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MGT 6

business plan
a document that outlines a proposed firm’s goals, the strategy for achieving them, and the standards for measuring success
Strategy
large-scale action plan that sets the direction for an org, an educated guess (revised every so often)
Strategic Management
a process that involves managers from all parts of the org in the formulation and the implementation of strategies and strategic goals
WHy strategic management is important
1) provide direction and momentum
2) encourage new ideas
3) develop a sustainable competitive advantage (stay ahead in a)responsive to customers b) innovating c)in quality d) effectiveness)
Strategic positioning
attempts to achieve sustainable competitive advantage by perserving what is distintive about a company
Strategic positioning principles
1) strategy is the creation of a unique & valuable position( few needs, many customers or broad needs, few customers or broad needs, many customers)
2) strategy requires trade-offs in competing
3) strategy involves creating a “fit” among activities
5 steps of the strategic management process
1) establish the mission & the vision
2) establish the grand strategy with environmental scanning
3) formulate the strategic plans
4) carry out the strategic plans
5) maintain the strategic control
Grand strategy
after an assessment of current organizational performance, then explains how the org’s mission is to be accomplished. 3 common grand strategies-growth, stability, and defensive
Growth strategy
grand strategy that involves expansion-as in sales revenues, market share, number of employees or number of customers or clients served
Stability strategy
grand strategy that involves little or no significant change
Defensive strategy or retrenchment
grand strategy that involves reduction in the org’s efforts
Strategy Formulation
the process of choosing among different strategies and altering them to best fit the org’s needs
Strategy implementation
putting strategic plans into effect
Strategic control
consists of monitoring the execution of strategy and making adjustments (engage people, keep it simple, stay focused, and keep moving)
3 strategic planning tools and techniques
1) competitive intelligence
2) SWOT analysis
3) forecasting
competitive intelligence
means gaining info about one’s competitors’ activities so that you can anticipate their moves and react appropriately (ways to get info- public prints & advertising, investor info, and informal sources
Environment scanning
careful monitoring of an org’s internal and external environments to detect early signs of opportunities and threats that many influence the firm’s plans
SWOT analysis or situational analysis
which is a search for the Strengths, Internal Weaknesses, external Opportunities, and Threats affecting the org
Forecast
a vision of projection of the future (two types-trend analysis & contingency planning)
Trend analysis
a hypothetical extension of a past series of events into the future, used to predict long-term trends, cyclic patterns, and seasonal variations
Contingency planning or scenario planning or scenario analysis
creation of alternative hypothetical but equally likely future conditions
Porter’s model for industry analysis
that business level strategies originate in five primary competitive forces in the firm’s environment: 1) threats of new entrants 2) bargaining power of suppliers 3) bargaining power of buyers 4) threats of substitute products or services 5) rivalry among competitors (do a SWOT analysis here)
Porter’s 4 competitive strategies or four generic strategies
1)cost leadership>wide markets
2) differentiation>wide Markets
3) cost-focus>narrow markets
4) focused differentiation> narrow markets
Cost leadership
is to keep the costs, and the prices of a product or service below those of competitiors and to target a wide market. dell, timex, home depot
Differentiation strategy
to offer products or services that are unique and superior value compared with those of competitors but to target a wide market. Ritz-Carlton, Lexus. Strategy used by companies trying to create BRANDS
Cost-focus strategy
to keep the costs, and prices of a product or service below those of competitors and to target a narrow market
Focused-differentiation strategy
to offer products or services that are of unique and superior value compared to those of competitors and to target a narrow market. Rolls Royce, Ferrari, Lambo
Single-product strategy
company makes and sells one product within its market(benefit-focus risk-Vulnerability)
Diversification
operating several businesses in order to spread the risk (Reduced risk, management effiencies, synergy-the economic value of separate realated businesses under one ownership and management is greater together than the businesses are worth separately)
Unrelated diversification
operating several businesses under one ownership that are not related to one another
Related diversification
an org under one ownership operates separate businesses that are related to one another
BCG matrix
a means of evaluating strategic business units on the basis of 1) their business growth rates 2)their share of the market
Execution
is not simply tactics, it is a central part of any company’s strategy. It consists of using questioning, analysis, and follow-through to mesh strategy with reality, align people with goals, and achieve results promise
3 core processes of business:
people WHO benefits, strategy HOW accomplished, and operations WHAT path
the foundation of execution
based on LEADERSHIP
Leaders engage in 7 behaviors
1)know your people & your business
2) insist on realism
3) set clear priorities
4) follow through
5) reward the doers
6) expand people’s capabilities
7) know yourself

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