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