Management Chapter 8

Competitive Advantage Four Key Elements

1. Target Customers 2. Core Competence - something that the organization does especially well in comparison to its competitors. 3. Build Synergy - when organizational parts interact to produce a joint effect that is greater than the sum of the parts acting alone. 4. Deliver Value

SWOT Analysis

A careful assessment of strengths, weaknesses, opportunities, and threats that affect organizational performance.

Business Level Strategy

Pertains to each business unit or production line

Trends in Strategy

Strategic Flexibility - managers must be prepared to change and adjust strategy quickly Strategic Partnerships - collaboration with other organizations is important Global Strategy - organizations pursue a distinctive focus for global business

Diversification

The strategy of moving into new lines of business. 1. Related Diversification - means moving into a new business that is related to the corporation's existing business activities. 2. Unrelated Diversification - refers to expanding into totally new lines of business.

BCG Categories

a. The Star‐ large market share in a rapidly growing industry. b. The Cash Cow - exists in a mature, slow‐growth industry but is a dominant business in the industry, with a large market share. c. The Question Mark - exists in a new, rapidly growing industry, but has only a small market share. d. The Dog - a poor performer; has only a small share of a slow‐growing market.

Market Share

defines whether a business unit has a larger or smaller share than competitors.

Vertical Integration

expanding into businesses that either provide the supplies needed to make products or distribute and sell the company's products.

Strategic Business Units (SBUs)

has a unique business mission, product line, competitors, and markets relative to other SBUs in the corporation.

Strategy Execution Primary Tools

i. Visible Leadership 1. Motivate people 2. Shape Culture and values 3. Model desired behaviors ii.Clear Roles and Accountability 1. Delegate authority and responsibility 2. Define roles 3. Define measures and metrics iii. Candid Communication 1. Open lines of communication 2. Encourage Debate 3. Be honest iv. Appropriate Human Resource Practices 1. Recruit employees 2. Manage transfers and promotions 3. Provide training

Strategy Formulation

includes assessing the external environment and internal problems to identify strategic issues, then integrating the results into goals and strategy.

Differentiation Strategy

involves an attempt to distinguish the firm's products or services from others in the industry.

Globalization Strategy

means that a product design and advertising strategies are standardized throughout the world. This approach is based on the assumption that a single global market exists for many consumers and industrial products.

Multi domestic Strategy

means that competition in each country is handled independently of industry competition in other countries.

BCG Matrix

organizes businesses along two dimensions business growth rate and market share.

Business Growth Rate

pertains to how rapidly the entire industry is increasing.

Functional Level Strategy

pertains to the major functional departments within the business unit. Functional strategies involve all of the major functions, including finance, research and development, marketing, and manufacturing.

Portfolio Strategy

pertains to the mix of business units and product lines that fit together in a logical way to provide synergy and competitive advantage for the corporation.

Corporate Level Strategy

pertains to the organization as a whole and the combination of business units and product lines that make up the corporate entity.

Strategic Managment

refers to the set of decisions and actions used to formulate and execute strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals.

Competitive Advantage

refers to what sets the organization apart from others and provides it with a distinctive edge for meeting customer or client needs in the marketplace. Is comprised of four key elements.

Translational Strategy

seeks to achieve both global standardization and national responsiveness. A true transnational strategy is difficult to achieve, though, because one goal requires close global coordination while the other requires local flexibility.

Explicit Strategy

the plan of action that describes resource allocation and activities for dealing with the environment, achieving a competitive advantage and attaining the organization's goals.

Strategy Execution

the use of managerial and organizational tools to direct resources toward accomplishing strategic results.

Cost Leadership Strategy

when the organization aggressively seeks efficient facilities, pursues cost reductions, and uses tight cost controls to produce products more efficiently than competitors.

Focus Strategy

when the organization concentrates on a specific regional market or buyer group.