MBA 705 Chapter 7-9

• Business Strategy


  A strategy delineating how a business unit competes with its rivals; also called competitive strategy
• Business Unit


  An organizational entity with its own unique mission, set of competitors, and industry
• Competitive Advantage


  A state whereby a business unit's successful strategies cannot be easily duplicated by its competitors
• Differentiation Strategy


  A generic business unit strategy in which a larger business produces and markets to the entire industry products or services that can be readily distinguished from those of its competitors
• First-Mover Advantages


  Benefits derived from being the first firm to offer a new or modified product or service
• Focus-Differentiation Strategy


  A generic business unit strategy in which a smaller business produces highly differentiated products or services for the specialized needs of a market niche
• Focus—Low-Cost-Differentiation Strategy


  A generic business unit strategy in which a smaller business produces highly differentiated products or services for the specialized needs of a select group of customers while keeping its costs low
• Focus-Low-Cost Strategy


  A generic business unit strategy in which a smaller business keeps overall costs low while producing no-frills products or services for a market niche with elastic demand
• Generic Strategies


  Strategies that can be adopted by business units to guide their organizations
• Intrapreneurship


  The creation of new business ventures within an existing firm
• Low-Cost—Differentiation Strategy


  A generic business unit strategy in which a larger business unit maintains low costs while producing distinct products or services industry-wide for a large market with a relatively inelastic demand
• Low-Cost Strategy


  A generic business unit strategy in which a larger business produces, at the lowest cost possible, no-frills products and services industry-wide for a large market with a relatively elastic demand
• Micro-localization


  Customizing products and services to suit the taste and needs of diverse consumers across a nation or region
• Multiple Strategies


  A strategic alternative for a larger business unit in which the organization simultaneously employs more than one of the generic business strategies
• Process Innovations


  A business unit's activities that increase the efficiency of operations and distribution
• Product Innovations


  A business unit's activities that enhance the differentiation of its products or services
• Quality


  The features and characteristics of a product or service that allow it to satisfy stated or implied needs
• Strategic Group


  A select group of direct competitors who have similar strategic profiles
• Structural Innovations


  Modifying the structure of the organization and/or the business model to improve competitiveness
• Value Innovations


  Modifying products, services, and activities in order to maximize the value delivered to customers
• At the business level, top managers determine how the organization is to compete effectively with its rivals
• According to Porter's framework, managers must decide whether to focus on a segment of the market—a strategy often appropriate for small businesses—and whether to emphasize low costs or differentiation
• Business units may also seek to combine the low-cost and differentiation strategies, although this approach can be difficult to implement effectively
• According to Miles and Snow's framework, managers may select a prospector, an analyzer, a defender, or a reactor strategy
• Top managers should also consider the roles of business size, the strategies of rivals, and opportunities in emerging markets when seeking to develop business strategies
• Functional Strategies


  The strategies pursued by each functional area of a business unit, such as marketing, finance, or production
• Aligning activities in the functional areas

  1. Ensure the various departments are well coordinated and work together

  2. Consider marketing, finance, production, purchasing, HR, and IS—including utilization of the Internet
• Business strategy


  Suggests appropriate characteristics of its functional strategies
• Capital-Labor Substitution


  An organization's ability to substitute labor for capital or vice versa as production increases
• Experience Curve


  The reduction in per-unit costs that occur as an organization gains experience producing a product or service
• Human Capital


  The sum of the capabilities of individuals in an organization
• Just-In-Time (JIT) Inventory System


  An inventory system, popularized by the Japanese, in which suppliers deliver parts just at the time they are needed by the buying organization to use in its production process
• Knowledge Management


  People and their skills and abilities (i.e., knowledge capital) represent the only resource that cannot readily be reproduced by a firm's competitors. Knowledge capital must be effectively leveraged if high-performing firms are to remain as such over the long term
• Learning


  The increased efficiency that occurs when an employee performs a task repeatedly
• Process R & D


  R & D activities that seek to reduce the costs of operations and make them more efficient
• Product/Service R & D

  R & D activities directed toward improvements or innovations in the quality or uniqueness of a company's outputs
• Total Quality Management (TQM)


  A broad-based program designed to improve product and service quality and to increase customer satisfaction by incorporating a holistic commitment to quality as seen through the eyes of the customer
• SWOT analysis


  Summarizes the organization's internal (strengths and weaknesses) and external (opportunities and threats) characteristics
• Strengths and weaknesses


  • Emanate from an analysis of human, organizational, and physical resources
• Opportunities and threats


  • Based on analyses of the macroenvironment and industry