Chapter 6

Core firms

central companies in a strategic group

Porter, five industry forces

character of the rivalry, the threat of new entrants, the threat of substitute products or services, the bargaining power of suppliers, and the bargaining power of buyers.

adaptive strategies

choose an industry-level strategy that is best suited to changes in the organization's external environment.

Stars are companies

companies that have a large share of a fast-growing market.

focus strategy

company uses either cost leadership or differentiation to produce a specialized product or service for a limited, specially targeted group of customers in a particular geographic region or market segment.

Recovery

consists of the strategic actions that a company takes to return to a growth strategy.

Industry-Level Strategies

How should we compete in this industry?

Resources must be...

Valuable Rare Imperfectly imitable Nonsubstitutable

Corporate Level Strategy

What business or businesses are we in or should we be in?

Cash cows

are companies that have a large share of a slow-growing market.

Question marks

are companies that have a small share of a fast-growing market.

Resources

assets, capabilities, processes, employee time, information, and knowledge that an organization controls.

Analyzers

blend the defending and prospecting strategies.

positioning strategies

cost leadership, differentiation, and focus.

Secondary firms

firms that use strategies related to but somewhat different from those of core firms

Strategic group

group of companies within an industry that top managers choose to compare, evaluate, and benchmark strategic threats and opportunities

Portfolio strategy

is a corporate-level strategy that minimizes risk by diversifying investment among various businesses or product lines.

BCG matrix (Boston Consulting Group)

is a portfolio strategy that managers use to categorize their corporation's businesses by growth rate and relative market share, helping them decide how to invest corporate funds.

a stability strategy

is to continue doing what the company has been doing, just doing it better.

growth strategy

is to increase profits, revenues, market share, or the number of places (stores, offices, locations) in which the company does business

Core capabilities

less visible, internal decision-making routines, problem-solving processes, and organizational cultures that determine how efficiently inputs can be turned into outputs

Differentiation

making your product or service sufficiently different from competitors' offerings so that customers are willing to pay a premium price for the extra value or performance that it provides.

Cost leadership

producing a product or service of acceptable quality at consistently lower production costs than competitors so that the firm can offer the product or service at the lowest price in the industry.

Competitive advantage

providing greater value for customers than competitors can

Distinctive competence

something that a company can make, do, or perform better than competitors

retrenchment strategy

strategy is to turn around very poor company performance by shrinking the size or scope of the business or, if a company is in multiple businesses, by closing or shutting down different lines of the business.

Sustainable competitive advantage

when other companies cannot duplicate the value a firm is providing to customers

Grand Strategies

Broad strategic plans used to help an organization achieve its strategic goals

Defenders

seek moderate, steady growth by offering a limited range of products and services to a well-defined set of customers.

risk-seeking strategy

that aims to extend or create a sustainable competitive advantage.

risk-avoiding strategy

that aims to protect an existing competitive advantage

dogs are companies

that have a small share of a slow-growing market.