Term
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Definition
Management of traditional profit and loss
Management of the company’s social responsibility
Management of the company’s environmental responsibility |
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Term
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Definition
the purpose or reason for an organizations existence.
o Announces what the company provides to society.
o Defines fundamental unique purpose that sets a company apart from other firms of its type and identifies the scope or domain of the company’s operations. |
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Term
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Definition
end results of planned activity.
o Action verbs that tell what is to be accomplished by when and quantified if possible.
o Achievement of the objectives should result in fulfillment of a corporation’s mission.
o What society gives back to a corporation from doing a good job?
o Goal- open ended statement of what one wants to accomplish, with no quantification of what is to be achieved and no time criteria for completion. |
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Term
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Definition
| • Strategy- comprehensive approach that states how the corporation will achieve its mission and objectives. |
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Term
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Definition
company’s overall direction in terms of its general attitude towards growth and the management of tis various business and product lines.
Fit three types of strategies generally
• Stability
• Growth
• Retrenchment |
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Term
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Definition
Occurs at the business unit or product level
Emphasizes improvement of the competitive position of a corporation’s products or services in the specific industry or market segment served by that business unit.
Two general categories
• Competitive
o differentiation
• cooperative
o Strategic alliances. |
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Term
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Definition
Approach taken by a functional area to achieve corporate and business unit objectives and strategy by maximizing resource productivity.
A specific R&D strategy for example |
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Term
| 3 methods of strategy implementation |
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Definition
o Programs
o Budgets
o Procedures |
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Term
| 3 characteristics of strategic decisions |
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Definition
Rare- unusual type of decision
Consequential- have big consequences
Directive- set a precedent for lesser decisions. |
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Term
| Hoffman's version of PESTEL |
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Definition
• Legal/political
o Anti-trust
• Economic
o BRIC countries
Brazil, Russia, India, China
• Sociocultural
o Increasing environmental awareness
o Growing health consciousness
o Growing senior market
o Impact of millennials
o Declining mass market.
• Technological
o I know all this shit
• Environmental/sustainability
o Regulatory risk
o Supply chain risk
o Product and technology risk
o Litigation risk
o Reputational risk
o Physical risk
• Global
o Unique rules/regulations in each country |
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Term
| Hoffman's 6th force for PORTER |
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Definition
Relative power of other stakeholders
• sixth force should be added to porter's list.
• governments, communities, creditors
• complementors- something hosted on Microsoft OS
Also, companies should not focus on erecting barriers to entry. It is not effective and instead should use capital for innovation |
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Term
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Definition
Prospectors- companies with broad product lines that focus on product innovation and market opportunities.
Analyzers - corporations that operate in at least two different product-market areas, one stable and one variable. in stable areas, efficiency is emphasized, in variable, innovation is emphasized.
reactors- corporations tat lack a consistent strategy-structure-cultural relationship. reaction to changing environment is through small strategy changes.
defenders- companies with a limited product line that focus on improving the efficiency of their existing operations. |
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Term
| Evaluate Competencies through VRIO |
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Definition
• valuable- does it provide customer value and competitive advantage?
• rareness- do other competitors possess it?
• Imitability- is it costly for others to imitate?• transparency
• transferability
• replicability
• Organization- is the firm organized to exploit the resource?
Also - Durability for sustainable |
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Term
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Definition
simple structure- no product or functional categories. Appropriate for small, entrepreneur dominated company. Employees are generalists
Functional structure- appropriate for medium firms with several product lines in one industry. Employees are specialists.
Divisional structure- appropriate for large firms with many product lanes in several related industries. Employees tend to be functional specialists organized according to product/market distinctions.\
Strategic Business Units (SBU's)- modification of divisional structure. Divided into business groups who are given primary responsibility and authority for the management of their functional areas.
