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36 Cards in this Set
- Front
- Back
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strategy
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set of related actions that managers take to increase their company’s performance
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business model
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Managers’ conception of how the set of strategies their company pursues should mesh together into a congruent whole, enabling the company to gain a competitive advantage and achieve superior profitability and profit growth
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Business level strategy
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encompasses the bsuiness’s overall competitive theme, the way it positions itself in the marketplace to gain a competitive advantage and the different positioning strategies that can be suesd in different industry settings-for example, cost leadership, differentiation, focusing on a particular nice or segment of the industry, or some combination of these
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corporate level strategy
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strategy what business or businesses should we be in to maximize the long-run profitability and profit growth of the organization
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Shareholder value
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we mean the returns that shareholders earn from purchasing shares in a company
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profitability
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profitability the return that it makes on capital invested in the enterprise
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profit growth
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can be measured by the increase in net profit over time
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Strategy formulation
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task of selecting strategies
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strategy implementation
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task of putting strategies into action which includes designing delivering, and supporting products
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Steps in the strategy-making process
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. 1. select the corporate mission and major corporate goals 2. opportunities and threats 3. strengths and weakenesse, 4. select strategieis that build on the organization’s strengths and correct its weaknesses in order to take advanatage of external opps and counter external threats. These strategies should be consistent with the mission and major goals of the organization. They should be congruent and constitute a viable model 5. implement the strategies
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What is the purpose of feedback in the strategy-making process
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Strategic planning is ongoing and goes through feedback loops.. top managers anc then decide whether to reaffirm the existing business model and the existing strategies and goals for suggest changes for the future
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competitive advantage
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profitability is greater than the average profitability of all other companies competing for the same set of customers
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sustained competitive advantage
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when strategies enable it to maintan above-average profitability for a number of years
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multinational company
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Company that does business in two or more national markets
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Why globalize
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barriers to trade and investment have fallen, production ability globally
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Choice of entry points – exporting, licensing, etc.
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. the issue of how and when to enter a new national market raises eht euqtion of how to determine th best mode or vehicle for such entry… exporting licensing, franchising, entering into a joint venture with host country copany, and setting up a wholly owned licnsed subsidiary in host country
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Horizontal Integration
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single-industry strategy process of acquiring or merging with the industry competitorsin an effort to achieve the competitive advantages that come with large scale and scope,
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vertical integration
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expands its operations either ba ckward into an industry that produces inputs for the company’s products or forward into an industry that uses, distributes or sells the company’s products
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corporate-level strategy
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Enables a company or one or more of its business units to perform one or more the value creation functions at a lower cost or in a way that allows for differentiation and a premium price
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Corporate-level strategy and the multibusiness model
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model justifies entry into different businesses and industries this model should explain how and why the company’s current competencies and business strategies increase its return on investment in the value chain of a new industry
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benefits of horizontal integration
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lowers cost structure increases product differentiation, replicates the business model, reduces rivalry within the industry increases bargaining power over suppliers, allows companies to BUNDLE for differentiation
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problems with horizontal integration
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FTC can bar mergers, it can be hard to merges that destroys value
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Vertical integration – backward and forward. Examples
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backward vertical integration expands its operations backwards into an industry tha produces inputs for the company’s products or fowrad into an industry that uses, distributes or sell the company’s products ie forward-PC Maker who sells PCs to company-owned retail ie backward steel company that supplies its iron ore needs from company owned iron ore mines
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Increasing profitability through vertical integration (three ways – include “holdup”)
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1. facilitates investments in efficiency enhancing specialized assets 2. protects product quality 3. results in improved scheduling HOLDUP: being taken advantage of by a trading partner after the investment in specialized assets has been made.. some say that in order to avoid this Ford for example manufactures their own fuel-injection system rather than having to depend on another company
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Alternatives to vertical integration
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strategic alliances: long term agreements between two ore more companies to jointly develop new products that benefit all companies concerned; short term contracts, competitive bidding,
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Outsourcing. What is it
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Decision to allow one or more of a company’s value-chain activities or functions to be performed by an independent specialist companies that focus all their skills and knowledge on just one kind of activity
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why outsource?
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Strengthen their business models and increase profitability, reduces cost structure, enhanced differentiation due to the fact that outsourced companys can provide better quality than origin company, ability to focus on core business Examples. What are the risks? Hold up, loss of sensitive information
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What is diversification
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A company that operates in tow ore more industries
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why diversify?
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Take one or more value chain functions and do it at a lower cost, in a way that allows for differentiation and gives the company pricing options or ina way that helps the company to manage industry rivalry better
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What does it mean to view the company as a portfolio of competencies?
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Consider how those competencies might be leveraged to create opportunities in new industries
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Increasing profitability through diversification – 5 ways – examples
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Transferring competencies among existing businesses, leveraging competencies, sharing resources, using product bundling, managing rivalry
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What are economies of scope
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are able to effectively able to pool, share, and utilize expensive resources or capabilities
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Three entry strategies to implement multibusiness model
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internal new ventures, acquisitions, joint ventures
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Increasing profitability through diversification – 5 ways – examples
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Transferring competencies among existing businesses, leveraging competencies, sharing resources, using product bundling, managing rivalry
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What are economies of scope
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are able to effectively able to pool, share, and utilize expensive resources or capabilities
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Three entry strategies to implement multibusiness model
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internal new ventures, acquisitions, joint ventures
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