Planning
the process of identifying and selecting an organization's objectives and deciding how the organization will achieve those objectives.
Strategy
the set of planned actions taken by managers to help a company meet its objectives
Strategy-Formulation Process
Stage 1-Identify company mission and goals
Stage 2-Identify core competency and value-creating activities
Stage 3-Formulate Strategies
mission statement
a written statement of why a company exists and what it plans to accomplish
market segment
a clearly identifiable group of potential buyers
stakeholders
all parties, ranging from suppliers and employees to stockholders and consumers, who are affected by a company's activities.
core competency
special ability of a company that competitors find extremely difficult or impossible to equal.
value-chain analysis
process of dividing a company's activities into primary and support activities and identifying those that create value for customers
primary activities
inbound and outbound logistics, production (goods and services), marketing and sales, and customer service
support activities
business infrastructure, human resource management, technology development, and procurement (sourcing)
two international strategies
multinational or a global strategy
multinational (multidomestic) strategy
a strategy of adapting products and their marketing strategies in each national market to suit local preferences
the main benefit of a multinational strategy
allows companies to monitor buyer preferences closely in each local market and to respond quickly and effectively to emerging buyer preferences
the main drawback of a multinational strategy
companies cannot exploit scale economies in product development, manufacturing, or marketing
global strategy
a strategy of offering the same products using the same marketing strategy in all national markets
the main benefit of a global strategy
cost savings due to product and marketing standardization
the main problem with a global strategy
can cause a company to overlook important differences in buyer preferences from one market to another
three different levels of company strategy
corporate, business, and department-level strategies
Companies involved in more than one line of business must first formulate a
corporate-level strategy
the four key approaches to corporate strategy are
growth, retrenchment, stability, and combination
growth strategy
designed to increase the scale or scope of a corporation's operations
strategic alliance
separate businesses work together as an alliance
retrenchment strategy
strategy designed to reduce the scale or scope of a corporation's businesses
stability strategy
strategy designed to guard against change and used by corporations to avoid either growth or retrenchment
combination strategy
mix growth, retrenchment, and stability strategies across a corporation's business units.
business-level strategies
strategies for each business unit
the key to developing an effective business-level strategy is deciding on a
general competitive strategy in the marketplace
a business unit can use one of the three generic business-level strategies for competing in its industry
low-cost leadership, differentiation, or focus
low-cost leadership
strategy in which a company exploits economies of scale to have the lowest cost structure of any competitor in its industry
differentiation strategy
strategy in which a company designs its products to be perceived as unique by buyers throughout its industry
three differentiators
quality, brand images, and product design
focus strategy
strategy in which a company focuses on serving the needs of a narrowly defined market segment by being the low-cost leader, by differentiating its products, or both
department-level strategy
strategies that focus on the specific activities that transform resources into products
organizational structure
way in which a company divides its activities among separate units and coordinates activities among those units
centralized decision making
concentrates decision making at a high organizational level in one location, such as at headquarters
decentralized decision making
disperses decisions to lower organizational levels, such as to international subsidiaries
effects of differentiation strategy
price premium, customer loyalty, portion of market only, and higher production costs
chains of command
the lines of authority that run from top management to individual employees and that specify internal reporting relationships.
four organizational structures of international companies
division structure, area structure, product structure and matrix structure
international division structure
organizational structure that separates domestic from international business activities by creating a separate international division with its own manager
international area structure
organizational structure that organizes a company's entire global operations into countries or geographic regions
global product structure
organizational structure that divides worldwide operations according to a company's product areas
global matrix structure
organizational structure that splits the chain of command between product and area divisions
A main goal of the matrix structure is
to bring together geographic area managers and product area managers in join decision making.
work teams
self-managed, cross-functional, and global teams
self-managed team
team in which the employees from a single department take on the responsibilities of their former supervisors.
cross-functional teams
team composed of employees who work at similar levels in different functional departments
global teams
team of top managers from both headquarters and international subsidiaries who meet to develop solutions to company-wide problems.