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| a document that outlines a proposed firm’s goals, the strategy for achieving them, and the standards for measuring success |
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| a large-scale action plan that sets the direction for an organization; represents and “educated guess” about what must be done in the long term for the survival or prosperity of the organization or its principle parts |
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| a process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals |
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| determines not only the organization’s long-term goals for the next 1-5 years regarding growth and profits, but also the ways the organization should achieve them |
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| Importance of strategic management & planning |
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Definition
1) provide direction and momentum
2) encourage new ideas
3) develop sustainable competitive advantage |
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| the single most important strategist working today and maybe of all time |
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| attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company; “performing different activities from rivals, or performing similar activities in different ways” |
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| Effective strategy principles (3) |
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Definition
1) strategy is the creation of a unique and valuable position. Emerges from three sources:
• Few needs, many customers
• Broad needs, few customers
• Broad needs, many customers
2) strategy requires trade-offs in competing
3) strategy involves creating a “fit” among activities |
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| Strategic-management process (5 steps) |
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Definition
1) establish the mission and vision
2) establish the grand strategy
3) formulate strategic plans
4) carry out the strategic plans
5) maintain strategic control/the feedback loop |
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| Establish the mission and vision |
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Definition
| step one of the Strategic-Management Process; states the organization's purpose/reason for being and its long-term goals/direction |
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| Establish the grand strategy |
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Definition
| step two of the Strategic-Management Process; an assessment of current organizational performance and then explains how the organization’s mission is to be accomplished |
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| Formulate strategic plans |
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Definition
| step three of the Strategic-Management Process; the process of choosing among different strategies and altering them to best fit the organization’s needs; very time-consuming |
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| Carry out the strategic plans |
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Definition
| step four of the Strategic-Management Process; putting strategic plans into effect |
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| Maintain strategic control: the feedback loop |
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Definition
| step five of the Strategic-Management Process; consists of monitoring the execution of strategy and making adjustments |
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Definition
| an assessment of current organizational performance and then explains how the organization’s mission is to be accomplished; three types: growth, stability, defensive/retrenchment |
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Definition
| a grand strategy that involves expansion (as in sales revenues, market share, number of employees, or number of customers or clients served for nonprofits) |
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Definition
| a grand strategy that involves little or no significant change |
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| Defensive/retrenchment strategy |
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Definition
| a grand strategy that involves reduction in the organization’s efforts |
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Definition
| the process of choosing among different strategies and altering them to best fit the organization’s needs; very time-consuming |
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Definition
| putting strategic plans into effect |
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Definition
consists of monitoring the execution of strategy and making adjustments, if necessary by doing the following:
• Engaging people
• Keeping it simple
• Staying focused
• Keep moving |
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Term
| Strategic-planning tools (3) |
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Definition
1) competitive intelligence
2) SWOT analysis
3) forecasting |
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Term
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Definition
| gaining information about one’s competitors’ activities so that you can anticipate their moves and react appropriately (i.e. public prints and advertising like press releases or the internet, investor information like SEC and corporate annual reports, informal sources like trade shows) |
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Definition
Strengths
Weaknesses
Opportunities
Weaknesses |
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Definition
| the skills and capabilities that give the organization special competencies and competitive advantages in executing strategies in pursuit of its mission; inside matter of SWOT analysis |
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| Organizational weaknesses |
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Definition
| the drawbacks that hinder an organization in executing strategies in pursuit of its mission; inside matter of SWOT analysis |
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| Organizational opportunities |
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Definition
| environmental factors that the organization may exploit for competitive advantage; outside matter of SWOT analysis |
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Definition
| environmental factors that hinder an organization’s achieving a competitive advantage; outside matter of SWOT analysis |
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Term
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Definition
| a vision or projection of the future |
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Definition
| a hypothetical extension of a past series of events into the future |
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| Contingency planning/scenario analysis |
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Definition
| the creation of alternative hypothetical, but equally likely future conditions |
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Term
| Porter's Competitive Forces for industry analysis (5) |
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Definition
business-level strategies originate in five primary competitive forces in the firm’s environment:
1) threats of new entrants
2) bargaining power of suppliers
3) bargaining power of buyers
4) threats of substitute products or services
5) rivalry among competitors |
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| Porter's Competitive Strategies for industry analysis (4) |
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Definition
1) cost-leadership strategy
2) differentiation strategy
3) cost-focus strategy
4) focused-differentiation strategy |
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Definition
| keeping cost and prices low for a wide market; one of Porter's competitive strategies |
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Definition
| offering unique and superior value for a wide market; one of Porter's competitive strategies |
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Definition
| keeping costs and prices low for a narrow market; one of Porter's competitive strategies |
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| Focused-differentiation strategy |
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Definition
| offering unique and superior value for a narrow market; one of Porter's competitive strategies |
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Definition
| a company makes and sells only one product within its market; focused (benefit), but vulnerable (risk) |
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Definition
| operating several different businesses in order to spread the risk |
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Term
| Unrelated diversification |
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Definition
| operating several businesses under one ownership that are not related to one another |
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Definition
| in which an organization under one ownership operates separate businesses that are related to one another |
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Term
| Advantages of related diversification (3) |
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Definition
1) reduced risk because of more than one product
2) management efficiencies; administration is spread over several businesses
3) synergy |
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Term
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Definition
| the economic value of separate, related businesses under one ownership and management is greater together than the businesses are worth separately; the sum is greater than the parts |
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| Boston Consulting Group (BCG) Matrix |
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Definition
a means of evaluating strategic business units on the basis of their business growth rates and their share of the market
1) stars: high growth, high market share (definite keepers)
2) question marks: high growth, low market share (risky new ventures, become stars or become dogs)
cash cows: low market growth
dogs: |
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Term
| Execution (defined by Larry Bossidy and Ram Charan) |
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Definition
| is not simply tactics, it is a central part of any company’s strategy. It consists of using questioning, analysis, and follow-through to mesh strategy with reality, align people with goals, and achieve the results promised |
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| Core processes of business (3) |
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Definition
1) people
2) strategy
3) operations |
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Definition
| who will benefit you in the future; developing future leaders, dealing with nonperformers, and transforming the mission and operations of the human resource department; believed to be the most important process by Bossidy and Charan |
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Definition
| how success will be accomplished; where an organization wants to go |
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Definition
| what path will be followed; addresses marketing, production, sales, etc. and then defines short-term objectives for these activities to provide targets for people to aim at |
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Term
| Building a foundation of exectution |
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Definition
• Know your people and your business: “engage intensely with your employees”
• Insist on realism: “don’t let others avoid reality”
• Set clear priorities: “focus on a few rather than many goals”
• Follow through: “establish accountability and check on results”
• Reward the doers: “show top performers that they matter”
• Expand people’s capabilities: “develop the talent”
• Know yourself: “do the hard work of understanding who you are” |
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