness corporation.

Business strategy

establishes an overall game plan for managing a set of businesses in a diversified, multibusiness company.

Corporate strategy

relate to the financial performance targets management has established for the organization to achieve.

Financial objectives

are concerned with actions related to particular functions or processes within a business (marketing strategy, production strategy, finance strategy, customer service strategy, product development strategy, and human resources strategy).

Functional-area strategies

the beliefs, traits, and behavioral norms that its personnel are expected to display in conducting the company's business and pursuing its strategic vision and mission. Provide guidance for desired actions and behaviors of employees as they conduct the company's business

Values

Are targets to be achieved within 3 to 5 years.

Long-term Objectives

organization's performance targets—the results management wants to achieve.

Objectives

Are relatively narrow strategic initiatives and approaches for managing key operating units (plants, distribution centers, geographic units) and specific operating activities such as materials purchasing or Internet sales.

Operating strategies

Are targets to be achieved soon and represent milestones or stair steps for reaching long-range performance.

Short-term Objectives

embodied in the organization's relentless pursuit of an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective.

Strategic intent

relate to target outcomes that indicate a company is strengthening its market standing, competitive vitality, and future business prospects

Strategic objectives

1. Develop a strategic vision. 2. Set objectives. 3. Craft a strategy. 4. Implement and execute the chosen strategy. 5. Evaluate and analyze the external environment and the firm's internal situation and performance.

Strategy Execution Process

set performance targets high enough to stretch an organization to perform at its full potential and deliver the best possible results.

Stretch objectives

Operating strategies, Business strategies, Corporate strategies, Functional-area strategies

The Strategy-Making Hierarchy includes

A company's mission statement typically addresses which of the following questions? -What objectives and level of performance do we want to achieve? -What approach should we take to achieve sustainable competitive advantage? -Why have we chosen a particular business model to achieve our objectives and our vision? -Who are we? What do we do? and Why are we here?

Who are we? What do we do? and Why are we here?

Crafting strategy requires -a collaborative effort between the CEO and board members only. -participation by all employees. -a collaborative effort that includes managers in various position at various organizational levels. -executive management involvement only.

a collaborative effort that includes managers in various position at various organizational levels.

A company's strategic plan consists of -its balanced scorecard and its business model. -its strategy and management's specific, detailed plans for implementing it. -a company's plans for improving value-creating internal processes. -a vision of where it is headed, a set of performance targets, and a strategy to achieve them.

a vision of where it is headed, a set of performance targets, and a strategy to achieve them.

a widely used method for combining the use of both strategic and financial objectives, tracking their achievement, and giving management a more complete and balanced view of how well an organization is performing.

balanced scorecard

Functional area strategies -concern the actions, approaches, and practices to be employed in managing particular functions within a business. -specify how to build and strengthen the skills, expertise, and competencies needed to execute operating-level strategies successfully. -support and add power to the corporate-level strategy. -are normally crafted by operating-level managers.

concern the actions, approaches, and practices to be employed in managing particular functions within a business.

The primary managerial purpose of setting objectives is to -designate financial outcomes as leading indicators. -convert the strategic vision into specific performance targets. -designate strategic outcomes as lagging indicators. -ensure that deliberately vague language such as "reducing costs" and "becoming more efficient" is used to provide managers with more latitude in setting stretch objectives for the company.

convert the strategic vision into specific performance targets.

When companies adopt the strategy formulation, strategy execution process, the first step is to -execute the company's chosen strategy efficiently and effectively. -develop a strategic vision, mission, and values. -monitor internal and external developments and initiate corrective adjustments to the business model when necessary. -adopt a proven business model, decide on the company's top management team, and craft a strategy.

develop a strategic vision, mission, and values.

A balanced scorecard for measuring company performance -balances the drive for profits with social responsibility obligations. -prevents the drive for achieving strategic objectives from overwhelming the pursuit of financial objectives. -entails striking a balance between financial objectives and strategic objectives. -entails creating a set of financial objectives balanced among profitability measures and liquidity measures.

entails striking a balance between financial objectives and strategic objectives.

You have been asked to evaluate Kampus Kombucha's mission statement, "To heal and refresh everyone we touch." You would most likely observe that Kampus Kombucha's mission statement -is vague, fairly uninformative, and blurs the essence of this company's business activities. -describes more of an objective and a result of what this company does instead of its purpose. -specifically informs customers and employees "who we are, what we do, and why we are here." -specifies the buyer needs that it seeks to satisfy and the customer groups or markets it serves.

is vague, fairly uninformative, and blurs the essence of this company's business activities.

conveys a company's purpose in language specific enough to give the company its own identity. focuses on its present business scope and purpose—"who we are, what we do, and why we are here."

mission statement

Effectively communicating the strategic vision down the line to lower-level managers and employees has the value of -not only explaining "where we are going and why" but, more importantly, also inspiring and energizing company personnel to unite to get the company moving in the intended direction. -making it easier for top executives to set strategic objectives. -helping lower-level managers and employees better understand the company's business model. -helping company personnel understand why "making a profit" is so important.

not only explaining "where we are going and why" but, more importantly, also inspiring and energizing company personnel to unite to get the company moving in the intended direction.

occurs when significant changes in an industry require that management must evaluate the risks of changing the company's future direction rather than staying on its established course.

strategic inflection point

maps out where a company is headed, establishes strategic and financial targets, and outlines the competitive moves and approaches to be used in achieving the desired business results.

strategic plan

firm's future strategic course—"where we are headed and our future focus." describes "where we are going"—the course and direction management has charted and the company's future product-customer-market-technology focus.

strategic vision

A company's values concern -whether and to what extent it intends to operate in an ethical and socially responsible manner. -the beliefs and operating principles built into the company's "balanced scorecard" for measuring performance. -the beliefs, traits, and behavioral norms that company personnel are expected to display in conducting the company's business and pursuing its strategic vision and mission. -how aggressively it will seek to maximize profits and enforce high ethical standards.

the beliefs, traits, and behavioral norms that company personnel are expected to display in conducting the company's business and pursuing its strategic vision and mission.