Chapter 8.
Management 309 with Wesson at Texas A&M University
About this deck
About StudyBlue
STUDYBLUE makes things that make you better at school.
Things like online flashcards with photos and audio.
Things like personalized quizzes and friendly reminders about when (and what) to study next.
Think of it as a digital backpack™: access to all of your study materials online and on your phone.
STUDYBLUE exists to make studying efficient and effective for every student, for free. Join us.
“I have been getting MUCH better grades on all my tests for school. Flash cards, notes, and quizzes are great on here. Thanks!”
Kathy
Kathy
Sign up (free) to study this.
Strategy
Is a comprehensive plan for accomplishing organizations goals
Common organizational strengths
Organizational capabilities process by numerous competing firms
Sustained Competitive advantage
What remains after all attempts at strategic innovations cease
Strategic imitation is difficult when: (3)
-difficult for competitors to understand its nature or character
-distinctive competence is based on unique historical circumstances
-The competence is based on a complex phenomenon, such as organizational culture
Organizational weakness can be overcome by: (2)
-investments to obtain the strengths needed
-modification of the org. mission so it can be accomplished with the current work force
Name porters 3 generic business level strategies
Overal cost leadership strategy
Differentiation strategy
Focus Strategy
How would you implement the Differentiation Strategy
Marketing all sales emphasize high quality, high value image of the organizations products or services
What does a Reactor do
Has no clear strategy, react to changes and events
-most are companies arent still in business
Single product Strategy
Organization manufactures one product or service and sells it in a single geographic market
Advantages of Related Diversification
LOOK IN NOTES
Advantages of formulating unrelated diversification strategy (2)
-Allocation of resoures to areas with the highest return potentials to maximize corp performance
-Stable corporate-level performance over time due to business cycle differences among the multiple businesses
Disadvantages to formulating unrelated diversification strategy (2)
-Failing to exploit key synergies puts the firm at a competitive disadvantage w/ firms w/ related strategy
-Corporate-level managers in such companies usually dont know enough about the unrelated businesses to provide helpful guidance to make most money
Strategic management
A comprehensive and ongoing management proces aimed at formulating and implementing effective strategies which align the organization with its environment to achieve major organizational goals
Effective strategies
Strategies that promote a superior alignment between the organization and its environment and the achievement of its goals
Name and describe the 3 components of strategy
1. Distinctive competence: something an organization does exceptional well
2. Scope: Range of markets in which the organization will compete
3. Resource deployment: how an organization will distribute its resources across the areas in which it competes
Business-level strategy
The set of strategic alternatives that an organization chooses from as it conducts business in a particular industry or market
Corporate-level strategy
The set of strategic alternatives that an organization chooses from as it manages its operations simulaneously across serveral industries and markets
Strategy formulation
Set of processes involved in creating or determining the organizations strategies
Strategy implementation
The methods by which strategies are operationlized or executed within the organization
Deliberate Strategy
A plan, chosen and implemented to support specific goals, that is the result of a rational, systematic, and planned process of strategy formulation and implementation
Emergent Strategy
A pattern of action that develops over time, in the absence of goals or missions, or despite goals and missions
What are the 5 ways to evaluating organizational strengths
ORganizational strengths
COmmon organization strengths
Distinctive competencies
Limitation of distinctive competencies
Sustained competitive advantage
Organizational strengths
Are skills and abilities enabling an organization to conceive of and implement strategies
What are distintive competencies useful for?
Competitive advantage and superior performance
Imitation of distinctive competencies
is duplicating another firms distinctive competence
When does does sustained competitive advantage occur?
