Strategic Planning Management

Vocabulary flashcards covering the fundamentals of Strategic Planning Management, including strategy formulation, implementation, industry analysis frameworks, and competitive strategies.

Strategy

A set of actions and plans used by managers to improve company performance and achieve long-term goals.

Strategy formulation

The process of planning and choosing the best strategy after analysing the business environment, identifying opportunities, threats, strengths, and weaknesses.

Strategy implementation

The process of putting a strategy into action using resources, organising employees, and carrying out daily operations to achieve business goals.

Opportunities

External situations that help a company grow and improve profitability, such as new technology or increasing customer demand.

Threats

External factors that may reduce profits or harm business performance, such as new competitors or economic recession.

Porter’s Five Forces

A framework used to analyse industry competition and profitability based on five specific market pressures.

Threat of New Entrants

One of Porter's Five Forces referring to how easily new companies can enter the market, influenced by entry barriers.

Rivalry Among Existing Firms

One of Porter's Five Forces referring to the intensity of competition among current companies in an industry.

Bargaining Power of Buyers

One of Porter's Five Forces where customers have the power to demand lower prices or better quality.

Bargaining Power of Suppliers

One of Porter's Five Forces where suppliers are powerful because there are few alternatives available to the company.

Threat of Substitute Products

One of Porter's Five Forces involving alternatives that satisfy the same customer needs, such as tea being a substitute for coffee.

PESTLE analysis

A study of external macroenvironment factors including Political, Economic, Social, Technological, Legal, and Environmental factors.

VRIO framework

A tool used to analyse whether company resources can create competitive advantage based on Value, Rarity, Inimitability, and Organisation.

Superior Efficiency

A building block of competitive advantage that involves using fewer resources to produce more output to lower costs.

Superior Quality

A building block of competitive advantage where high-quality products increase customer satisfaction and loyalty.

Superior Innovation

A building block of competitive advantage involving the creation of new products and processes.

Superior Customer Responsiveness

A building block of competitive advantage achieved by understanding and meeting customer needs to improve satisfaction.

Low-cost strategy

A business-level strategy focusing on reducing costs and offering products at lower prices to attract price-sensitive customers.

Differentiation strategy

A business-level strategy focusing on making products unique through quality, branding, design, or service so customers pay premium prices.

Broad Low-Cost Strategy

A generic business-level strategy that targets a large market with low prices, such as Walmart.

Broad Differentiation Strategy

A generic business-level strategy that targets a large market with unique products, such as Coca-Cola.

Focus Low-Cost Strategy

A generic business-level strategy targeting a niche market with low prices, such as Southwest Airlines.

Focus Differentiation Strategy

A generic business-level strategy targeting niche customers with premium products, such as Nordstrom.

Organisational architecture

The overall system used to design and manage a company, including structure, controls, incentives, processes, culture, and people.

Tall hierarchy

An organisational structure with many management levels and a narrow span of control leading to close supervision but slow communication.

Flat hierarchy

An organisational structure with few management levels and a wide span of control leading to faster communication and lower costs.

Functional structure

A structure that divides the company into departments based on specialized roles like marketing, finance, and production.

Multidivisional structure

A structure that divides the company into separate divisions based on specific products or markets, used by large diversified companies.

Personal Control

A method of control where managers directly supervise employees.

Bureaucratic Control

A method of control where employees follow established rules and procedures.

Output Control

A method of control where performance is measured using specific targets.

Market Control

A method of control where budgets and competition are used to regulate resource usage.

Incentive Control

A method of control where rewards or bonuses motivate employees to perform well.

Organisational culture

Shared values, beliefs, and norms that guide employee behaviour and support company strategy.

Global standardisation strategy

A strategy of selling standardised products worldwide with minimal changes to reduce costs through mass production and economies of scale.

Transnational strategy

A strategy focusing on achieving both low cost through global efficiency and local responsiveness through product adaptation.

Localisation strategy

A strategy that involves adapting products, services, and marketing to meet the specific preferences and culture of local markets.

Joint venture

A collaborative arrangement where two companies create a new business together and share ownership, profits, and risks.

Strategic alliance

A cooperative partnership where companies work together to share technology or access markets without creating a new company.

Embryonic Stage

The first stage of the industry life cycle where the industry is new and growth is slow because customers are unfamiliar with the products.

Growth Stage

The second stage of the industry life cycle where demand increases rapidly and sales grow quickly.

Shakeout Stage

The third stage of the industry life cycle where competition becomes intense and weaker firms exit the market.

Mature Stage

The fourth stage of the industry life cycle where the market becomes saturated and growth slows down.

Decline Stage

The final stage of the industry life cycle where demand decreases due to technological or social changes.