Ch 7 Managing Strategy and Strategic Planning

Distinctive Competence

organizational strengths that are unique to a small number of competing firms; identifying what makes the organization strong compares to its competitors makes this important

Scope of Strategy

Refers to the range of markets where an organization will compete; helps define the strategic market reach of the organization

Resource Deployment

How an organization allocates its resources across various competing areas; affects overall competitiveness and operational efficiency

Business Level Strategy

strategic alternatives focused on a specific industry or market, involves choices regarding how to compete successfully in that market

Corporate Level Strategy

strategic alternatives for managing operations across multiple industries or markets; example is diversification into different sectors versus concentrated efforts in one sector

Strategy Formulation

Processes involved in creating or determining an organization’s strategy, focusing on strategy content

Strategy Implementation

Processes involved in executing the strategy and achieving organizational goals

Deliberate Strategy

Rational, systematic, and planned approaches to strategy

Emergent Strategy

Patterns of action that develop over time without formal planning, often in response to unforeseen changes

SWOT Analysis

Stands for Strengths, Weaknesses, Opportunities, and Threats; provides a framework for analyzing internal and external factors affecting an organization

Internal Factors

Strengths (aspects the organization can control [e.g., unique capabilities, resources]) and weaknesses (internal limitations or deficiencies that hinder performance)

External Factors

Opportunities (external conditions that the organization can leverage for growth) and threats (external challenges or risks that could impede success)

Application of SWOT

Importance of revisiting SWOT analysis to adapt to changing organizational strengths, weaknesses, opportunities, and threats as the environment evolves

Differentiation Strategy

Distinguishing an organization from its competitors through superior product quality; results in enhanced reputation and customer loyalty due to high-quality offerings

Overall Cost Leadership Strategy

Gaining competitive advantage by maintaining lower costs than competitors; a potential drawback is reduced quality in pursuit of cost efficiency

Focus Strategy

Concentration on a specific market segment or product line to achieve competitive advantage; example is targeting specific customer groups with tailored offerings

Prospector Strategy

Encouraging innovation and flexibility; typically characterized by a decentralized organization

Defender Strategy

Focus on cost minimization and improved performance of existing products; example is seeking better vendor contracts to reduce costs on production materials

Analyzer Strategy

Balancing maintaining current business performance while exploring innovations in new ventures; its strategic focus is incremental improvements and cautious exploration

Reactor Strategy

An approach that lacks consistency, responding reactively to market conditions rather than proactively planning

Stages of the Product Life Cycle

Introduction, Growth, Maturity and Decline

Introduction Stage

High demand and focus on getting products into the market

Growth Stage

Rapid increase in sales; threats from competitors emerge, stimulating innovation

Maturity Stage

Sales stabilize; organizations focus on differentiating their products to maintain market share

Decline Stage

decrease in demand; organizations may need to cut costs or innovate to survive

Types of Diversification

Single Product Strategy, Related Diversification, and Unrelated Diversification

Single Product Strategy

Manufacturing and selling one product in a specific market; a strength is focused success in a niche market and a weakness is vulnerability to market changes and competitors

Related Diversification

Operates multiple businesses that are interconnected, sharing resources or technology; an advantage is synergy and efficiency across related businesses

Unrelated Diversification

Engaging in businesses that lack logical connections; an advantage is risk management across diverse sectors; a disadvantage includes complexity and lack of synergy

Becoming a Diversified Firm

Backward Vertical Integration (involving in supply-side activities); Forward Vertical Integration (engaging in customer-facing activities); mergers and acquisitions (strategies for creating synergy or entering new markets effectively)