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141 Cards in this Set

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What question is asked in association with vision?
What do we want to become?
A clear business vision leads to what?
a comprehensive mission statement
A shared vision does what 4 things?
creates commonality of interests, reduces daily monotony, provides opportunity and challenge, captures the emotions of employees and steers them in a common direction
What question is asked in association with mission?
What is our business?
What is a mission and what does it do?
an enduring state of purpose; distinguishes one firm from another and declares the firm's reason for being
What 3 things does a mission convey?
who we are, what we do, and why we are here
What 4 things is a mission also referred to as?
creed statement, statement of purpose, statement of philosophy, and statement of business principles
A mission is essential for what?
establishing objectives and formulating strategies
A strategic vision is concerned with a firm's what?
future business path-"where we are going"
A mission statement focuses on what?
its present business purpose-"who we are and what we do"
What are some things a vision identifies?
markets to be pursued; future product/market/customer/technology focus; kind of company mgmt is trying to create
What are some things a mission statement identifies?
current product and service offerings, customer needs being served, technological and business capabilities
What are 4 benefits from a strong mission?
unanimity of purpose, resource allocation, organizational climate, focal point for work structure
What are some characteristics of effective missions?
broad in scope, generate strategic alternatives, not overly specific, reconciles interests among diverse stakeholders, finely balanced between specificity and generality, arouse positive feelings and emotions, motivate readers to action, generate favorable impression of the firm, reflect future growth, provide criteria for strategy selection, basis for generating and evaluating strategic options
What are the 9 mission elements?
customers, employees, products and services, markets, technology, survival growth profit, philosophy, self-concept, public image
What is the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives?
strategic management
To exploit and create new and different opportunities for tomorrow is the purpose of what?
strategic planning
What tries to optimize for tomorrow the trends of today?
long-range planning
Strategic planning is used to refer to only what?
strategy formulation
The strategic-mgmt process consists of what 3 stages?
strategy formulation, implementation, and evaluation
What stage includes developing a vision and mission, identifying an organization's external opportunities and threats, determining internal strengths and weaknesses, establishing long-term objectives, generating alternative strategies, and choosing particular stragies to pursue?
strategy formulation
What stage's issues include deciding what new businesses to enter, what businesses to abandon, how to allocate resources, whether to expand operations or diversify, whether to enter international markets, whether to merge or form a joint venture, and how to avoid a hostile takeover?
strategy formulation
What stage requires a firm to establish annual objectives, devise policies, motivate employees, and allocate resources so that formulated strategies can be executed?
strategy implementation
What stage includes developing a strategy-supportive culture, creating an effective organizational culture, redirecting marketing efforts, preparing budgets, developing and utilizing information systems, and linking employee compensation to organizational performance?
strategy implementation
Which stage is the action stage?
strategy implementation
What stage is the most difficult?
strategy implementation
What are three fundamental strategy-evaluation activities?
reviewing external and internal factors that are the bases for current strategies, measuring performance, and taking corrective actions
What are the three hierarchical levels the three stages occur at?
corporate, divisional or strategic business unit, and functional.
What is anything a that a firm does especially well compared to rival firms?
competitive advantage
How can a firm strive to achieve sustained competitive advantage?
by continually adapting to changes in external trends and internal capabilities, competencies, and resources; and by effectively formulating, implementing, and evaluating strategies that capitalize upon those factors
Who are the individuals most responsible for the success or failure of an organization?
strategists
Who is the most visible and critical strategic manager?
