Professional Documents
Culture Documents
I. Strategic Management
Strategy - A comprehensive plan for accomplishing an organization’s goals.
SWOT ANALYSIS
Business-Level Strategies
Porter’s Generic Strategies
Differentiation Strategy - seeking to distinguish an organization from its competitors through
the quality of its products or services.
Overall Cost Leadership Strategy - attempting to gain competitive advantage by reducing
overall costs below the costs of competing firms.
Focus Strategy - concentrating on a specific regional market, product line, or group of buyers.
Managing Diversification
• Portfolio Management Techniques
– Are used to make decisions about what businesses to engage in and how to manage
these multiple businesses to maximize corporate performance.
• BCG (Boston Consulting Group) Matrix - Evaluates businesses relative to the
growth rate of their markets and their individual market shares.
- Classifies the types of businesses of a diversified organization’s portfolio as:
o Dogs having small market shares and no growth prospects.
o Cash cows having large shares of mature markets.
o Question marks having small market shares in quickly growing markets.
o Stars having large shares of rapidly growing markets.
• GE (General Electric) Business Screen - Evaluates firms in a diversified portfolio
along two multi-factor dimensions:
o Industry attractiveness.
o Competitive position (strength) of portfolio firms.
- Shows where a firm should invest more of its resources in competitive
businesses in attractive industries.
Decision-Making Conditions
Under Certainty - The decision maker knows with reasonable certainty what the alternatives are
and what conditions are associated with each alternative.
Under Risk - The availability of each alternative and its potential payoffs and costs are all
associated with risks.
Under Uncertainty - The decision maker does not know all the alternatives, the risks associated
with each, or the consequences of each alternative.
Entrepreneurship - The process of planning, organizing, operating, and assuming the risk of a business
venture.
Franchising
• Franchising Agreement
– Operation of the franchised business by the entrepreneur (the franchisee) under a license
by a parent firm (the franchiser).
– The entrepreneur pays the parent firm for use of trademarks, products, formulas, and
business plans.
Business Process Change (Reengineering) - the radical redesign of all aspects of a business to achieve
major improvements in cost, service, or time.
The Need for Business Process Change:
– Entropy is a normal process leading to system decline.
Organization Development - A planned, organization-wide effort managed from the top, intended to
increase organizational effectiveness and health through interventions in the organization’s processes,
using behavioral science knowledge.
Organizational Innovation
Innovation - the managed effort of an organization to develop new products or services or new uses for
existing products or services.
• Radical Innovation - a new product, service, or technology developed by an organization that
replaces the existing one.
- fundamentally changes the nature of competition in an industry.
• Incremental Innovation - a new product, service, or technology that modifies an existing one.
- does not significantly affect competition in an industry.