Lecture 5 Flashcards
(28 cards)
What are long-term objectives in strategic management?
Results expected from pursuing certain strategies; they provide focus and direction
What are the 5 characteristics of good long-term objectives?
Measurable
Clear
Achievable
Realistic
Compatible with the firm’s internal systems
What’s the difference between financial and strategic objectives?
Financial Objectives: Focus on profitability, revenue growth, ROI, cash flow, etc.
Strategic Objectives: Focus on market share, product quality, innovation, delivery speed, etc
What are the different levels of strategy in an organisation?
Corporate-level (overall firm direction)
Business-level (competitive positioning)
Functional-level (departmental tactics)
What are integration strategies?
Strategies that allow a company to gain control over suppliers, distributors, or competitors
What is forward integration?
Gaining control over distributors or retailers to move closer to the customer (e.g., Levi’s opening its own stores)
What is backward integration?
Gaining control of suppliers (e.g., Apple buying a touchscreen factory)
What is horizontal integration?
Acquiring competitors to increase market share or reduce rivalry (e.g., Disney acquiring Pixar
What are intensive strategies used for?
To grow the business through increased sales and market reach within existing or new areas
What are the three types of intensive strategies?
Market Penetration
Market Development
Product Development
What is Market Penetration?
Increasing market share for existing products in existing markets via advertising, sales promotion, or pricing (e.g., McDonald’s growing in existing cities)
What is Market Development?
Introducing existing products into new geographic areas (e.g., Tesla expanding into China)
What is Product Development?
Creating new or improved products for current markets (e.g., Campbell Soup acquiring Pacific Foods for organic soups)
What are the two types of diversification?
Related Diversification
Unrelated Diversification
What is related diversification?
Adding new but related products/services (e.g., Apple expanding from computers to phones; Disney buying ABC TV)
What is unrelated diversification?
Entering an entirely different industry (e.g., Coca-Cola purchasing Columbia Pictures)
What are defensive strategies used for?
: To protect or reduce the size of operations during decline or financial difficulty
What are the three types of defensive strategies?
Retrenchment
Divestiture
Liquidation
What is retrenchment?
Cost-cutting or asset-selling to reverse decline (e.g., Starbucks closing stores to refocus on core markets)
What is divestiture?
Selling a division or part of a business (e.g., Massy Group selling IT companies)
What is liquidation?
Selling all company assets due to failure (e.g., Toys “R” Us liquidating its U.S. stores in 2018)
What are Porter’s three generic strategies?
Cost Leadership
Differentiation
Best Value (Type 2)
What is Type 1 Cost Leadership?
Offering low-cost products to a broad market at the lowest price in the industry
What is Type 2 Cost Leadership (Best Value)?
Offering the best price for value compared to similar competitor products
