SBM L2

• Mission


  The purpose or reason for the organization's existence. It tells what the company is providing to society—either a service or a product.
• Vision


  What the organization would like to become
• Mission statement defines the 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 in terms of products (including services) offered and markets served
• Mission statement may also include the firm's values and philosophy about how it does business and treats its employees
• Business strategy


  Focuses on improving the competitive position of a company's or business unit's products or services within the specific industry or market segment that the company or business unit serves

  
• Business unit effects have double the impact on overall company performance than do either corporate or industry effects
• Business strategy

  Can be competitive (battling against all competitors for advantage) and/or cooperative (working with one or more companies to gain advantage against other competitors)
• Lower cost strategy


  The ability of a company or a business unit to design, produce, and market a comparable product more efficiently than its competitors
• Differentiation strategy


  The ability of a company to provide unique and superior value to the buyer in terms of product quality, special features, or after-sale service
• Cost leadership


  A lower-cost competitive strategy that aims at the broad mass market and requires aggressive construction of efficient-scale facilities, vigorous pursuit of cost reductions from experience, tight cost and overhead control, avoidance of marginal customer accounts, and cost minimization in areas like R&D, service, sales force, advertising, and so on
• Differentiation


  Aimed at the broad mass market and involves the creation of a product or service that is perceived throughout its industry as unique. The company or business unit may then charge a premium for its product.
• Cost focus


  A low-cost competitive strategy that focuses on a particular buyer group or geographic market and attempts to serve only this niche, to the exclusion of others
• Differentiation focus


  Concentrates on a particular buyer group, product line segment, or geographic market. The company or business unit seeks differentiation in a targeted market segment.
• Corporate strategy


  Primarily about the choice of direction for a firm as a whole and the management of its business or product portfolio
• Directional strategies


  • Growth
  • Stability
  • Retrenchment
• Vertical growth


  Can be achieve by taking over a function previously provided by a supplier or by a distributor. The company grows by making its own supplies and/or by distributing its own products.
• Backward integration


  Assuming a function previously provided by a supplier
• Forward integration


  Assuming a function previously provided by a distributor
• Taper integration


  A firm internally produces less than half of its own requirements and buys the rest from outside suppliers
• Quasi-integration


  A company does not make any of its key supplies but purchases most of its requirements from outside suppliers that are under its partial control
• International entry options for horizontal growth


  • Exporting
  • Licensing
  • Franchising
  • Joint ventures
  • Acquisitions
  • Green-field development
  • Production sharing
  • Turnkey operations
  • BOT concept
  • Management contracts
• Green-field development


  Building its own manufacturing plant and distribution system
• Production Sharing


  The process of combining the higher labor skills and technology available in developed countries with the lower-cost labor available in developing countries. Often called outsourcing.
• Turnkey Operations


  Contracts for the construction of operating facilities in exchange for a fee. The facilities are transferred to the host country or firm when they are complete.
• BOT (Build, Operate, Transfer) concept


  A variation of the turnkey operation where the company operates the facility for a fixed period of time during which it earns back its investment plus a profit.
• Management Contracts


  A large corporation uses some of its personnel to assist a firm in a host country for a specified fee and period of time.
• Concentric (Related) Diversification


  Growth through diversification into a related industry when a firm has a strong competitive position but industry attractiveness is low. The search is for synergy.
• Conglomerate (Unrelated) Diversification


  Diversifying into an industry unrelated to its current one when the current industry is unattractive and the firm lacks outstanding abilities or skills that it could easily transfer to related products or services.
• Pause/Proceed with Caution Strategy


  A timeout - an opportunity to rest before continuing a growth or retrenchment strategy. It is a very deliberate attempt to make only incremental improvements until a particular environmental situation changes.
• No-Change Strategy


  A decision to do nothing new - continue current operations and policies for the foreseeable future. It depends on a lack of significant change in a corporation's situation.
• Profit Strategy


  A decision to do nothing new in a worsening situation but instead to act as though the company's problems are only temporary by reducing investment and short term discretionary expenditures.
• Turnaround Strategy


  Emphasizes the improvement of operational efficiency. It has two phases: contraction (quickly "stop the bleeding" with a general, across-the board cutback) and consolidation (implement a program to stabilize the now leaner corporation).
• Captive Company Strategy


  Giving up independence in exchange for security when a company with a weak competitive position cannot engage in a full-blown turnaround strategy.
• Bankruptcy/Liquidation Strategy


  When a company finds itself in the worst possible situation with a poor competitive position in an unattractive industry, it must pursue bankruptcy (giving up management to the courts) or liquidation (terminating the firm and converting assets to cash).
• BCG Growth-Share Matrix


  A portfolio analysis technique that plots each of the corporation's product lines or business units according to the growth rate of the industry and its relative market share.
• GE Business Screen


  A more complicated portfolio analysis matrix that includes nine cells based on long-term industry attractiveness and business strength competitive position.
• Balanced Scorecard


  Combines financial measures with operational measures on customer satisfaction, internal processes, and the corporation's innovation and improvement activities to provide a comprehensive view of performance.
• Balanced Scorecard Perspectives


  • Financial
  • Customer
  • Internal business
  • Innovation and learning