Strategic Management Chapter 5 (M)

Generic Strategies

According to Porter, strategies allow organizations to gain competitive advantage from three different bases: cost leadership, differentiation, and focus.

Related Diversification

Adding new but related products or services.

Unrelated Diversification

Adding new, unrelated products or services.

franchising

An effective means of implementing forward integration is ____

Porter's Type 3 generic strategy is differentiation

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

Managing by Extrapolation

adheres to the principle "If it ain't broke, don't fix it." The idea is to keep on doing about the same things in the same ways because things are going well.

Vertical integration strategies

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

Intensive strategies

are Market penetration, market development, and product development, because they require intensive efforts if a firm's competitive position with existing products is to improve.

Managing by Crisis

based on the belief that the true measure of a really good strategist is the ability to solve problems. Because there are plenty of crises and problems to go around for every person and every organization, strategists ought to bring their time and creative energy to bear on solving the most pressing problems of the day. Is actually a form of reacting rather than acting and of letting events dictate the what and when of management decisions.

Managing by Hope

based on the fact that the future is laden with great uncertainty and that if we try and do not succeed, then we hope our second (or third) attempt will succeed. Decisions are predicated on the hope that they will work and the good times are just around the corner, especially if luck and good fortune are on our side!

Managing by Subjectives

built on the idea that there is no general plan for which way to go and what to do; just do the best you can to accomplish what you think should be done. In short, "Do your own thing, the best way you know how" (sometimes referred to as the mystery approach to decision making because subordinates are left to figure out what is happening and why).

Bankruptcy

can be an effective type of retrenchment strategy. ___ can allow a firm to avoid major debt obligations and to void union contracts.

being a slow mover (also called fast follower or late mover)

can be effective when a firm can easily copy or imitate the lead firm's products or services.

When a merger or acquisition is not desired by both parties, it can be called a

takeover or hostile takeover.

Type 4 is a low-cost focus strategy

that offers products or services to a small range (niche group) of customers at the lowest price available on the market.

Cost leadership

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

friendly merger

if the acquisition is desired by both firms, it is termed a ___

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.

Joint venture

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

Business-process outsourcing (BPO)

is a rapidly growing new business that involves companies taking over the functional operations, such as human resources, information systems, payroll, accounting, customer service, and even marketing of other firms.

Balanced Scorecard

is a strategy evaluation and control technique.

White knight

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

De-integration

makes sense in industries that have global sources of supply

Focus

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

Market Penetration

Seeking increased market share for present products or services in present markets through greater marketing efforts.

Product Development

Seeking increased sales by improving present products or services or developing new ones.

Backward Integration

Seeking ownership or increased control of a firm's suppliers.

Horizontal Integration

Seeking ownership or increased control over competitors.

Divestiture

Selling a division or part of an organization.

Liquidation

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

turbulent, high-velocity markets

Some industries are changing so fast that researchers call them.

vertical integration strategies

Forward integration, backward integration, and horizontal integration are sometimes collectively.

Forward Integration

Gaining ownership or increased control over distributors or retailers.

strategic planning

Hansen and Smith explain that ____ involves "choices that risk resources" and "trade-offs that sacrifice opportunity."

Market Development

Introducing present products or services into new geographic area.

combination strategy

Many, if not most, organizations simultaneously pursue a combination of two or more strategies, but a ____ can be exceptionally risky if carried too far

leveraged buyout (LBO)

occurs when a corporation's shareholders are bought (hence buyout) by the company's management and other private investors using borrowed funds (hence leverage).

Acquisition

occurs when a large organization purchases (acquires) a smaller firm, or vice versa.

Merger

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

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.

Strategies

represent the actions to be taken to accomplish long-term objectives.

Long-term objectives

represent the results expected from pursuing certain strategies.

Type 5 is a best-value focus strategy

that offers products or services to a small range of customers at the best price-value available on the market. Sometimes called "focused differentiation," the best-value focus strategy aims to offer a niche group of customers products or services that meet their tastes and requirements better than rivals' products do.

Type 2 is a best-value strategy

that offers products or services to a wide range of customers at the best price-value available on the market; the best-value strategy aims to offer customers a range of products or services at the lowest price available compared to a rival's products with similar attributes.

Type 1 is a low-cost strategy

that offers products or services to a wide range of customers at the lowest price available on the market.

Retrenchment Regrouping

through cost and asset reduction to reverse declining sales and profit.

unrelated

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

related

when their value chains posses competitively valuable cross-business strategic fits