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35 Cards in this Set
- Front
- Back
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Financial Objectives |
include those associated with growth in revenues, growth in earnings, higher dividends, larger profit margins, greater return on investment, higher earnings per share, a rising stock price, improved cash flow, etc. |
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Strategic Objectives |
include things such as a larger market share, quicker on-time delivery than rivals, shorter design-to market times than rivals, lower costs than rivals, higher product quality than rivals, wider geographic coverage than rivals, achieving technological leadership, consistently getting new or improved products to market ahead of rivals, etc. |
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Characteristics of objectives |
Q(uantitative) M(easurable) R(ealistic) U(nderstandable) C(hallenging) H(ierarchical) O(btainable) C(ongruent across departments) |
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Managing by Extrapolation (not managing by objectives) |
- "if it ain't broke, don't fix it" - idea is to keep on doing the same things in the same ways because things are going well. |
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Managing by Crisis (not managing by objectives)
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- based on the belief that the true measure of a really good strategist is the ability to solve problems. Strategists ought to bring their time and creative energy to bear on solving the most pressing problems of the day. - actually a form of reacting rather than acting and of letting events dictate the what and when of management decisions. |
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Managing by Subjectives (not managing by objectives) |
- idea that there is no general plan for which way to go and what to do; just do the best you can to accomplish what you think should be done. - "do your own thing, the best way you know how" - sometimes referred to as the mystery approach to decision making because subordinates are left to figure out what is happening and why. |
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Managing by Hope (not managing by objectives) |
- the future is laden with great uncertainty and that is we try and do not succeed, then we hope our second (or third) attempt will succeed. - decisions are predicated on the hope that they will work and that good time are coming (especially if luck/fortune are on your side) |
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Large Firms vs. Small - Level of Strategies |
- Corporate - Divisional (Key difference between L/s) - Functional - Operational |
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Forward Integration Strategy (Vertical Integration Strategies) |
Involves gaining ownership or increased control over distributors or retailers
- Franchising, or PayPal pushing its service off the Web and into stores via an agreement with Discover card
- When is this effective? |
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Backward Integration Strategy (Vertical Integration Strategies) |
A strategy of seeking ownership or increased control of a firm's suppliers.
- De-integration: reducing the pursuit of backwards integration; instead of owning suppliers, companies negotiate with several outside suppliers.
- Fancy Motels Inc. acquiring a furniture manufacturer
- When is this effective? |
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Horizontal Integration Strategy (Vertical Integration Strategies) |
Refers to seeking ownership of or increased control over a firm's competitors.
- Britain's GlaxoSmithKline PLC acquired Human Genome Sciences Inc. for $3 billion.
- When is it effective? |
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Market Penetration (Intensive Strategies) |
Seeks to increase market share for present products or services in present markets through greater marketing efforts.
- PepsiCo is heavily advertising its new Diet Pepsi special edition silver cans feature the blue and red Pepsi logo in a heart shape.
- When is it effective? |
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Market Development (Intensive Strategies) |
Involves introducing present products of services into new geographic areas.
- China Petrochemical purchased three Canadian oil companies, Daylight Energy, Tanganyika Oil, and Syncrude Canada. |
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Product Development (Intensive Strategies) |
Seeks increased sales by improving or modifying present products or services.
- General Electric is building new composite material jet engines, whereas rival Pratt & Whitney is developing newly designed jet engines.
- When is it effective? |
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Related Diversification (Diversification Strategies) |
Focus on adding new but related products or services
- Toys 'R' Us developed a new Wi-Fi tablet computer for children.
- When is it effective? |
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Unrelated Diversification (Diversification Strategies) |
Focus is on adding new unrelated products or services.
- IKEA is opening a chain of motels in Europe
- When is it effective? |
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Retrenchment (Defensive Strategies) |
Occurs when an organization regroups through cost and asset reduction to reverse declining sales and profits, sometimes also called turnaround or re-organizational strategy. Designed to fortify an organization's basic distinctive competencies.
- Callaway Gold cut 12% of its workforce; Deutsche Bank AG cut 1,000 jobs from its investment bank segment.
- When is it effective? |
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Divestiture (Defensive Strategies)
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Selling a division or part of an organization.
- Dean Foods sold off its WhiteWave-Alpro organic dairy business.
- When is it effective? |
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Liquidation (Defensive Strategies) |
Selling of all of a company's assets in parts for their tangible worth.
- Big Sky Farms, one of Canada's biggest hog-producing firms, liquidated.
- When is it effective? |
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Cost Leadership (Porter's 5 Generic Strategies) |
Emphasizes producing standardized products at a low per-unit cost for consumers who are price sensitive.
- Type 1: low cost strategy that offers products or services to a wide range of customers at the lowest price available on the market. (targets a large market)
- Type 2: a best-value strategy that offers products or services to a wide range of customers at the best price-value available on the market. (targets a large market) |
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Differentiation (Porter's 5 Generic Strategies) |
Type 3: a strategy aimed at producing products and services considered unique industry-wide and directed at consumers who are relatively price-insensitive. |
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Focus (Porter's 5 Generic Strategies) |
Means producing products or services that fulfill the needs of small groups of consumers.
Type 4: a low-cost focus strategy that offers products or services to a small range of customers at the lowest price available on the market.
Type 5: a best-value focus strategy that offers products or services to a small range of customers at the best price-value available on the market. |
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Joint Venture |
A popular strategy that occurs when two or more companies form a temporary partnership or consortium for the purpose of capitalizing on some opportunity.
- Effective when? |
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Co-operative Arrangements |
Can include research and development partnerships, cross-distribution agreements, cross-manufacturing agreements, etc.
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Merger/Acquisition |
When two organizations of about equal size unite to form one enterprise. |
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Acquisition |
Occurs when a large organization purchases (acquires) a smaller firm, or vice versa. |
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Takeover/Hostile Takeover |
When a merger or acquisition is not desired by both parties. |
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Friendly Merger |
If the acquisition is desired by both parties. |
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White Knight |
Refers to a firm that agrees to acquire another firm when that other firm is facing a hostile takeover by another company. |
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Leveraged Buyout (LBO) |
Occurs when a corporation's shareholders are bought (hence buyout) by the company's management and other private investors using borrowed funds (hence leveraged). |
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Secondary Buyouts |
When private-equity firms buying companies from other private-equity firms.
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Dividend Recapitalizations |
When private-equity firms especially, but other firms also, borrow money to fund dividend-payouts to themselves.
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First Mover Advantage |
Refers to the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms
- Advantages include securing access to rare resources, gaining new knowledge of key factors and issues, and carving out market share and a position that is easy to defend and costly for rival firms to overtake.
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Business-process outsourcing (BPO) |
Involves companies hiring other companies to take over various parts of their functional operations, such as HR, information systems, payroll, accounting , customer service, and marketing.
- Companies outsource because it is less expensive, it allows firms to focus on its core business, and it enables the firm to provide better services. |
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Reshoring |
Is a new term that refers to US companies planning to move some of their manufacturing back to the USA after outsourcing them.
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