• must have unique mission
• identifiable competitors
• external market focus
• control of biz functions
conglomerate structure-large corps with many product lines in several unrelated industries. Holding company |
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Term
| Competitive Business Strategy |
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Definition
cost leadership- the ability of a company or busines to make a product more efficientyly than competitors
differentation- provide a unique and superior value
focus- niche strategy
Firm's competitive advantage is determined by its competitive scope- breadth of the firms target market. |
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Term
| Cooperative Business Strategies |
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Definition
collusion- active cooperation of firms within an industry to reduce output and raise prices.
• tacit or explicit
Strategic alliances- long term cooperative arragement between two or more independent firms or business units.
• enter into strategic alliances for:
o to obtain new capabillits
o access to specific markets
o reduce financial risk
o reduce political risk
mutualservice consortia- partnership of similar companies in similar industries that pool resources to gain benefit that is to expensive to develop alone.
Joint Ventures- creates an independent business entity with ownership, operations, financial risks/rewards to each member.
• most popular form of strategic alliances
licensing agreements
value chain partnership |
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Term
| Directional Strategy (corporate Strategy) |
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Definition
firms overall orientation towards growth, stability, or retrenchment. (directional strategy)
• growth strategies (M+A)
o Concentration
vertical growth
Horizontal integration
o Diversification
concentric diverisification (related industry)
conglomerate (unrelated) diversification
• stability strategies
o pause/proceed-with-caution
o no-change
o profit strategy
• retrenchment strategies
o turnaround
o captive company
o sell-out/divestment
o bankruptcy/liquidation |
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Term
| Portfolio Analysis (corporate strategy) |
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Definition
Industries or markets in which the firm competes through its products and business unites (porfolio analysis)
• most popular portfolio analysis techniques:
o BCG growth-share matrix
market growth rate on Y axis, market share on x axis
question marks- new products with potential for success, but need lots of cash for development
• high growth rate, low market share
Stars- market leaders that are typically nearing the peak of their product life cycle
• high growth rate high market share
Cash Cows- declining stage of life cycle, product is milked for cash. cost cutting
• low growth, high market share
Dogs- sold of or managed carefully
• low growth, low market share
o GE business screen
• Managing strategic alliance portfolio
o dev/implement portfolio strategy
o monitoring
o coordinating to obtain synergies and avoid conflicts
o establishing alliance management system |
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Term
| Parenting Strategy (corporate strategy) |
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Definition
manner in which management coordinates activities and transfers resources (parenting strategy)
• views a corporation in terms of resources and capabilities that can be used to build business unit value as well as generating synergies across business units.
• developing parenting strategy
o examine each biz unit in terms of strategic factors
o examine biz unit in terms of areas in which performance can be improved
o analyze how well a parent corporation fits with biz unit. |
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Term
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Definition
follow the leader
hit another home run
arms race
do everything
losing hand |
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Term
| Offensive competitive tactics |
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Definition
o frontal assault
o flanking maneuver
o bypass attack
o encirclement
o guerrilla warfare |
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Term
| Defensive Competitive Tactics |
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Definition
o raise structural barriers
o increse expected retailiation
o lower inducement for attack |
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Term
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Definition
share know-how
coordinated strategies
shared resources
economics of scale/scope
pooled negotiating power
new business creation |
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Term
| China + India are so important because they have 4 stories rolled into one. |
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Definition
Megamarkets-
• as a fast growing megamarket, they provide some of the largest growth opportunities for every product or service
• Most important factors for market size: population size and buying power
o C+I account for 40% of world pop and 10% of world GDP, and 20% or growth in GDP
Cost efficiency platform-
• lowest wage rates, they have the potential to dramatically reduce a company’s global cost structure
• C+I provide some of the lowest labor costs in the world.
• If you don’t invest here, your rival will.
• Managers that don’t invest will be fired and replaced by mangers who speed up c+I investment.
Innovation platform
• As producers of the largest annual pools of scientists and engineers in the world, they can enable a quantum leap in a company’s technological and innovation capabilities
• Dramatically boost a company’s global technology and innovation base.
