Fundamentals of management chapter 8 – Flashcards

strategic management is a set of decisions and actions used to formulate and Implement strategies that will provide a competitively Superior fit between the organization and its environment

the three categories of grand strategy are growth, stability and retrenchment. growth can be promoted internally by investing in expansion or externally by acquiring additional business division. stability is when the organization wants to remain the same size or grow slowly and in a controlled fashion.. retrenchment means that the organization goes through a period of forced decline by either shrinking current business units or selling off or liquidating entire business

the 4 Global strategies are globalization transnational export and multidomestic. in the globalization strategy the product design and advertising strategies are standardized throughout the world. And the transnational strategy the company seeks to balance Global efficiencies and local responsiveness. Standardization and customisation are combined for product and advertising strategies. In the export strategy locally produced products are selected for export. In the multidomestic strategy competition in each country is handled independently of Industry competition in other countries.

the corporate level ask what business we are in. Top managers are responsible to formulate strategy and the strategies are for the entire organization. The business level asks how do we compete. The middle managers are responsible to formulate strategies. The strategies are four different department and must be aligned with corporate level. The functional level asked how do we support business level strategies. The first line managers are responsible to formulate strategies. The strategies are for different departments and must be aligned with the business level.

3 reasons for developing strategies are for Core competent where the organization does especially well in comparison to its competitors, to build Synergy whereby the organizational Parts interact to produce a joint effect that is greater than the sum of the parts acting alone and for creating value for customers.

the strategic management process begins when executive evaluate their current situation by scanning their internal and external environment for their strengths which are positive internal characteristics that the organization can exploit to achieve its strategic performance goals, weaknesses, which are internal characteristics that might inhibit or restrict the organizations performance. opportunity which are characteristics of the external environment that helps the organization achieve or exceed it's strategic goals and threats which are characteristics of the external environment that may prevent the organization from achieving it's strategic goals. It is then followed by implementing new strategies.

the BCG Matrix organizes businesses along two dimensions business growth rate and market share. Business growth rate pertains to how rapidly the entire industry is increasing and market share is whether a business unit has a larger or smaller share than competitors. Four categories are provided for a corporate portfolio the star has a large market share in a rapidly growing industry. The cash cow exists in a mature slow growth industry but is a dominant business in the industry with a large market share. The question mark Business is risky as it could become a star or it could fail it has a small market share and the dog who is a poor performer and has only a small share of a slow-growth market.

the five competitive forces that exist in a company's environment are potential new entrance the bargaining power of buyers bargaining power of suppliers threat of substitute products and rivalry around competitors.potential new entrants have two barriers which are economies of scale and capital bargaining power of buyers inform customers become empowered customers and they will shop where it is most convenient bargaining power of suppliers where the supplier has the ability to reach a wider audience threat of substitute products the power of Alternatives and substitutes for a company's product may be affected by changes in costs or in current trends rivalry around competitors rivalry among competitors is influenced by the preceding four forces as well as by cost and product differentiation.

there are three competitive strategies that can be used to provide an edge within the five forces. These are differentiation cost leadership and focus. The differentiation strategy aims to attempt to distinguish the company's products or services from others in the industry. Cost leadership strategy aggressively seek efficient facilities pursues cost reduction and uses tight cost controls to produce products more efficiently than competitors. The focus strategy concentrate on a specific regional market or buyer group.

there are four tools for putting strategy into action. They are leadership structural design human resources and information and controls systems. Leadership uses persuasion to motivate employees and shape culture and values. Structural design is responsible to create teams determine centralization and decentralization arrange facilities and task design. Human Resources is responsible for recruiting and selecting employees. They manage transfer and promotion and training as well as directly layy offs and recalls. Information and control systems is responsible to revise pay and reward systems they apply rules and procedures Implement information systems such as memos and change budget allocations.