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BAMG 350 Chapter 6
Organizational Strategy
| Term | Definition |
|---|---|
| Resources | the assets, capabilities, processes, employee time, information, and knowledge than an organization uses to improve its effectiveness and efficiency and create and sustain competitive advantage |
| Competitive Advantage | providing greater value for customers than competitors can |
| Sustainable Competitive Advantage*** | a competitive advantage that other companies have tried unsuccessfully to duplicate and have, for the moment, stopped trying to duplicate |
| Valuable Resource | a resource that allows companies to improve efficiency and effectiveness |
| Rare Resource | a resource that is not controlled or possessed by many competing firms |
| Imperfectly Imitable Resource*** | a resource that is impossible or extremely costly or difficult for other firms to duplicate |
| Non-substitutable resource*** | a resource that produces value or competitive advantage and has no equivalent substitutes or replacements |
| Competitive Inertia | a reluctance to change strategies or competitive practices that have been successful in the past |
| Shadow-Strategy Task Force | a committee within a company that analyzes the company's own weaknesses to determine how competitors could exploit them for competitive advantage |
| Strategic Dissonance | a discrepancy between a company;s intended strategy and the strategic actions managers take when implementing that strategy |
| Situational (SWOT) Analysis*** | an assessment of the strength and weaknesses in an organization's internal environment and the opportunities and threats in its external environment |
| Distinctive Competence | what a company can make, do, or perform better than its competitors |
| Core Capabilities | the internal decision-making routines, problem-solving processes, and organizational cultures that determine how efficiently inputs can be turned into outputs |
| Strategic Group*** | a group of companies within an industry against which top managers compare, evaluate, and benchmark strategic threats and opportunities |
| Core Firms*** | the central companies in a strategic group |
| Secondary Firms*** | the firms in a strategic group that follow strategies related to bu somewhat different from those of the core firms |
| Strategic Reference Points*** | the strategic targets managers use to measure whether a firm has developed the core competencies it needs to achieve a sustainable competitive advantage |
| Corporate-Level Strategy | the overall organizational strategy that address the question "What business or businesses are we in or should we be in?" |
| Diversification | a strategy used for reducing risk (stocks or, in the case of a corporation, types of businesses) so that the failure of one stock or business does not doom the entire portfolio |
| Portfolio Strategy*** | a corporate-level strategy that minimizes risk by diversifying investments among various businesses or product lines |
| Acquisition | the purchase of a company by another company |
| Unrelated Diversification*** | creating or acquiring companies in a completely unrelated business |
| BCG Matrix*** | a portfolio strategy, developed by the Boston Consulting Group, that categorizes a company's businesses by growth rate and relative market share and helps managers decide how to invest corporate funds |
| Star*** | a company with a large share of a fast-growing market. Invest here. |
| Question Mark*** | a company with a small share of a fast-growing market. Invest cautiously. |
| Cash Cow*** | A company with a large share of a slow-growing market. Profits here. |
| Dog*** | a company with a small share of a slow-growing market. Divest/harvest. |
| Related Diversification*** | creating or acquiring companies that share similar products, manufacturing, marketing, technology or culture |
| Grand Strategy | a broad corporate-level strategic plan used to achieve strategic goals and guide the strategic alternatives that managers of individual businesses or subunits may use |
| Growth Strategy | a strategy that focuses on increasing profits, revenues, market share, or the number of places in which the company does business |
| Stability Strategy | a strategy that focuses on improving the way in which the company sells the same products or services to the same customers |
| Retrenchment Strategy | a strategy that focuses on turning around very poor company performance by shrinking the size or scope of the business |
| Recovery | the strategic actions taken after retrenchment to return to a growth strategy |
| Industry-Level Strategy | a corporate strategy that addresses the question "How should we compete in this Industry?" |
| Character of the Rivalry*** | a measure of the intensity of competitive behavior between companies in an industry |
| Threat of New Entrants *** | measure of the degree to which barriers to entry make it easy or difficult for new companies to get started in an industry |
| Threat of Substitute Products or Services*** | a measure of the ease with which customers can fins substitutes for an industry's products or services |
| Bargaining Power of Suppliers*** | a measure of the influence that suppliers of parts, materials, and services to firms in an industry have over the prices of theses inputs |
| Bargaining Powers of Buyers*** | a measure of the influence that customers have on a firm's prices |
| Cost Leadership*** | the positioning strategy of producing a product or service of acceptable quality at consistently lower production costs than competitors can, so that the firm can offer the lowest price in the industry |
| Differentiation*** | the positioning strategy of providing a product or service that is sufficiently different from competitors' offerings that customers are willing to pay a premium for |
| Focus Strategy*** | the positioning strategy of using cost leadership of differentiation to produce a specialized product or service for a limited, specially targeted group of customers in a particular geographic region or market segment |
| Defenders*** | companies using an adaptive strategy aimed at defending strategic positions bu seeking moderate, steady growth, and by offering a limited range of high-quality products and services to a well-defined set of customers |
| Prospectors*** | companies using an adaptive strategy that seeks fast growth by searching for new marker opportunities, encouraging risk taking, and being the first to bring innovative new products to the market |
| Analyzers*** | companies using an adaptive strategy that seeks to minimize risk and maximize profits by following or imitating the proven success of prospectors |
| Reactors*** | companies that do not follow a consistent adaptive strategy, but instead react to changes in the external environment after they occur |
| Firm-Level Strategy | a corporate-level strategy that addresses the question "how should we compete against a particular firm?" |
| Direct Competition | the rivalry between two companies that offer similar products and services, acknowledge each other as rivals, and act and react to each other's strategic actions |
| Market Commonality | the degree to which two companies have overlapping product, services, or customers in multiple markets |
| Resource Similarity | the extent to which a competitors has similar amounts and kinds or resources |
| Attack | a competitive move designed to reduce a rival's market share or profits |
| Response | a competitive countermove, prompted by a rival's attack, to defend or improve a company's market share or profit |
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