When a distinctive competence cannot be easily duplicated
Organizational weaknesses
Are skills and capabilities that do not enable an organization to choose and implement strategies that support its mission
Competitive disadvantage
Is a situation in which an organization fails to implement strategies being implemented by competitors
In what areas do you find organizational opportunities
In the organizations environment that may generate high performance
In what areas do you find organizational threats
In the org.'s environment that make it difficult for the org. to achieve high performance
Overal cost leadership strategy
organization attempts to gain competitive advantage by reducing its costs of competing firms
Differentiation strategy
An organization seeks to distinguish itself from competitors through the quality of products or services
Focus Strategy
An organization concentrates on a specific regional market, product line, or group of buyers
How would you implement Overal cost leadership strategy
To support cost leadership, marketing and sales are likely to focus on simple product attributes and how these product attributes meet customer needs in a low-cost and effective manner
How would you implement the fouce strategy
This strategy is implement via the same approaches used for differentiation and cost leadership, depending on which one (differentiation or cost leadership) is the proper basis for competing in or for a specific market segment, product category, or group buyers
Name the 4 miles and snow strategy types
Prospector
Defender
Analyzer
Reactor
What does a prospector do (2)
-Encourages creativity to seek out new market opportunities
-develops the flexibility to meet changing market conditions by decentralizing its organizational structure
What does a defender do and how does he achieve this
Focuses on defending its current markets by lowering its cost and/or improving the performance of its current products
What does a analyzer do and why
incorporates elements of both the prospector and the defender strategies to maintain business and to be somewhat innovative
Name and the 4 stages of the product life cycle and what they focus on
Introduction: getting the product out of the door without sacrificing quality
Growth: ensuring quality and delivery, and begin to differentiate product
Mature: low costs and new products, essential stage if company is going to survive in long run
Decline
What are the 3 ways to formulating corporate level strategies through diversification
Single product strategy
Related diversification
Unrelated diversification
Strategic business units strategy
each business or group of businesses within an organization engaged in serving the same markets, customer, or products
Diversification strategy
The number of businesses an organization is engaged in and the extent to which these businesses are related to one another
Related diversification strategy
Strategy in which an organization operates in several different businesses, industries, or markets that are somehow linked
What are the 4 basis of relatedness when implementing related diversification, examples of each
1 Similar technology: phillips, boeing, westinghouse, compaq
2 Common distribution and marketing skills: Nabisco, Phillip Morris, Proctor & Gamble
3 Common name brand and repuatation: disney, universal
Common customers: merck, IBM, AMF-head
Unrelated Diversification strategy
A strategy in which an organization operates multiple businesses that are not logically associated with one another
What are the 3 to becoming a diversified firm
1 Internal development of new products: developing products and services within the boundaries of traditional business operations
2 Replacement of suppliers and customers: backward vertical integration, forward vertical int.
3 Merger and acquisitions
Backward Vertical Integration
Beginning a business that furnishes resources previously handled by a supplier
Forward Vertical Integration
An organizations beginning the business activities formerly conducted by its customers
What is the difference between a merger and acquisition
Merger-the purchase of one firm by another firm of approximately the same size
Acquisition- the purchase of a firm by a firm that is considerably larger
What are the 2 purposes of mergers and acquisitions
-to acquire complementary products or services linked by a common technology and common customers
-to create or exploit synergies that reduce the combined organizations costs of doing business to increase revenue
Name and describe the 2 major tools for managing diversification
Organizational structure
Portfolio management techniques: methods that diversified organizations use to make decisions about what businesses to engage in and how to manage these multiple businesses to maximize corporate performance
What are the 2 important portfolio management techniques
BCG Matrix
GE business screen
BCG matrix
A method of evaluating business relative to the growth rate of their market and the organizations share of the market
Name and describe the 4 types of businesses that a diversified organization can engage in under the BCG Matrix
Dogs- have small mkt shares and no growth prospects
Cash cows- businees that have large share of mkt that is not expected to grow
Question marks- have small mkt shares in quickly growing markets
Stars- have large shares of rapidly growing markets
What 3 things are taken into consideration when developing international and global strategies
1 Global efficiencies
2 Multi market flexibility
3 Worldwide learning
Name and describe the 3 global efficiencies when developing international and global strategies
Location efficiences - seeking lower input cost locations
Economies of scale - larger facilities=lower cost
Economies of scope - broadening product lines
What is it ment for multimarket flexibility when developing international and global strategies
International businesses may respond to change in one country by implementing a change in another country
What is it ment to have worldwide learning when developing international and global strategies
The diverse operating environments of multinational corporations (MNC) contribute to organizational learning that can be transferred to other operating environments
What are the 4 strategic alternatives for international business
Home replication strategy
Multi domestic strategy
Global strategy
Transnational strategy
Home replication strategy
Apply the distinctive competences they developed in their home market to the foreign markets they enter
Multi domestic strategies
Used by firms that manage a portfolio of international business as relatively autonomous and independent units
Global strategies
Companies doing exactly the opposite of those using a multidomestic strategy (standardizing across all countries)
Transnational strategy
Pursue both centralization and decentralization at the same time, using whichever approach majes more sense in the particular circumstances
About this deck
About StudyBlue
STUDYBLUE makes things that make you better at school.
Things like online flashcards with photos and audio.
Things like personalized quizzes and friendly reminders about when (and what) to study next.
Think of it as a digital backpack™: access to all of your study materials online and on your phone.
STUDYBLUE exists to make studying efficient and effective for every student, for free. Join us.
“I have been getting MUCH better grades on all my tests for school. Flash cards, notes, and quizzes are great on here. Thanks!”
Kathy
Kathy