Strategic Management: realized Grand Designs and Effective Strategy

These vocabulary flashcards cover the core concepts of Strategic Management, including levels of strategy, the strategic-management process, SWOT and VRIO analysis, and Porter’s competitive strategies.

Strategic positioning

Developed by Michael Porter, it attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company, often by performing different activities from rivals or similar activities in different ways.

Corporate-Level Strategy

A level of strategy that focuses on the organization as a whole; its executives are generally referred to as the C-Suite.

Business-Level Strategy

A strategy level focusing on individual business units or product/service lines, where managers aim to implement decisions from the Corporate-Level.

Functional-Level Strategy

Strategy applying to key functional departments or units within business units, where managers focus on tactical issues.

Strategic-Management Process

A five-step cycle consisting of: 1. Establish mission, vision, and values; 2. Assess current reality; 3. Formulate strategies; 4. Execute strategies; 5. Maintain strategic control.

Mission Statement

A statement that defines an organization's purpose, including its customers, products, geographical areas, technology, and commitment to economic objectives.

Vision Statement

A statement reflecting an organization's high ideals and standards of excellence, clarifying purpose and direction to inspire enthusiasm and commitment.

Values Statement

A statement expressing a company's distinctiveness and view of the world, serving as the foundation for organization-wide actions and decisions.

Environmental scanning

The monitoring of internal and external environments to detect early signs of opportunities and threats that might influence firm plans.

SWOT Analysis

A scanning process used to assess internal Strengths and Weaknesses, as well as external Opportunities and Threats.

S-Strengths (in SWOT)

Inside matters referring to positive internal attributes such as work processes, culture, staff, product quality, or financial resources.

W-Weaknesses (in SWOT)

Inside matters representing internal deficiencies in categories like work processes, organization, or service levels.

O-Opportunities (in SWOT)

Outside matters including market segment analysis, industry competition, or technological impacts that the organization can exploit.

T-Threats (in SWOT)

Outside matters consisting of external factors like market segment analysis or governmental impacts that could harm the organization.

VRIO

A framework for analyzing a resource to determine competitive potential based on four questions: Value, Rarity, Imitability, and Organization.

Forecasting

A vision or projection of the future used in strategic planning.

Trend analysis

A forecasting technique involving the hypothetical extension of a past series of events into the future.

Contingency planning

The creation of alternative hypothetical but equally likely future conditions; also referred to as scenario planning or scenario analysis.

Benchmarking

A process where a company compares its own performance with that of high-performing organizations.

Strategy formulation

The process of choosing among various strategies and altering them to best fit the needs of the organization.

Growth strategy

A grand strategy involving expansion in areas such as sales revenues, market share, number of employees, or number of customers.

Stability strategy

A corporate strategy that involves little or no significant change to the current operations.

Defensive strategy

Also called retrenchment, this strategy involves a reduction in the organization's efforts or assets.

Diversification

The strategy of operating several businesses, which may be related or unrelated, in order to spread risk.

Vertical integration

When a firm expands into businesses that either provide the supplies needed for its products or distribute and sell its products.

Porter’s Five Competitive Forces

Forces that originate business-level strategies: threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threats of substitute products, and rivalry.

Cost-leadership strategy

A strategy aimed at keeping costs and prices below those of competitors while targeting a wide market.

Differentiation strategy

A strategy aimed at offering unique and superior value compared to competitors while targeting a wide market.

Cost-focus strategy

A strategy aimed at keeping costs below those of competitors while targeting a narrow market.

Focused-differentiation strategy

A strategy aimed at offering unique and superior value compared to competitors while targeting a narrow market.

Strategy implementation

The process of putting strategic plans into effect, often considered the greatest challenge for managers.

Execution

A process of using questioning, analysis, and follow-through to mesh strategy with reality and align people with goals.

Strategic control

Monitoring the execution of strategy and taking corrective action when necessary to keep the plan on track.

Three Core Processes of Business

Key elements for execution including People (who will benefit in the future), Strategy (how success is accomplished), and Operations (what path is followed).