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Ryerson University
Global Management Studies
GMS 200
Shavin Malhotra

Chapter Seven: Strategy and Strategic Management 1. What are the useful planning tools and techniques? SWOT Analysis, Porter’s five Forces Model, BCG Matrix (Boston Consulting Group Matrix), and Scenario Planning 2. Sustainable competitive advantage is the ability to outperform rivals in ways that are difficult or costly to imitate. 3. Typical sources of competitive advantage include: cost and quality, knowledge and speed, barriers to entry, and financial resources. 4. Strategic intent focuses and applies organizational energies on a unifying compelling goal – a strategy helps ensure that resources are used with consistent strategic intent 5. Levels of strategy: a. Corporate-level strategy: sets long-term direction for the total enterprise – directs the organization as a whole toward sustainable competitive advantage – its purpose is to set direction and guide resource allocations for the entire enterprise – it identifies how the company intends to compete across multiple industries and markets b. Business-level strategy: identifies how a division or strategic business unit will compete in its product or service domain – it involves answering questions like, “How are we going to compete for customers in this industry and market?” – typical strategy decisions include choices about product and service mix, facilities locations, new technologies – the term strategic business unit is often used to describe a single business firm within a larger enterprise c. Functional Strategy: guides activities within one specific area of operations – focuses on activities within a specific functional area such as marketing, manufacturing, or HR – strategic question: “How can we best utilize resources within a function to implement our business strategy?” 6. The strategic management process: 7. A mission statement expresses the organization’s reason for existence in society. A strategic constituency’s analysis assesses interest of stakeholders and how well the organization is responding to them. 8. Operating objectives are specific results that organizations try to accomplish. Some examples are: profitability, financial health, cost efficiency, customer service, product quality, market share, human talent, and innovation. 9. A core competency is a special strength that gives an organization a competitive advantage. They are rare, costly to imitate, and cannot be substituted. 10. Tools for External Environment Analysis – Porter’s Five Forces Model FACTOR 1: Potential entry for new entrants: barriers to entry, when a firm can easily enter a new industry, competition in that industry increases, this threat is aggravated when new entrants can leverage their existing cash flows in other business FACTOR 2: Threat of substitutes: industries with close competition with producers of substitute products, more pressure on pricing, as pricing for substitute products decline higher competitive pressure on the industry FACTOR 3: Bargaining power of suppliers: very large suppliers, cost of switching raw materials is high, includes suppliers of labour (pilots) FACTOR 4: Bargaining power of consumers: when customers are large and buy in bulk they enjoy more power, bargaining power of customers is also higher when (i) product is standard or undifferentiated, (ii) they can easily switch to competing brands, and (iii) sellers are struggling in the face of falling consumer demand 11. Corporate-Level Strategy Formulation: a growth strategy involves expansion of the organization’s current operations. A stability strategy maintains current operations without substantial changes. A renewal strategy tries to solve problems and overcome weaknesses that are hurting performance. In liquidation, business operations cease and assets are sold to pay creditors. A combination strategy pursues growth, stability, and/or retrenchment in some combination. Growth through concentration is growth within the same business area. Gro
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