C483 Comp 1, Ch 4 - Strategic Planning

Describe bottom-left quadrant of BCG Matrix? Name?

"Cash Cow" - low-growth, strong-competitive-position businesses; they generate revenues in excess of their investment needs and therefore fund other businesses

Describe bottom-right quadrant of BCG Matrix? Name?

"Dogs" - low-growth, weak-competitive-position businesses; the remaining revenues from these businesses are realized and then these businesses are divested (eliminated or sold)

Describe the top-right quadrant of BCG Matrix? Name?

"Question Marks" - high-growth, weak-competitive-position businesses; require substantial investment to improve position - otherwise, divestiture is recommended

Describe the top-left quadrant of the BCG Matrix? Name?

"Stars" - high-growth, strong-competitive-position businesses; require heavy investments, but strong position allows them to generate needed revenues

Define the 4 types of Corporate Strategy

1. "Concentration Strategy" - focuses on a single business in a single industry (i.e., Starbucks) 2. "Vertical Integration Strategy" - focuses on expanding backwards and forward into supply chains (buying, getting involved in businesses that supply this) and/or distribution channels (same) 3. "Concentric Diversification Strategy" - moving into new businesses that are related to the co's original core business - like restaurant moving into catering or other hospitality type svcs 4. "Conglomerate Diversification Strategy" - adding new businesses that are unrelated (products, industries, etc)

What 5 broad questions (about how an org will meet its objectives) does an effective strategy answer?

1. "Where will we be active?" 2. "How will we get there?" (ex: increasing sales, or buying another co?) 3. How will we win in the marketplace?" (ex: low prices, or best srvc?) 4. "How fast will we move, and in what sequence will we make changes?" 5. "How will we obtain financial returns?" (ex: low costs or premium pricing?)

When it comes to an organization's External Environment, what are the two facets of that?

1. Competitive (inner) environment: new entrants, buyers, substitutes and complements, suppliers, rivals 2. Macroenvironment: social values, demographics, technology, economy, laws & politics

What are 2 trends in Strategy Implementation?

1. Comprehensive View: every aspect of the company must support the strategy (orgs are adopting this more and more) 2. Participative View: involving mgrs at every level of company to formulate strategy and ID and execute ways to implement it - more authority and responsibility going into the hands of other (even as Sr. Execs oversee the overall strategy)

List the 4 steps of Strategy Implementation

1. Define Strategic Tasks (define what to do in simple language) 2. Assess Organizational Capabilities (ability to implement the tasks) 3. Develop Implementation Agenda (how it will change, what's needed...outcome is usually the philosophy statement) 4. Create Implementation Plan (develop/monitor/get feedback)

List the 6 major components of the strategic management process [which will be further defined, in-depth]

1. Establishment of mission, vision, goals 2. Analysis of external opportunities and threats 3. Analysis off internal strengths and weaknesses 4. SWOT (strengths, weaknesses, opportunities, and threats) analysis and strategy formulation 5. Strategy implementation 6. Strategic control

Name the 2 generic Business Strategies that give a business a competitive edge in the marketplace

1. Low-Cost Strategies 2. Differentiation Strategy

Name the 6 Steps to Planning

1. Perform situational analysis 2. Generate alternative goals and plans 3. Evaluate goals and plans 4. Select goal and plan to use 5. Implementation 6. Monitor and Control

Forecasting future trends is critical in this evaluation of Step 2 of Strat. Mgmt. Process; name 2 approaches in performing this forecast

1. Quantitative analysis (math models, using facts or stats for predictions) 2. Simple judgement [note: judgment is susceptible to bias and people have limited ability to process info; quant models can be necessary to make informed analyses]

Name the 3 levels of Hierarchical Planning, who executes them, how much detail is involved, and how long each level's planning time takes

1. Strategic (top mgmt; low-level detail; 3-7 yrs) 2. Tactical (middle mgmt; mid-level detail; 1-2 yrs) 3. Operational (frontline mgmt; high-level detail; <1 yr)

List the 4 key drivers of the Strategy Map

1. The skills of its people and their ability to grow and learn 2. The effectiveness of its internal processes 3. Its ability to deliver value to customers 4. Ultimately, its ability to grow its financial assets

Name 4 circumstances where resources could be a source of competitive advantage

1. When they create value/benefits to customer, relative to cost 2. When they're rare (and valuable) 2. When they're difficult to imitate 3. When they're well organized (packaging, distribution, etc)

Define "Strategic Management"

A process that involves managers from all parts of the organization in the formulation and implementation of strategic goals and strategices

Define Tactical Planning

A set of procedures for translating broad strategic goals and plans into specific goals and plans that are relevant to a distinct portion of the org, such as a functional area like marketing

What is a "Strategy Map"?

