chapter 8
Strategy
A cluster of decisions about the goals the organization will pursue, the actions it will take, and how it will use resources to achieve those goals
Corporate-Level Plan
A plan that outlines the entire organization's mission, goals, strategy, and structure
Franchising
A special kind of arrangement in which a foreign organization buys the rights to use a brand name and operational know-how in exchange for a lump-sum payment and a share of the products
Joint Venture
A specific kind of strategic alliance in which two or more companies agree to share the ownership of a new business
Synergy
Performance gains that result from the coordination of the actions of individuals and departments
Hypercompetition
Permanent, intense, ongoing competition that results from changing customer tastes or advancing technology
Single-Use Plans
Plans used for nonprogrammed decisions, in situations that occur infrequently and thus require one-of-a-kind actions
Standing Plans
Plans used for programmed decisions, in situations that occur repeatedly
what are the five steps of the planning and implementing strategy
make specific individuals and groups responsible for implementation write detailed action plans create a timetable with specific, measurable goals allocate resources to responsible individuals or groups hold specific individuals or groups responsible for goal attainment
flexibility
managers should be willing to change plans when the situation changes
Accuracy
managers should use all available information in the planning process
intermediate-term plans
one to five years
short-term plans
one year or less
unity
only one central plan is in place at a time
continuity
planning should be ongoing and implemented at all levels
An increase in local competition, an increase in labor cost, or a fall in the economy are all _____ to an organization.
potentil threats
single-use plans
programs and projects
what does differentiation strategy focus on
serving only one segment of the market by offering differentiated products to that narrow market segment
what does low-cost strategy focus on
serving only one segment of the market by trying to be the lowest-cost provider in that segment
the CEO and top managers must demonstrate ____________________ when determining the organization's mission and goals
strategic leadership
time horizon of plans
long-term plans, intermediate-term plans, Short-term plans, rolling plans
what are the formulating business-level strategies
low-cost strategy and differentiation strategy
Mission Statement
A broad declaration of the organization's purpose and how the organization will be distinguishable from its competitors
Licensing
Allowing a foreign firm to manufacture and distribute a product in return for a negotiated fee
Functional-Level Strategy
An action plan to achieve task-specific activities in a way that adds value to the organization's goods and services
Strategic Alliance
An agreement in which organizations share resources or know-how with a foreign company, and share the risks and rewards
Time Horizon
Describes a plans intended duration
Business-Level Plan
Establishes a particular division's long-term goals, strategy, and structure
Functional-Level Plan
Establishes the goals that functional-level managers will pursue to achieve business-level goals
Diversification
Expanding the company's operations to new industries in order to produce and provide new kinds of products
Business-Level Strategy
Indicates how a particular division will compete against its rivals
Unrelated Diversification
Involves entering a new business or industry not related in any way to the company's current businesses or industries
Related Diversification
Involves entering a new business or industry to produce a competitive advantage in an already-existing division or business
Vertical Integration
Involves expanding operations either backward or forward
Scenario Planning
Involves generating multiple forecasts and analyzing how to respond in each of those conditions
Strategy Formulation
Involves the development of corporate, business, and functional-level strategies that will allow the organization to achieve its goals and accomplish its mission
Importing
Making products abroad and selling them at home
Exporting
Making products at home and selling them abroad
A planning exercise that analyzes the internal strengths and weaknesses as well as the external opportunities and threats of the external environment is referred to as:
SWOT analysis
Corporate-Level Strategy
States which industries and markets the organization will compete in
SWOT Analysis
The identification of internal strengths and weaknesses and external opportunities and threats
Planning
The process in which managers identify and select appropriate goals and courses of action
Multidomestic Strategy
When a company customizes its products and marketing strategies in each national market
Global Strategy
When a company sells the same basic product everywhere, using the same basic marketing approach
Wholly Owned Foreign Subsidiary
When a production operation is established in a foreign country without any involvement of a local firm
when McDonald's buys chicken ranches to provide eggs to its restaurant it is engaging in
backward vertical integration
when coca-cola buys a company that makes artificial sweetener that it will use to produce its sugar-free beverages it is engaging in
backward vertical integration
The cell phone division of a multinational corporation has granted its research and development department funds to create new technologies to ensure the organization stays ahead of its competitors in the market. This decision by the cell phone division is an example of the organization's _____ strategy.
business-level
when campbell sold Godiva chocolates and invested its money in its for core soup business it is engaging in
concentration in a single industry
when nike reinvests profits into its sportswear product development it is engaging in
concentration in a single industry
what are the formulating Corporate-level strategies
concentration on a single industry, vertical integration, diversification, international expansion
scenario planning is also known as
contingency planning
three levels in organization
corporate level plan, business-level plan, functional level plan
The highest level of decision making, which involves decisions by the members of the top management concerning the organization's goals, overall strategy, and structure, is the _____ plan.
corporate-level
three steps in the planning process
determine the organization's mission and goal known as the mission statement formulate the strategy implement the strategy
In general, ______ refers to the corporate-level strategy of expanding a company's business operations into a new industry in order to produce new kinds of valuable goods or services.
diversification
what is the least risky international expansion strategy
exporting and importing
long-term plans
five years or more
_____ is a corporate-level strategy in which a company expands its business operations and enters a new industry that uses, distributes, or sells the company's products.
forward vertical integration
when Apple opened stores to sell the computers and other electronic devices it is engaging in
forward vertical integration
when Gallo wines opened a new division to make the bottles it would use for the wines it produces it is engaged in
forward vertical integration
The decisions pertaining to the goals that a department's manager proposes to pursue to help the division attain its business-level goals is called a(n) _____.
functional-level plan
what are some examples of international expansion
global strategy, multi domestic strategy, exporting and importing, licensing and franchising, strategic alliance and joint ventures, wholly owned subsidiaries
A company intends to expand internationally but wants avoid risk or uncertainty to the highest degree possible. The organization is most likely to pursue its global operations through _____.
importing and exporting
what is forward vertical integration
into an industry that uses, distributes, or sells the product
what is backward vertical integration
into an input industry
four reasons why planning is important
it gives the organization direction and purpose it allows managers to participate in decision making about the organizations future it coordinates the activities of managers in different divisions and functional groupings it can be used as a control mechanism, because it establishes standards and benchmarks to be achieved
what does hypercompetition do to planning and strategy formulation
it makes it more difficult
five forces model
level of rivalry among firms in the industry potential for entry into the industry the power of large suppliers the power of large consumers the threat of substitute products
what is related to diversification
synergy
what is the strategy and planning at a textbook company
textbooks developed interactive software
determine the mission by defining the business by identifying
the customers, their needs, and how to satisfy those needs
Henri Fayol's effective plans that have four qualities
unity, continuity, accuracy, flexibility
rolling plans
updates annually to take into account changes in the environment
what international expansion strategy has the most risk
wholly owned subsidiaries