Principles of management chapter 6

strategy
large-scale action plan that sets the direction for an organization
strategic management
process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals
why strategic management and strategic planning important
provide direction and momentum, encourage new ideas, and develop a sustainable competitive advantage
sustainable competitive advantage
being responsive to customers, innovation, quality, and effectiveness
strategic positioning
attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company
effective strategy
creation of a unique and valuable position, requires trade-offs in competing, creating a fit among activities
growth strategy
involves expansion, as in sales revenues, market share, number of employees, and number of customers
stability
involves little or no significant change
definsive
involves reduction in the organization’s efforts retrenchment
strategy formulation
process of choosing among different strategies and altering them to best fit the organization’s needs
strategy implementation
putting strategic plans into effect
strategy control
consists of monitoring the execution of strategy and making adjustments if necessary to engage people, keep it simple, stay focused, and keep moving
competitive intelligence
means gaining information about one’s competitors activities so that you can anticipate their moves and react appropriately and public prints and advertising, investor information, and informal sources
environmental scanning
careful monitoring of an organization’s internal and external environments to detect early signs of opportunities and threats that may influence firm’s plan
SWOT analysis
strength (inside matters), weaknesses (inside matters), opportunities (outside matters), and threats (outside matters)
organizational strengths
skills and capabilities that give organization special competencies and competitive advantages in executing strategies in pursuit of its mission
organizational weaknesses
drawbacks that hinder an organization in executing strategies in pursuit of its mission
organizational opportunities
environmental factors that the organization may exploin for competitive advantage
organizational threats
environmental factors that hinder an organization’s achieving a competitive
internal stregnths
attention to detail and a frugality that shuns waste of every kind
internal weakness
parts were supplied by outside companies rather than trusted traditional suppliers
external opportunities
stressed commintment to customers, still ranks high in quality
trend analysis
hypothetical extension of a past series of events into the future
contingency planning
creation of alternative hypothetical but equally likely future conditions, also called scenario planning
porter’s five competitive forces
threat to entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products or services, and rivalry amoung competitors
porters 4 competitive stratetgies
cost leadership, differentiation, cost-focus, and focused-differentiation
cost leadership strategy
keep the costs, and hence the prices, of a product or service below those of competitors and to target a wide market
differentiation strategy
offers products that are of unique and superior value compared to those of competitors but to target a wide market
cost focus strategy
keep the costs of a product below those of competitors and to target a narrow market
focused differentiation
offer products that are of unique and superior value compared to those of competitors and to target a narrow market
signle-product strategy
company makes and sells only one product within its market, benefit-focus, and risk-vulnerability
diversification
operating several businesses under one ownership that are not related to one another
advantages of related diversification
reduced risk (because more than one product), management effenciencies (administration spread over several businesses), and synergy (the sum is greater than the parts)
BCG matrix
a means of evaluating strategic business units on the basis of their business growth rates and their share of the market
execution
consists of using questioning, analysis, and follow through in order to mesh strategy with realisty, align people with goals, and achieve results promised, central part of any company’s strategy
the three core processes of business
people, strategy, and operations