Strategic Management Concepts: A Comprehensive Guide
Strategic Management Concepts
1. Brand Extension
When a company like Smith & Wesson uses its name on products outside its core offerings, such as men’s cologne, it’s employing a brand extension strategy.
2. Value-Chain Partnership
A value-chain partnership is a strategic alliance where a company forms a close, long-term relationship with a key supplier or distributor for mutual benefit.
3. Parenting Strategy
A parenting strategy focuses on how a firm coordinates activities and builds synergies through resource sharing and development across its business units.
4. Pull Strategy with Consumer Advertising
Companies use consumer advertising as a trade promotion to “pull” their products through the distribution system by creating demand from end consumers.
5. Business Strategy Focus
Business strategy aims to improve the competitive position of a company’s products or services within a specific industry or market segment.
6. Encirclement Strategy
Yamaha’s entry into the market with a broader range of pianos exemplifies an encirclement strategy, aiming to surround and capture a larger market share.
7. Geographic-Area Structure
A geographic-area structure allows corporations to decentralize decision-making to local subsidiaries, catering to regional differences and needs.
8. Strategy Implementation
Strategy implementation encompasses all the activities and choices required to execute a strategic plan effectively.
9. Parallel Sourcing
Parallel sourcing is a purchasing strategy where two suppliers are the primary sources for different parts but also serve as backup suppliers for each other’s parts.
10. Penetration Pricing
Penetration pricing aims to accelerate market development by offering a low price to gain market share and establish industry dominance.
11. Competitive Scope
According to Porter, competitive scope refers to the breadth of a company’s target market.
12. Matrix Structure
A matrix structure combines functional and product forms at the same organizational level, allowing for specialization and coordination.
13. Dynamic Industry Expert
A dynamic industry expert CEO, with extensive experience in the industry, is suitable for corporations pursuing vertical or horizontal growth through a concentration strategy.
14. Marketing Strategy
The pricing, selling, and distribution of a product fall under the umbrella of marketing strategy.
15. Forward Integration
Nike’s ability to manufacture its shoes and establish its own stores for distribution is an example of forward integration.
16. Retrenchment Strategy
Downsizing is often employed to implement a retrenchment strategy, aiming to reduce costs and improve efficiency.
17. CEO Selection During Company Trouble
Research suggests boards often seek external candidates for CEO positions when the company is in trouble, hoping for fresh perspectives and turnaround expertise.
18. Crisis of Autonomy
A crisis of autonomy arises when managers of diversified product lines in a functional structure desire more decision-making freedom than top management is willing to grant.
19. Quasi Integration
Bristol-Myers Squibb’s purchase of ImClone’s stock to access a new drug represents quasi integration, a form of partial acquisition.
20. Horizontal Growth
Horizontal growth involves expanding into new geographic locations and/or increasing the range of products and services offered to existing markets.
21. Reengineering
Reengineering is the radical redesign of business processes to achieve significant improvements in cost, service, or time.
22. Outsourcing and Distinctive Competence
The key to successful outsourcing is to purchase only those activities that are not key to the company’s distinctive competence.
23. Frontal Assault
Kimberly-Clark’s introduction of Huggies against Pampers exemplifies a frontal assault, directly challenging the market leader.
24. Steering Controls
Steering controls measure variables that influence future profitability, helping guide the company towards its strategic goals.
25. Purpose of Vertical Growth
The purpose of vertical growth is to take over functions previously provided by suppliers or distributors, gaining greater control over the value chain.
26. Losing Hand Strategy to Avoid
A company that clings to an unsuccessful strategy despite evidence of its failure exemplifies the losing hand strategy to avoid.
27. Output Control Example
Among the options, getting to work on time is not an example of output control, as it focuses on behavior rather than results.
28. Strategic Alliances in Jet Airplane Manufacturing
Jet airplane manufacturers often form strategic alliances to reduce financial risk associated with large-scale projects.
29. Skim Pricing
Skim pricing capitalizes on high demand and limited competition during a product’s early stages to maximize profits.
30. Technological Follower
A company that imitates competitors’ products is known as a technological follower.
31. Directional Strategy
A directional strategy outlines a firm’s overall orientation towards growth, stability, or retrenchment.
32. Job Rotation
Job rotation involves moving employees between different roles to provide them with a broader range of experiences and prepare them for future responsibilities.
33. Program in Strategic Implementation
A program in strategic implementation is a statement of activities or steps needed to accomplish a single-use plan, making the strategy action-oriented.
34. Executive Type and Corporate Strategy
Executives with specific skills and experiences can be categorized as executive types and paired with specific corporate strategies that align with their strengths.
35. Cost Leadership
According to Porter, cost leadership is a generic competitive strategy where a company aims to design, produce, and market products more efficiently than its competitors.
36. Propitious Niche
A propitious niche is a specific competitive role that aligns so well with a firm’s internal and external environment that it is difficult for other companies to challenge.
37. Multiple Sourcing (Just-in-Time Sourcing)
An automobile manufacturer ordering seats for a specific car model from several vendors is using a multiple sourcing (or just-in-time sourcing) strategy.
38. Joint Ventures in International Strategy
MNCs use joint ventures to enter foreign markets by partnering with local firms or government agencies, combining resources and expertise for new product or technology development.
39. Distinctive Competencies
Distinctive competencies are the unique capabilities and resources a firm possesses and the superior way in which they are utilized to create a competitive advantage.
40. Suboptimization
When one department’s success comes at the expense of another, it reflects suboptimization, where the overall performance of the organization suffers.
41. Follow the Leader Strategy to Avoid
A company that blindly imitates a leading company’s strategy without considering its own strengths and weaknesses is following the follow the leader strategy to avoid.
42. Product Group Structure
A product group structure centralizes decision-making along product lines, promoting efficiency and cost reduction.
43. Free Cash Flow
Takeover specialists often assess the free cash flow of a target company, which represents the amount of money a new owner can extract without harming the business.
44. Strategic Windows
Strategic windows are unique market opportunities that are available for a limited time.
45. Behavior Control
Behavior control specifies how tasks should be performed through policies, rules, standard operating procedures, and instructions from superiors.
46. Key Driver for Strategic Fit
Among the options, the statement that partners must independently achieve their goals is not a key driver for strategic fit between alliance partners.
47. Benchmarking
Benchmarking is the continuous process of comparing a company’s products, services, and practices against industry leaders to identify areas for improvement.
48. Operations Strategy (R&D and Production)
Decisions regarding product manufacturing, production processes, resource development, and supplier relationships fall under the operations strategy (encompassing R&D and production).
49. Analytical Portfolio Manager
An analytical portfolio manager CEO, with expertise in managing diverse product lines across industries, is well-suited for corporations pursuing a diversification strategy.
50. Situational Analysis
Situational analysis involves identifying and analyzing a company’s internal strengths and weaknesses and external opportunities and threats to develop strategies that leverage strengths and opportunities while mitigating weaknesses and threats.