MGT 409 Exam 2

generic strategies

-cost leadership -differentiation -focus

intensive strategies

-market penetration -market development -product development

resource allocation

a central management activity that allows for strategy execution

establishing annual objectives

a decentralized activity that directly involves all managers in an organization

conflict

a disagreement between two or more parties on one or more issues

white knight

a firm that agrees to acquire another firm when that other firm is facing a hostile takeover by some company

joint venture

a popular strategy that occurs when two or more companies form a temporary partnership consortium for the purpose of capitalizing on some opportunity

grand strategy matrix

a popular tool for formulating alternative strategies

six sigma

a quality boosting process improvement technique that entails training several key persons in the firm in the techniques to monitor, measure, and improve processes and eliminate defects

differentiation

a strategy aimed at producing products and services considered unique industry-wide and directed at consumers who are relatively price insensitive

backward integration

a strategy of seeking ownership or increased control of a firm's suppliers

product development

a strategy that seeks increased sales by improving or modifying present products or services

WO strategies

aim at improving internal weaknesses by taking advantage of external opportunities

vertical integration

allow a firm to gain control over distributors, suppliers, or competitors

SWOT matrix

an important matching tool that helps managers develop four types of strategies: SO, WO, ST, and WT

WT strategies

are defensive tactics directed at reducing internal weakness and avoiding external threats

divisional structure (decentralized structure)

as a small organization grows, it has more difficulty managing different products and services in different markets

strategic business unit (SBU) structure

as organizations grow, their structures generally change from simple to complex as a result of concatenation or the linking together of several basic strategies

bankruptcy

can allow a firm to avoid major debt obligations and to void union contracts; liquidation procedure used only when a corporation sees no hope of being able to operate successfully or to obtain the necessary creditor agreement

resistance to change

can be considered the single greatest threat to successful strategy implementation

relative market share position

defined as the ratio of a division's own market share (or revenues) in a particular industry to the market share (or revenues) held by the largest rival firm in that industry

cost leadership

emphasizes producing standardized products at a low per-unit cost for consumers who are price-sensitive

annual objectives

essential for strategy implementation because they (a) represent the basis for allocating resources; (b) are primary mechanisms for evaluating managers; (c) are the major instrument for monitoring progress toward achieving long-term objectives; and (d) establish organizational, divisional, and departmental priorities

confrontation

exemplified by exchanging members of conflicting parties so that each can gain an appreciation of the other's point of view or holding a meeting at which conflicting parties present their views and work through their differences

matching

external and internal critical success factors is the key to effectively generating feasible alternative strategies

matching stage

focuses on generating feasible alternative strategies by aligning key external and internal factors - SWOT, SPACE, BCG, IE, Grand Strategy

strategic position and action evaluation (SPACE) matrix

four-quadrant framework indicates whether aggressive, conservative, defensive, or competitive strategies are most appropriate for a given organization

board of directors

group of individuals who are elected by the ownership of a corporation to have oversight and guidance over management and who look out for shareholders' interests

functional structure

group tasks and activities by business function, such as production and operations, marketing, finance and accounting, research and development, and management information systems

cooperative arrangements

include research and development partnerships, cross-distribution agreements, cross-licensing agreements, cross-manufacturing agreements, and joint-bidding consortia

strategic objectives

include things such as a larger market share, quicker on-time delivery than rivals, shorter design-to-market times than rivals, lower costs than rivals, higher product quality than rivals, wider geographic coverage than rivals, achieving technological leadership, consistently getting new or improved products to market ahead of rivals and so on

financial objectives

include those associated with growth in revenues, growth in earnings, higher dividends, larger profit margins, greater return on investment, higher earnings per share, a rising stock price, improved cash flow and so on

avoidance

includes such actions as ignoring the problem in hopes that the conflict will resolve itself or physically separating the conflicting individuals (or groups)

turbulent, high-velocity markets

industries changing so fast - telecommunications, medical, biotechnology, pharmaceuticals, computer hardware, software, and virtually all Internet-based industries

decision stage

involves a single technique, the QSPM, revealing the relative attractiveness of alternative strategies and thus provides objective basis for selecting specific strategies

business-process outsourcing (BPO)

involves companies hiring other companies to take over various parts of their functional operations, such as human resources, information systems, payroll, accounting, customer service, and even marketing

benchmarking

involves comparing a firm against the best firms in the industry on a wide variety of performance-related criteria

forward integration

involves gaining ownership or increased control over distributors or retailers

force change strategy

involves giving orders and enforcing those orders; resistance

market development

involves introducing present products or services into new geographic areas

reengineering

involves reconfiguring or redesigning work, jobs, and processes for the purpose of improving cost, quality, service, and speed; process management, process innovation, process redesign

restructuring

involves reducing the size of the firm in terms of number of employees, number of divisions or units, and number of hierarchical levels in the firm's organizational structure; downsizing, rightsizing, delayering

quantitative strategic planning matrix (QSPM)

objectively indicates which alternative strategies are the best

leveraged buyout (LBO)

occurs when a corporation's shareholders are bought by the company's management and other private investors using borrowed funds

acquisition

occurs when a large organization purchases a smaller firm, or vice versa (takeover if not desired by both firms)

retrenchment

occurs when an organization regroups through cost and asset reduction to reverse declining sales and profits

merger

occurs when two organizations of about equal size unite to form one enterprise

divestiture

often is used to raise capital for further strategic acquisitions or investments; can be part of an overall retrenchment strategy to rid an organization of businesses that are unprofitable, that require too much capital, or that do not fit well with the firm's other activities

rational change strategy (self-interest change strategy)

one that attempts to convince individuals that the change is to their personal advantage

educative change strategy

one that presents information to convince people of the need for change

combination strategy

organizations simultaneously pursue a combination of two or more strategies

defusion

playing down differences between conflicting parties while accentuating similarities and common interests, compromising so that there is neither a clear winner nor lower, resorting to majority rule, appealing to a higher authority, or redesigning present positions

internal-external (IE) matrix

positions an organization's various divisions in a nine-cell display, plotting organization divisions in a schematic diagram

focus

producing products and services that fulfill the needs of small groups of consumers

first mover advantages

refer to the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms

reshoring

refers to US companies planning to move some of their manufacturing back to the USA

horizontal integration

refers to a strategy of seeking ownership of or increased control over the firm's competitors

policy

refers to specific guidelines, methods, procedures, rules, forms, and administrative practices established to support and encourage work toward state goals

long-term objectives

represent the results expected from pursuing certain strategies

strategy-formulation framework

require the integration of intuition and analysis

gain sharing

requires employees or departments to establish performance targets; if actual results exceed objectives, all members get bonuses

liquidation

selling all of a company's assets, in parts, for their tangible worth

just-in-time (JIT)

significantly reduces the costs of implementing strategies

input stage

stage 1 summarizes the basic input information needed to formulate strategies - EFE, CPM, IFE

market penetration

strategy that seeks to increase market share for present products or services in present markets through greater marketing efforts

furloughs

temporary layoffs

champions

the individuals most strongly identified with the idea or product and whose futures were linked to its success

matrix structure

the most complex of all designs because it depends on both vertical and horizontal flows of authority and communication

halo error

the tendency to put too much weight on a single factor

SO strategies

use a firm's internal strengths to take advantage of external opportunities

ST strategies

use a firm's strengths to avoid or reduce the impact of external threats

unrelated diversification

value chains are so dissimilar that no competitively valuable cross-business relationships exist

related diversification

value chains possess competitively valuable cross-business strategic fits