Management Chapter 6 (Connect and Notes)
5 Steps in Strategic Management Process
1. Establish mission and vision 2. Assess current reality 3. Formulate grand strategy 4. Implement Strategy 5. Maintain strategic control ; think MAFIM
3 Core Processess
1. People: Consider who will benefit you in the future 2. Strategy: Consider how to accomplish success 3. Operations: Consider what path will be followed; THINK SPO
Porter's 4 Competitive Strategies
1. cost leadership 2. differentiation 3. cost focus 4. focused differentiation
To Maintain strategic control one should:
1. engage people 2. keep it simple 3. stay focused 4. keep moving
Porters Model for Industry Analysis (5 competitive forces)
1. threats of new entrants 2. bargaining power of suppliers 3. bargaining power of buyers 4. threats of substitute products/services 5. rivalry among competitors; think TSBTC
SWOT
AKA situational analysis; strengths, weaknesses, opportunities, and threats
Strategic Positioning
Achieve sustainable competitive advantage by preserving what is distinctive about a company
Strategy Formulation (step 3)
Choosing among different strategies and altering them to best fit the organization's needs
Benchmarking
Comparing your performance to high performing organizations
Contingency Planning
Creating alternative hypothetical but equally likely future conditions
BCG Matrix
Evaluating strategic business units based on their business growth rates and their market share
Competitive Intelligence
Gaining info about the competitor's activities so you can anticipate their moves and react appropriately
Growth Strategy
Grand strategy involving expansion; revenue, market share, number of employees etc
Stability Strategy
Grand strategy involving little or no significant change
Defensive Strategy
Grand strategy involving reduction in the organization's efforts
BCG Star
High Growth and High Market Share
BCG Question Marks
High growth, low market share some stars some dogs
Grand Strategy (step 3)
How the mission is to be accomplished; growth, stability, and defensive are 3 types
Trend Analysis
Hypothetical extensions of a past series of events into the future
BCG Dogs
Low growth, low market share
Single Product Strategy
Makes and sells only one product within its market
Mission vs Vision
Mission is reason for being, vision is what we want to become
Environmental Scanning
Monitoring an organization's interanl and external environments to detect early signs of opportunities and threates
Strategic Control (step 5)
Monitoring the execution of strategy and making adjustments if necessary
Differentiation Strategy
Offer products or services of a unique and superior value compared to competitors, large target market
Focused Differentiation Strategy
Offer products or services that are of unique and superior value in a NARROW market; FOCUS=NARROW
Diversification
Operating several businesses in order to spread the risk
Related Diversification
Operating several businesses under one ownership that are RELATED to each other Offers reduced risk, management efficiency, and synergy (sum>parts)
Unrelated Diversification
Operating several businesses under one ownership that are UNRELATED to eachother
Strategy Implementation (step 4)
Putting strategic plans into effect
BCG Cash Cows
Slow Growth but high market share
Strategy can fill these three areas
few needs, many customers broad needs, few customers broad needs, many customers
Cost Focus Strategy
keep costs and prices below competitors in a NARROW target market
Cost Leadership Strategy
keep costs and prices of a product below competitors in LARGE market