MGT 300-Chapter 4
___ is a diversification strategy that emphasizes adding businesses that have *little* in common but may be undervalued relative to the purchase price
Unrelated diversification
____ is growth by acquiring companies in industries that have *nothing* in common
Unrelated diversification
___ is the strategy of extending a business's scope by including an activity backward toward suppliers or forward toward the end user
Vertical integration
____ is a strategy of extending a business scope by taking an activity or function backward toward sources of supply or forward toward the end user
Vertical integration
Forward looking, graphic, inspirational but feasible idea of the course and direction of the organization
Vision
What is a good example of a *cost leadership* company?
Walmart
Resources or capabilities a firm lacks or does worse than their competitors
Weaknesses
What question does a *mission* answer?
What are we about?
What question does a *vision* answer?
Where are we going?
What is the *third* step in the strategic planning model?
crafting a strategy to achieve the objectives and move the company along the intended path
What company is an example of *concentration*?
Mcdonalds
Generic strategy: ____ seeks to gain competitive advantage by producing goods or services more cheaply than competition while still providing the customer with basic wants and needs
Cost leadership
What are the 4 *generic strategy* types?
Cost leadership, focus cost leadership, differentiation, focus differentiation
"Strategy is about choices" He is known as the guru of strategy
Michael Porter
States the purpose of an organization, the reason for its existence and often includes values and beliefs
Mission
Each division or department is responsible for planning its own operations with guidance from central planning group
Decentralized
What is the *first* step in the strategic planning model?
Developing a strategic vision, mission, and values
Generic Strategy: ___ seeks its competitive advantage by targeting some unique product or service attributes that consumers see as advantageous over the attributes of competing products
Differentiation
____ strategy seeks its competitive advantage by targeting some unique product or service attributes that consumers see as advantageous over the attributes of competing products
Differentiation
___ is the strategy of entering a business that is in a different industry than the current business
Diversification
What company is a good example of a *focus cost leadership strategy*?
Dollar General
What is a good example of a *focus-cost leadership* company?
Dollar general or Sams Club
T/F: A SWOT analysis concentrates only on the internal aspects of a firm.
False
___ is a growth strategy by acquiring another firm in the same industry whose products or services are similar
Horizontal integration
What is an example of *forward vertical integration*?
If Disney opened their own store instead of selling their stuff to other companies
What is an example of *backward vertical integration*?
If Starbucks had to buy or own their own coffee farms
What is an example of *horizontal integration*?
If whole foods were to buy the fresh market (or vise versa)
___ organizations are usually decentralized or a combination of both
Large
____ is growth by acquiring companies in industries that are somewhat *similar*
Related diversification
___ involves making decisions about how best to present your company in order to achieve the vision and objectives you set forth
Strategy
What does SWOT analysis stand for?
Strength, Weakness, Opportunities, Threats
Resources or capabilities that give you the upper hand over competition
Strengths
____ are usually more motivated when involved in the objective setting
Subordinates
What is the *fourth* step in the strategic planning model?
executing the strategy (very important!)
Opportunities and threats are ___ to the organization
external
What is a good example of a *focus-differentiation* company?
fresh market or whole foods
Porter said that there are only *2 ways to achieve competitive advantage*:
have lower costs than rivals, have different product and be rewarded for it
What is the *second* step in the *planning* process?
identifying and assessing conditions relating to the objective
Strengths and weaknesses are ___ to the organization
internal
Each SBU has its own ___ and ___ environment that must be assessed
internal; external
Most ___ corporations have a number of products in one or more industries
large
Strategic planning: -Significant ___ term impact -Related to the ____ environment -Deals with issues that are ___ oriented
long; external; future
What is a good example of a *differentiation* company?
mom and pop shops or speciality stores
What is the *fifth* step in the strategic planning model?
monitoring developments, evaluating performance, and initiating corrective adjustments
What should you NOT do when objective setting?
move the goalposts, have too many objectives, use words that end in "ize"
Strategic Planning process includes activities that involve: -Vision/mission -Setting ___ -Developing ____ to achieve objectives
objectives; strategies
*BCG matrix*: high growth markets and small market share
question marks
What is the *first* step in the *planning* process?
setting an objective
What is the *second* step in the strategic planning model?
setting objectives
The Resource based approach isolates the ___ process and capabilities a firm does better than its rivals
specific
*BCG matrix*: fast growth markets and large market share
stars
Objectives are very important because they become the focal point for ___ direction
strategic
Strategic planning decisions are made by:
top management
A production supervisor is more likely to be involved with planning horizons of how long?
up to one year
What are other steps associated with planning (strategic planning)?
-Defining mission/vision (leading) -Implementing plan (organizing, leading) -Monitoring implementation (controlling) -Evaluating effectiveness (controlling)
Short range plans (lower management)
1 day to a year
Intermediate range plans (middle management)
1 to 3 years
What are the two main combinations organizations look for after they do a SWOT analysis?
1. leverage your strengths to take advantage of opportunities 2. Analyze what threats are out there
Long range plans (top management)
3 to 5 years
____ consists of a unique company business (within a larger diversified firm) that has its own mission, product or service lines, competition, customers, threats, and opportunities
A strategic business unit (SBU)
____ is a tool in strategic planning for diversified corporations
BCG (Boston Consulting Group) Matrix
___ is a strategy where a firm operates with a single line of business
Concentration
___ are end results of organizations activities
Objectives
Favorable happenings in the external environment
Opportunities
___ is defined as the process of establishing objectives and determining how to best achieve them
Planning
___ is the process of establishing objectives and how to achieve them (a 3 step process)
Planning
___ based view focuses on what resources and capabilities a firm does better than its rivals
Resource
___ organizations are usually *centralized*
Small
What does SMART stand for?
Specific, Measurable, Attainable, Results oriented, Time oriented
In which step of the *planning* process do you make assumptions about the future and scan your environment?
Step 2
Each of these larger companies therefore consists of a portfolio of several distinct *smaller* businesses called:
Strategic business units (SBU)
___ is defined as those activities that involve defining the organizations vision, mission, setting objectives, and developing strategies to help it operate successfully
Strategic planning
Unfavorable external circumstances that can negatively effect the organization
Threats
Simplicity with powerful visual representation is an ___ of the BCG matrix
advantage
Strategic planning is usually the ___ of large amount of resources
allocation
What are the two types of markets you can target?
broad and narrow
*BCG matrix*: mature, slow growing market and high market share
cash cows
Done by single person or planning department
centralized
Planning is more _______________ when it is done by a single person or group such as at the corporate level.
centralized
What are some *corporate growth* strategies?
concentration, horizontal integration, vertical integration
Each of the following is one of the three basic steps in planning except:
defining the mission
What is the *third* step in the *planning* process?
developing a systematic approach to achieve the objective
An ___ of the BCG matrix is that only 2 aspects are being represented namely 1) industry growth rate 2) relative market share
disadvantage
What are some *corporate diversification* strategies?
diversification, related diversification, unrelated diversification
*BCG matrix*: low growth market and low market share
dogs
Where is planning done?
done on a continuum that ranges from centralized to decentralized
Why is the *strategic planning* process very important?
due to increasing complexities of both the external and internal environments