A tool managers can use to align strategic and operational goals, and communicate these goals to various org members and illustrate their individual roles in achieving those goals.

Define "Core Competence"

A unique skill and/or knowledge an organization possesses that gives it an edge over competitors

Define an organization's External Environment

All forces outside th eorg's control, including its competitive (inner) and macro (outer) environments

Define Mission

An organization's basic purpose and scope of operations

Why is it important for a company to not fall behind and pull funding in a given area at any one time where they think there might not be potential?

B/c any slacking off can allow competitors to move in, innovate and swallow up market share - eventually, the org might not ever be able to catch up.

When does Business Strategy come into play?

Comes after top-level mgmt makes "corporate strategy" decisions; they determine how they'll compete in each business area.

Describe a "Differentiation Strategy"

Company attempts to be unique or special in its industry or market segment - unique and significant to customers; often based on high product quality, excellent marketing or superior service (ex: Nordstrom)

Define "Planning"

Conscious, systematic process of making decisions about goals & activities that some entity will pursue in the future - a clear map, but flexible for circumstances or change

Name a couple ways a company can engage in Functional Strategy

Cross-training...Developing systems to share information across departmental boundaries

What are the two aspects that strategic goals should reflect?

Effectiveness (approp. outputs) and Efficiency (high ratio of outputs to inputs)

Define some requirements in making sure Strategic, Tactical and Operational Planning are in alignment

Ensure they're consistent, mutually supportive, focused on achieving common purpose and goal - LOOK @ each goal/output individually, be SPECIFIC about what it would mean to accomplish it - then TRANSLATE it into a vision...the separate concepts must then work together and support each other.

Define Step 1 of Strat. Mgmt. Process: "Establishment of Mission, Vision, and Goals"

Establish a mission (clear, concise expression org's purpose/what it does), vision (where org is going, what it can become, long-term intent), and goals (specific objectives that evolve from the mission and vision - i.e., "enhance this...sustain that...")

Define Step 2 of Strat. Mgmt. Process: "Analysis of External Opportunities and Threats", Part 2: Examine Stakeholders

Examine stakeholders and how they influence the organization. Stakeholders are groups and individuals who affect/are affected by the achievement of the org's mission, goals and strategies

[mission and vision drive this 2nd compenent] Define Step 2 of Strat. Mgmt. Process: "Analysis of External Opportunities and Threats", Part 1: External Environment Analysis

Examine these aspects of external environment: 1. Industry and Market analysis 2. Competitor analysis 3. Political and Regulatory analysis 4. Social analysis 5. Human Resource analysis (are there people out there that can fill our needs?) 6. Macroeconomic Analysis 7. Technological analysis

What is the BCG Matrix?

Formulated by Boston Consulting Group; it's a quadrant with "High" and "Low" (referring to growth) on the two left top and bottom squares, and "Strong" (left) and "Weak" (right) (competitive levels) on the bottom two squares - represents four possible combinations of business types; a visual and thinking tool that can help identify strategy

List some typical strategic goals

Growth, increasing market share, improving profitability, boosting ROI, fostering quantify and quality of output, increasing productivity, improving cust. svc., contributing to society

Define "Resources"

Inputs to a system that can enhance performance

Define "Strategic Goals"

Major targets or end results relating to the org's long-term survival, value and growth

Define Step 3 of Strat. Mgmt. Process: "Analysis of Internal Strengths & Weaknesses"

Managers must look at these things: 1. Financials (balance sheet, income statement, historical and industry figure comparisons) 2. Marketing (major mrktng activities, ID markets and key segments, position/mrkt share of org within key markets) 3. Operations (manufacturing, production, service delivery activities) 4. Other Internal Resources (research and devlopment [product & process], mgmt. info systems, engineering, purchasing) 5. Human Resource Assessment (all levels of mgmt, employees, activities like recruitment, hiring, placement, training, labor union relationships, compensation, appraisal, quality of work life, human resources planning)