CEO
What is considered the first step in strategic planning?
developing a vision statement
What refer to economic, social, cultural, demographic, environmental, political, legal, governmental, technological, and competitive trends and events that could significantly benefit or harm an organization in the future?
external opportunities and threats
What are an organization's controllable activities that are performed well or poorly?
internal strengths and weaknesses
Strengths and weaknesses are determined relative to who?
competitors
What are specific results that an organization seeks to achieve in pursuing its basic mission?
objectives
Long term means more than what?
one year
What are the means by which long-term objectives will be achieved?
strategies
What are short-term milestones that organizations must achieve to reach long-term objectives?
annual objectives
Long-term objective should be what 5 things?
challenging, measurable, consistent, reasonable, and clear
What are the means by which annual objectives will be achieved?
policies
What include guidelines, rules, and procedures established to support efforts to achieve stated objectives?
policies
What are guides to decision making and address repetitive or recurring situations?
policies
Three important questions to answer in developing a strategic plan:
where are we now? where do we want to go? how are we going to get there?
What are some characteristics of a mission statement?
broad, no monetary amts, numbers, percentages, less than 250 words, inspiring, identify utility of firm's products, reveal firm is socially responsible and environmentally responsible, include nine components, reconciliatory, enduring
Ten benefits to having a clear mission and vision:
clarity of purpose, provide basis for all other strategic planning activities, direction, focal point for all stakeholders, resolve divergent views, promote sense of shared expectations, sense of worth and intent, organized motivated organization worthy of support, higher organizational performance, achieve synergy
What stage is the thinking phase?
formulation
What two things are considered when deciding how to compete?
cost and value
What are tools designed to manage conglomerates?
GE Business screen and BCG Matrix
What is a general orientation towards growth?
direction
A well conceived mission stmt says what 4 things?
unique and fundamental purpose that sets your company apart, identifies scope and domain of operations, answers who we are and what we do, message to stakeholders
When is actual performance measured compared to standards?
evaluation
What is the source for evaluation and setting performance standards?
annual objectives during implementation
When assessing company's situation, what's external?
trends/forces, competition, industry analysis, opportunities/threats
A strategic plan is how many years?
3-5 years
When assesing a company's situation, how do we assess internal?
value chain analysis, competence-core/distinctive competitive advantage, strengths/weaknesses
What two factors determine a company's "situation"?
external (macro) and internal (micro)
What does an external audit focus on?
industry and competitive environment (The Industrial Organization IO)
What does an internal audit forcus on?
market position and competitiveness (The Resource-Based View RBV)
What is the purpose of an external audit?
to identify opportunities and threats
The idea of an external audit is to formulate strategies that do what?
take advantage of opportunities and avoid/minimize the impact of threats
The strategic fit must be between:
what the environment needs and the corporation has to offer and what the corporation needs and the environment can provide
What are the 2 main key external forces?
natural environment and societal (general) environment
What includes physical resources, wildlife, and climate, which form an ecological system of interrelated life?
natural environment
What are the 4 main categories of societal environment?
economic forces, technological forces, political-legal forces, and sociocultural forces
Which forces regulate the exchange of materials, money, energy, and information?
economic
Which forces generate problem solving inventions?
technological
Which forces allocate power and provide constraining/protecting laws and regulations?
political-legal
Which forces regulate the values, mores, and customs of society?
sociocultural
A key external force, task environment, is composed of what?
competitors, suppliers, distributors, creditors, customers, employees, communities, managers, stockholders, labor unions, special interest groups, products, services, and markets-basically all stakeholders
A change in natural environment first impacts __ environment in terms of what and then __ environment in terms of what?
societal; resource availability and cost; task; growth/decline of industries
What are 3 things the natural environment is concerned with?
climate change, global warming, sustainability
What are some new trends in the natural environment?
green technologies and renewable energies
What are some societal environment economic forces?
GDP Trends, interest rates, money supply, inflation rates, unemployment levels, wage/price control, devaluation, discretionary income
What are some technological forces?
total govt spending for R&D, total industry spending for R&D, focus of technological efforts, patent protection, new products, productivity improvements, technology transfer from lab to marketplace
What are some political-legal forces?
antitrust regulations, environment protection laws, tax laws, special incentives, foreigns trade regulations, HR laws, stability of govt, terrorism and privacy issues
What do antitrust regulations do?
hinder corporation growth strategies; hard to acquire other firms so they have to go in unfamiliar industries
What are some sociocultural forces?
lifestyle changes, career expectations, consumer activism, growth rate of population, population age distribution, regional shifts in population, birth rate, life expectancies
Examples of sociocultural forces:
demographic trends, baby boomers, health consciousness, proliferation of email
What is a group of firms producing a similar product or service?
industry
A corporation is most concerned with what within its industry according to Porter?
the intensity of competition
Intensity of competition is determined by what?
