management Ch.8 (TEST #2) – Flashcards

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Exploit Core Competencies Build Synergy Deliver Value Target Customers

Finacne, marketing, manufacturing.

consumer products unit, biotechnology unit, media unit

Assessing the external environment and internal problems to create goals and strategy

the use of managerial and organizational tools to direct resources toward accomplishing strategic results

Formulating strategy often begins with an audit of internal and external factors Internal Strengths and Weaknesses External Opportunities and Threats

Portfolio strategy pertains to the mix of business units and product lines that fit together in a logical way to provide synergy and competitive advantage for the corporation. Corporations like to have a balanced mix of business divisions called

Organizes business along two dimensions Business growth rate Market share Four categories for corporate portfolio The combination of high/low market share and high/low business growth

The star is important because it has additional growth potential and profits should be reinvested for future growth and profits. It will generate a positive cash flow as industry matures and market growth slows.

The cash cow exists in a mature, slow-growth industry but has a large market share. The cash cow has a positive cash flow and can be milked to feed riskier businesses.

The question mark exists in a new, rapidly growing industry but only has small market share. The question mark is risky. It could become a star or it could fail.

The dog is a poor performer with small market share in a slow- growth industry. A dog provides little profit and may be targeted for divestment or liquidation

The strategy of moving into new lines of business is called

means the company expands into businesses that either produce the supplies needed to make products or that distribute and sell those products to customers.

Strategy within the business units: How do we compete? Business-level strategies are developed by Porter's Five Forces Web technology is impacting all industries in positive and negative ways

Differentiation. The differentiation strategy is an attempt to distinguish the firm's products or services from others in the same industry. The organization may use advertising, distinctive product features, exceptional service, and new technology to achieve a product perceived as unique. The differentiation strategy can be profitable because customers are loyal and will pay high prices for the product. Companies that pursue differentiation need strong marketing abilities, a creative flair, and a reputation for leadership. This strategy can reduce rivalry with competitors if buyers are loyal. Cost Leadership. With a cost leadership strategy, the organization seeks efficient facilities, pursues cost reductions, and uses tight cost controls to produce products more efficiently than competitors. A cost leadership position means the company can undercut competitors' prices and still offer comparable quality and earn a reasonable profit. Focus. With a focus strategy, the organization concentrates on a specific regional market or buyer group. The firm may use a differentiation or cost leadership approach but only for a narrow target market.

In a strategy of globalization, product design and advertising strategies are standardized throughout the world. This is based on the theory that people everywhere want to buy the same products and live the same way. A globalization strategy can help an organization reap efficiencies by standardizing product design and manufacturing, using common suppliers, introducing products around the world faster, coordinating prices, and eliminating overlapping facilities.

In a multidomestic strategy, product design, marketing, and advertising are modified to suit the specific needs of each country. Many companies reject the idea of a single global market.

A transnational strategy seeks to achieve both global standardization and national responsiveness. This is difficult to achieve, as one goal requires close global coordination while the other goal requires local flexibility. Although most multinational companies want to achieve some degree of global integration to hold costs down, even global products may require some customization to meet government regulations in various countries or some tailoring to meet customer preferences.

something that the organization does especially well in comparison to its competitors.

organizational parts interact to produce a joint effect that is greater than the sum of the parts acting alone.

includes a careful assessment of strengths, weaknesses, oportunities, and threats that affect organizational performance.

unique business mission, product line, competitors.

new business is related to the companys exsisting activities. Ex. Nestles moved into pet foods.

organization expands into a totally new line of business ex. Sara Lee- food company to intimate apparel.

company expands into businesses that either produce the supplies needed to make products and services.

thinks out of the box strong marketing abilities rewards innovaion

strong central authority, highly efficient close supervision

pushes empowerment to employees with customer contact.

detailed control reports measures cost of providing products or service and maintaining cusomer loyalty

situations that have occurred often enough to enable decision rules to be developed and applied in the future. Ex. order new paper when inventory gets to certain place

made in response to situations that are unique are poorly defined and largly unconstructured, and have important consequences for the organization. Ex. Spring carrying iphones for 20 billion.

that all the information the decision maker needs is fully available.

managers know which goals they wish to achieve, but information about alternatives and future events is incomplete.

means that the goals to be achieved or the problem to be solved is unclear, alternatives are difficult to define, and info about outcome is unavailable.

based on rational economic assumptions and manager beliefs about what ideal decision making should be.

how a decision maker should make decisions.

descriptive, descibes how managers actually make decisions in complex situations rather than dictating how they should make decisions according to a theoretical ideal.

people have limits, or boundaries on how rational they can be.

info is limited and there are manger conflicts about what goals to pursue or what course of action to take.

informal alliance among managers who support a specific goal.