Chapter 10: Strategy and Strategic Management

Five forces of Industry Structure

Industry competition, new entrants, substitute, products or services, bargaining power of supplies, bargaining power of customers

SWOT analysis

examines organizational strengths and weaknesses and environmental opportunities and threats.

Mission statement

expresses the organizations reason for existence in society

Lack of participation error

failure to include key persons in strategic planning.

Attractive Industry

few competitors, high barriers to entry, few substitutes products, low power of suppliers, low power of customers.

Strategic intent

focuses and applies organizational energies on a unifying and compelling goal.

Growth through diversification

growth by acquisition of or investment in new and different business areas.

Growth through concentration

growth is within the same business area.

Growth through vertical integration

growth occurs by acquiring upstream suppliers or downstream distributors.

Functional strategy

guides activities within specific area of operations.

A strategic leader

has to be the guarding of trade-offs, needs to create a sense of urgency, needs to make sure that everyone understands the strategy, and needs to be a teacher.

Business strategy

identifies how a division or strategic business unit will compete in its product or service domain.

Competitive advantage

the ability to do something so well that one outperforms competitors

Sustainable competitive advantage

the ability to outperform rivals in ways that are difficult or costly to imitate.

Liquidation

where a business closes and sells its assets to pay creditors.

Operating objectives

specific results that organizations try to accomplish.

Sources for competitive advantage

Technology, Cost and quality, knowledge and speed, barriers to entry, financial resources

Globalization strategy

adopts standardized products and advertising for use worldwide.

BCG Matrix

analyzes business opportunities according to market growth rate and market share.

Core values

are broad beliefs about what is or is not appropriate behavior.

Stakeholders

are individuals and groups directly affected by the organization and its strategic accomplishments.

Strategy

comprehensive plan guiding resource allocation to achieve long-term organization goals.

Focus strategy

concentrates on serving a unique market segment better than anyone else.

Multidomestic strategy

customizes products and advertising to best fit local needs.

Downsizing strategy

decreases the size of operations.

Strategic leadership

inspires people to continuously change, refine, and improve strategies and their implementation.

Growth strategy

involves expansion of the organization's current operations.

Strategic control

makes sure strategies are well implemented and that poor strategies are scrapped or modified.

Unattractive industry

many competitors, low barriers to entry, many substitute products, high power of suppliers, high power of customers.

Focused differentiation strategy

offers a unique product to a special market segment.

Differentiation strategy

offers products that are unique and different from the competition.

Strategic alliance

organizations join in partnership to pursue an area of mutual interest.

Typical operating objectives

profitability, sustainability, social responsibility, financial health, cost efficiency, customer service, product quality, market share, human talent, innovation.

Retrench, Restructuring, and Turnaround strategies

pursue radical changes to solve problems.

Transnational strategy

seeks efficiencies of global operations with attention to local markets

Focused cost leadership strategy

seeks the lowest cost of operations within a special market segment.

Cost leadership strategy

seeks to operate with low cost so that products can be sold at low prices.

Divestiture

sells off pars of the organization to refocus attention on core business areas.

Corporate strategy

sets long-term direction for the total enterprise.

Core competency

special strength that gives an organization a competitive advantage.

Organizational culture

the predominant value system for the organization as a whole.

Strategic analysis

the process of analyzing the organization, the environment, and the organizations competitive position and current strategies.

Strategy formulation

the process of crafting strategies to guide the allocation of resources.

Strategic management

the process of formulating and implementing strategies.

Strategy implementation

the process of putting strategies into action.

Co-opetition

the strategy of working with rivals on projects of mutual benefit.

Corporate governance

the system of control and performance monitoring top management.

Turnaround strategy

tries to fix specific performance problems.

Chapter 11 bankruptcy

under US law protects a firm from creditors while management reorganizes to restore solvency.