Porter's 5 Basic Competitive Forces + 1
What are Porter's 5 Basic competitive forces?
competitive rivalry, bargaining power of suppliers, bargaining power of buyers, threat of new entrants, threat of substitutes
What the new force + 1?
relative power of other stakeholders
What are the 3 steps in analyzing the five competitive forces?
identify specific competitive pressures associated with each force, evaluate the strength of each competitive force-high, medium, low; determine whether the collective strength of the five forces is conducive to earning attractive profits
Competitive rivalry is concerned with what?
the amount of direct competition in the industry
With mutual dependent firms, a competitive move is what?
immediately retaliated
What are some intensive rivalry factors?
number of competitors-if few, watch carefully; rate of industry growth-if it declines, take sales from competitor; product or service characteristics-unique; capacity-build new plant operating at full capacity; exit barriers-keep company from exiting industry; fixed costs
What leads to an overall decline in industry profits?
extensive rivalry
Bargaining power of suppliers depends on supplier's ability to do what 2 things?
raise prices and reduce quality
A supplier is powerful if:
few suppliers selling to many buyers, unique product and/or built up switching costs, substitutes are not readily available, suppliers are able to integrate forward, purchasing industry buys only a small portion of the supplier's goods
Bargaining Power of Buyers depends on ability of buyers to:
force down prices, bargain for higher quality/service, play competitors against each other
A buyer (distributor) is powerful if:
buyer purchases a large portion of seller's product, buyer has potential to integrate backward, alternative suppliers exist, changing suppliers costs very little, product represents a high % of the buyer's costs, buyer's profit margin is low, the purchased product is not central for the final quality or the price of the buyer's product
Threat of new entrants: Newcomers to an existing industry bring what 3 things?
new capacity, desire to gain market share, substantial resources
The threat of new entrants depends on what?
entry barriers
What are some entry barriers??
economies of scale, capital requirements, switching costs, access to distribution channels, government policy, tariffs, lack of access to raw materials
What is a product that appears to be different but can satisfy the same need as another product? Examples?
substitute; email and fax, water and cola
Porter says substitutes limit the potential returns of an industry by placing what? Depends on what?
a ceiling price on the prices firms in the industry can profitably charge; switching costs
If switching costs are low, do substitues have a big effect?
yes
Relative Power of other stakeholders includes who?
govts, local communities, creditors, trade associations, unions, shareholders, complementors
Competitive environment is unattractive from the standpoint of earnings good profits when:
rivalry is vigorous-high levels, entry barriers are low and entry is likely, competition from substitutes is strong, suppliers and customers have considerable bargaining power
Competitive environment is ideal from a profit-making standpoint when:
rivalry is moderate, entry barriers are high and no firm is likely to enter, good substitutes do not exist, suppliers and customers are in a weak bargaining position
The strength of each of the 5 forces varies according to what?
the stage of industry evolution
Characteristics of a fragmented industry:
no firm has large market shares, each firm serves small piece of the market, prices drop as new competitors enter the industry, learning curve, economies of scale, vertical integration, differentiation
Characteristics of a consolidated industry:
dominated by a few large firms, products tend to become like commodities, sophisticated buyers, purchasing decision based on information, profit margins decline, struggle to differentiate products
What are the major underlying causes of changing industry and competitive conditions?
driving forces
What are some driving forces?
emerging new internet capabilities and applications, increasing globalization of industry, changes in long-term industry growth rate, changes in who buys the product and how they use it, product innovation, technological change/process innovation, marketing innovation
What are studied to be useful in understanding competitive environment?