Name 2 trends in corporate strategy

One trend is M&A's (Mergers and Acquisitions): past 2 decades have seen a wave of these; either consolidating a market (phone co. buying another phone co.) or merging 2 co's w/ different focuses but similar goals or vision (AOL and Time Warner)...Another trend is diversification: different schools of thought on whether unrelated diversification helps or hurts (recent trend in selling off peripheral biz's to build more focused portfolio) or if orgs perform better w/ concentric diversification (most observers agree-keeping to related or similar products or industries can generally better predict profitability)

Define "Strategy"

Pattern of actions/resource allocations designed to achieve the goals of the organization

Name & define the 2 categories of the Value Chain

Primary activities (R&D, inbound and outbound logistics, operations, marketing & sales, service ) and Support Activities (Firm infrastructure, human resource mgmt, technology development, procurement) - both categories contribute to profit margin

Define "Benchmarking"

Process co. uses to assess how well they're doing (basic functions and skills) against competitors; goal is to thoroughly understand "best practices" of competitors to then take action to achieve better performance, lower costs. Internal benchmarking is effective b/c it compares/pits departments against each other to determine best practices and constantly improve = competitive advantage

Name some areas where the Functional Strategy would be implemented

Production, Human Resources, Marketing, Research and Development (R&D), Finance, Distribution

What does the Macro-environment consist of?

Social values, Demographics, Technology, Economy, Laws & Politics

Define "Functional Strategy"

Strategies implemented by each functional area of the org to support the org's business strategy

What does the Competitive Environment consist of?

Suppliers, new entrants to market, buyers, substitutes and complements, rivals

Name 2 categories of resources

Tangible (like real estate, production facilities, raw materials, money, etc) and Intangible (company reputation, culture, technical knowledge, patents, brand recognition, accumulate learning/experience)

Define "Strategic Vision"

The LONG-TERM direction and strategic intent of a company; points to the future, defines strategic intent and strategic goals

Define Step 5 of Strat. Mgmt. Process: "Strategy Implementation"

The act of carrying out the strategy, and ensuring it's done efficiently and effectively

What is required to see goals and vision through to success?

The commitment of the CEO and strong leadership

Define Step 6 of Strat. Mgmt. Process: "Strategic Control"

The final component; a Strategic Control System is designed to support mgrs in evaluating the org's progress w/ its strategy and when discrepancies exist, taking corrective action. The SC system must encourage efficiency and allow flexibility to adapt. The org must develop performance indicators, an information system, and specific mechanisms to monitor progress. Most SC systems have udget to monitor/control maj. financial expenses

Who typically develops the functional strategies?

The functional area executives, with input and approval from the execs responsible for the business strategy...Sr. strategic decision mkers review these funct. strategies to ensure that each maj. dept. is operating consistently w/ the business strategies of the org.

Define "Business Strategy"

The major actions by which a business competes in a particular industry or market - "How are you going to distinguish yourself in the market?" more defined-scale way of looking at it

Whichever strategy managers adopt, what will make it most effective?

The one that competitors are unwilling or unable to imitate

What are two by-products of effective vision and goals?

The organization's purpose is clarified to key constituencies outside the org, an dit helps employees focus their talent, energy, and commitment in pursuit of the org's goals

Define Operational Planning

The process of identifying the specific procedures and processes required at lower levels of the org (these mgr usually focus on routine tasks like production runs, delivery schedules, human resources requirements, etc)

Define "Corporate Strategy"

The set of businesses, markets or industries in which an organization competes and the distribution of resources among those entities - "How will we operate in the grand scheme of things?"

Why would a company practice a diversification strategy?

To buffer financials in case of market fluctuations in primary or one industry; the diversified businesses of an org are sometimes called its portfolio

Describe a "Low-Cost Strategy"

Used to build competitive advantage by being efficient and no-frills/low-cost, i.e. 'we're the low cost leader!' - they must be the low-cost leader in their market tho for this to work, AND the product has to be simultaneously still acceptable; the production costs have to be low; co's that use this are often large and can take advantage of economies of scale - size lets them buy goods/svcs @ a lower price which leads to higher market share, volume, and profits

Define Step 4 of Strat. Mgmt Process: "SWOT Analysis and Strategy Formulation"

When they're finished looking at everything, a company will assess an organization's strengths and weaknesses (internal factors) and opportunities and threats (external factors) and after that, will formulate a Corporate Strategy and then a Business Strategy

When can resources be viewed as a company's "Core Competencies"?

When they're valuable, rare, inimitable, and organized