• Based on two opportunities
o The large, well-trained and low cost pool of scientific and engineering talent within C+I that is ready for challenge, career advancement and better creature comforts. Leveraging this can extend R&D capabilities for almost any firm
One of the largest R&D talent in the entire world, growing rapidly, and low cost.
GE used Bengalore location to do R&D for niche product that would have been impossible elsewhere.
Microsofts largest research center outside of Redmond is in Bejing
• Used for risky, innovative shit.
o Innovation demanded by the unique needs of the C+I markets such as low buying power, energy and raw material scarcity, environmental degradations, large populations and high population densities.
Designing new product, services and even tire business models to cater to these unique needs can yield innovation that can serve as competitive advantages
Impact of cheap hospital equitment.
Launching pads for new global competitors
• As home base of large rapidly growing and very capable companies that are eager to play of the global stage.
• While Japan and Korean giants grew naturally, C+I appears to be much more acquisition driven.
• Capital markets are much more accessible, as well as I-banks, consulting firms. |
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Term
| External Challenges for multinational corporations |
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Definition
Vast and diverse societies
• Geographical, sociological, demographics, political
Rapid pace of change
• economic, political, social, technological changes are occurring so rapidly that it is hard to get a read on the markets
More global and more demanding capital markets
• Shareholders are located all over the world. They are rational and allocate investments where they an get the highest ROI and gains.
o CEO tenure has declined steadily over the last 10 years.
Other unique difficulties
• China- entrenched dominance of state owned enterprises |
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Term
| Internal Challenges for multinational corporatiosn |
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Definition
Cognitive insularity
• Executives rule companies through filtered reports and abstract numbers rather than exposing themselves directly to ground-level reality.
Legacy mindsets
Hubris
• Exaggerated self pride |
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Term
| Basic Function of strategy |
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Definition
| Resource aqusition and reasource allocation |
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Term
| Porter's generic business strategies |
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Definition
• Low Price
• Must have low costs to charge low prices (have low prices to take customers from competition)
• Differentiation
• Premium price for value/ utility (Perceived Differentiation)
• Focus
• Specific market segment - niche |
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Term
| Strategic Philosophy (attitude towards innovation) |
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Definition
Prospectors: Want new everything (Apple, Google, HP, 3M -> First Movers)
Analyzers: Look for new everything cautiously (Coke, McDonald's)
Defenders: Carve out narrow product niche; guard it (Goodyear, Levi, Heinz, Campbell)
Reactors: Don't do anything until existence is threatened (GM, Ford vs. Toyota lean approach) |
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Term
| 7 factors of financial analysis |
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Definition
1,2 - Sales and Net Income
3. Ebita/ Operating margin
4,5 - cash, LTD/Equity <1 (your ability to survive a recession)
6,7 - A/R, Inventory move w/ sales. |
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Term
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Definition
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Term
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Definition
1. Market Risk
2. competitison
3. Historical/Geopolitical events |
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Term
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Definition
place where people come together to accomplish goals they otherwise could not have accomplished themeses
resource>transformation>outpus |
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Term
| functional strategy vs. business strategy s corporate strategies |
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Definition
functional is about product
business about competitive advantages, managing portfolio/overall direction of business |
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Term
| Strategic Philosophy, miles and snow typology |
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Definition
• Proactive
• Reactive – ford, GM, and all the companies that were selected out
• Defenders – companies that carve out a narrow market niche and guard it and defend it. Example: good year tires, Heinz ketchup, Levy Jeans, Kodak Film, etc.
• Prospectors: Apple, Intel, Merck, companies that invest in R&D and invent new products.
• Analyzers: Hybrid between defenders and prospectors, they look for new products constantly and cautiously. |
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Term
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Definition
1. Development – Invest heavy on R&D. Eventually, you move to the growth phase.
2. Growth – one of the biggest resources on the growth phase? Manufacturing and capacity.
3. Maturity – disc players, DVD players, Camcorders > High profit
4. Decline – black and white TVs |
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