Management Lecture #3

Strategic management

The formulation and implementation of initiatives by top management that will allow the organization to achieve its goals

Strategies

The plans for how the organization will do what it’s in business to do, how it will compete successfully, and how it will attract and satisfy its customers in order to achieve its goals

Business model

How a company is going to make money

Strategic management process

A six-step process that encompasses strategic planning, implementation, and evaluation

Opportunities

Positive trends in the external environment

Threats

Negative trends in the external environment

Resources

An organization’s assets that are used to develop, manufacture, and deliver products to its customers

Capabilities

An organization’s skills and abilities in doing the work activities needed in its business

Core competencies

The organization’s major value-creating capabilities that determine its competitive weapons

Strengths

Any activities the organization does well or its unique resources

Weaknesses

Activities the organization does not do wel or resources it needs but does not possess

SWOT analysis

An analysis of the organization’s strengths, weaknesses, opportunities, and threats

Corporate strategy

An organizational strategy that determines what businesses a company is in or wants to be in and what it wants to do with those businesses

Growth strategy

A corporate strategy that’s used when an organization wants to expand the number of markets served or products offered, either through its current business(es) or through new business(es)

Stability strategy

A corporate strategy in which an organization continues to do what it is currently doing

Renewal strategy

A corporate strategy designed to address declining performance

BCG matrix

A strategy tool that guides resource-allocation decisions on the basis of market share and growth rate of strategic business units

Stars

High market share, High anticipated growth rate

Cash cows

High market share, Low anticipated growth rate

Question marks

Low market share, High anticipated growth rate

Dogs

Low market share, Low anticipated growth rate

Competitive strategy

An organizational strategy for how an organization will compete in its business(es)

Strategic business unit (SBU)

The single independent businesses of an organization that formulate their own competitive strategies

Competitive advantage

What sets an organization apart; its distinctive edge

Porter’s five forces modal

Threat of new entrants, Threat of substitutes, bargaining power of buyers, Bargaining power of suppliers, current rivalry

Threat of new entrants

How likely it is that new competitors will come into the industry

Threat of substitutes

How likely it is that other industries’ products can be substituted for our industry’s products

Bargaining power of buyers

How much bargaining power buyers have

Bargaining power of suppliers

How much bargaining power suppliers have

Current rivalry

How intense the rivalry among current industry competitors is

First mover

An organization that’s first to bring a product innovation to the market or to use a new process innovation