strategic groups
What is a set of business units or firms that pursue similar strategies with similar resources?
strategic groups
Two strategic variables of interest:
price and product-line breadth
What are some other variables?
quality, service, location, degree of vertical integration
The variables are used to plot what on a two dimensional graph?
the market positions of industry competitors
Firms in same strategic group have __ or more __ characteristics in common. Examples?
two; competitive; have comparable product line breadth, sell in same price/quality range, emphasize same distribution channels, use same products attributes to appeal to similar types of buyers, use identical technological approaches, offer buyers similar services, cover same geographic area
Guidelines for strategic group maps:
variables on axes should not be highly correlated, variables chosen as axes should expose big differences in how rivals compete, variables don't have to be either quantitative or continuous,
Drawing sizes of circles proportional to combined sales of firms in each strategic group allows map to reflect what?
relative sizes of each strategic group
What are the 4 strategic types?
defenders, prospectors, analyzers, reactors
What strategic type has limited product lines and its focus is on efficiency-cost oriented?
defenders
What strategic type has broad product lines and focuses on product innovation and market opportunities-creativity over efficiency?
prospectors
What strategic type operates in at least 2 different product-market areas-one stable (efficiency) and one variable (innovatio)
analyzers
What strategic type lacks a consistent strategy-structure-culture relationship?
reactors
The level of competitive intensity is __ in most industries. Examples?
increasing; computer, software, automobiles, airlines, pharmaceuticals
Most companies are in a "quick strike" mentality to disrupt what?
the competitive advantage of the market leaders
What are 2 sources of competitive advantage?
up-to-date knowledge of environmental trends and competitive activity; willingness to risk a competitive advantage for a possible new advantage (cannibalize)
Hypercompetition makes __ __ more important.
competitive intelligence
Sizing up strategies and competitive strengths and weaknesses of rivals in a competitor analysis involves assessing what?
which rival has best strategy, has weak strategies, which gain market share, and which lose ground, which are likely to be leaders 5 years from now,
To survive and prosper in an industry, a firm must meet what 2 criteria?
what do our customers want and what does the firm need to do in order to survive competition
CPM critical success factors:
variables that significantly affect overall competitive positions of companies, vary from industry to industry, determined by economic and technological characteristics of industry as well as standardized competitive weapons like major home appliance industry,
What is a matter of survival?
dealing with the CSFs (critical success factors) of a particular industry
Pinpointing key success factors (KSFs) involves determining:
what basis do customers choose brands, what resources and competitive capabilities does a seller need, what does it take for seller to achieve sustainable comp. adv.
KSFs consist of what?
major determinants for success
Industry attractiveness: factors to consider-
industry's market size and growth potential, if competitive forces are conducive to rising/falling industry profitability, if profitability will be favorable or unfavorably impacted by driving forces, degree of risk and uncertainty in industry's future, severity of problems facing industry, firm's competitive position in industry, firm's potential to capitalize on vulnerabilities of rivals, if firm has sufficient resources to defend against unattractive factors
Is the degree to which an industry is attractive or not the same for all participants?
no
The opportunities an industry presents depends partly on what?
company's ability to capture them
What is a way to organize external factors into opportunities and threats?
external factor evaluation (EFE) matrix
What tells how well mgmt is responding to opportunities and threats in light of the perceived importantance of these factors to the company?
EFE Matrix
What is a systematic and ethical process for gathering and analyzing info about the competition's activities and general business trends to further a business's own goals?
competitive intelligence CI
One way to get CI
hire top executives from rival firms
What are educated assumptions about future trends and events?
forecasts
What allows strategists to summarize and evaluate economic, social cultural, demographic, environmental, political, govtal, legal, technological, and competitive info?
EFE Matrix
What identifies a firm's major competitors and its particular strengths and weaknesses in relation to a sample firm's strategic position ?
CPM Matrix