| A | B |
|---|
| Competitive Advantage | the ability to transform inputs into goods and services, at a maximum profit on a sustained basis, better than competitors. Also must be sustainable over time |
| Purpose Statement | This statement explains what the organizations seeks to accomplish and why it deserves the commitment of members and support of the public. |
| Business Statement | That statement identifies the organization's business activities or function. |
| Values Statement | These statements explains the values and beliefs that members hold in common and try to follow. Common value statements include a commitment to customer service, innovation, diversity, creativity, integrity, and personal development |
| Strategy | Involves a combination of the goals and plans to achieve competitive advantage, and the methods of implementing them. The goal is strategy to find a competitive environment where a company has imperfect competition |
| Perfect Competition | numerous buyers and sellers, perfect information, homogenous products, no barriers to entry or exit. (Yields average or below-average profits) |
| Imperfect competition | Few competitors, numerous suppliers and buyers. Asymmetric information. Heterogeneous products, barriers to entry (Supernormal Profits) |
| Three Grand strategies of marketing | Cost leadership, differentiation, and focus |
| Cost Leadership Strategy | involves selling your products and services at a lower cost. Usually achieved through the use of technology (Wal-Mart especially) or by using low-cost labor. Success with this strategy is contingent on one being the cost leader, not merely a contender for the spot. Products must also be comparable, or better than those offered by rivals. Examples include Southwest Airlines, Wal-Mart and Canadian Tire |
| "Stuck in the Middle" | As a firm, you are presented with a basic choice, quality vs. volume. It is very inefficient to try to be somewhere in the middle. (Target, Sears, $90 public golf courses) |
| Differentiation Strategy | involves providing unique products and services in ways that are widely valued by buyers. (Toyota (Quality), Amazon (Selection, service, one-click shopping), Zappos (Free Shipping), Weber Grill, Lexus, Ralph Lauren, Rolex, Neiman Marcus (High priced department store with very elegant look, low amount of inventory on the floor.) |
| Focus Strategy | Unique product within a segmented niche. Can suffer if the market selected is either too large or too small. Examples: Rolls Royce, Ferrari, High end golf courses, Tag Hauer, Edward Jones, |
| GE Corporate and PepsiCO | GE Corporate is essentially a bank, but it is unregulated by the FDIC and therefore not insured up to the usual 250K. PepsiCO is essentially a diversified food firm that sells products such as pepsi, frito-lay, tropicana, quaker, gatorade, etc. |
| Strategic Management Process (SWOT) | Strengths, weaknesses, opportunities, and threats. 1. Identify the organization's mission and objectives 2 & 3 Analyze the environment & Analyze the organization's resources 4. Formula strategy 5. implement strategy 6. evaluate and monitor results |
| Four organizational characteristics | Essential to making your firm more effective, your mission and strategy must align with these four things: structure, systems, culture, and processes |
| Structure: | refers to the fixed relationships of the organization and how people relate to one another. |
| Systems: | refer to the patterned activities that keep an organization going. Six essential subsystem activities are procurement, production, disposal, human resource, adaptive, and managerial. |
| Culture: | refers to the system of shared values and beliefs that influence worker behavior. |
| Processes: | refer to the interactions among members of the organization. Communication, decision making, leadership, and power |
| Firm's Resources | According to Jay Barney, the person most frequently credited for the resource-based view, sustained comparative advantage results from the ownership and control of resources that are rare, nontradable, nonsubstitutable, valued by the market, and difficult or impossible to imitate. |
| Creative Destruction | The "invisible hand" of the market allocates resources effectively. If you have a solid business idea and it is not implemented well, the market will eliminate you. |
| Levels of Strategic Analysis | Corporate Strategy (What businesses are we in? Allocation of resources among business units) Business Unit Strategy (Identifies key sources of competitive advantage) Functional Strategy (Specific to a product, marketing, HR, etc.) |
| Boston Consulting Group Matrix (BCG Matrix) | Great, simple analysis tool that is very sellable to managers. Diagram with ?'s, stars, cash cows, and dogs. Stars and ?'s require cash, all stars will become cash cows, dogs grow slowly and then die |
| Environmental Scanning | Company must constantly research and understand the environments of 8 different sectors: HR, Raw Materials, Financial Resources, Consumer Markets, Technology Sector, Industry, Economics, and Government |
| Apple's External Factor Evaluation (EFE) Matrix | Assigns a weighted score to opportunities and threats as a way to prioritize them |
| Michael Porter's Five Forces Model | Suppliers, buyers, rival firms (recession drives irrational behavior), substitute products, and new entrants |
| Rent vs. Own | The value of renting instead of owning has increased in recent years. The government encourages home ownership through a tax shield with Ginnie Mae. Nowadays you should really do research to discover which is more realistic in the city you want to live in, renting or owning? |
| Competitor Profile Matrix (CPM) | In addition to analyzing the overall industry, firms also need to analyze each company with which they directly compete. The kinds of topics involved are: future objectives, current strategies, assumptions, and capabilities. |
| Reducing Uncertainty | Because uncertainty threatens an organization's survival and reduces its effectiveness, organizations use a variety of strategies to reduce environmental uncertainty. 1. Changing the organizational structure 2. Planning and forecasting 3. Mergers and acquisitions 4. Cooptation 5. PR and Advertising 6. Political Activity 7. Illegal Activities |
