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Chapter 7

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Global Management Studies
GMS 200
Shavin Malhotra

GMS200 Chapter 7, Strategy and Strategic Management Competitive advantage – ability to do something so well that one outperforms competitors Sustainable competitive advantage – ability to outperform rivals in ways that are difficult or costly to imitate Strategy – comprehensive plan guiding resource allocation to achieve long term organization goals Strategic intent – focuses and applies organizational energies on a unifying and compelling goal Levels of strategy: Corporate strategy – sets long term direction for the total enterprise Business strategy – identifies how a division or strategic business unit will compete in its product or service domain (Strategic Business Unit A,B,C) Functional strategy – guides activities within one specific area of operations (Finance, HR, Manufacturing, Marketing) Strategic Management Process Strategic management – is the process of formulating and implementing strategies Strategic analysis – process of analyzing the organization, the environment and the organizations competitive position and current strategies Strategy formulation – process of crafting strategies to guide the allocation of resources Strategy implementation – process of putting strategies into action Mission – statement expresses the organizations reason for existence in society Stakeholders – individuals and groups directly affected by the organization and its strategic accomplishment Strategic constituencies analysis – assesses interests of stakeholders and how well the organization is responding to them Core values – are broad beliefs about what is or not appropriate behaviour Organization culture- predominant value system for the organization as a whole Operating objectives – specific results that organizations try to accomplish SWOT analysis – examines organizational strengths and weaknesses and environmental opportunities and threats Core competency – is a special strength that gives an organization a competitive advantage Porters Five Forces Model Industry competition - intensity of rivalry among firms in the industry and the ways they behave competitively towards one another New entrants – the threat of new competitors entering the market, based on the presence or absence of barriers to entry Substitute products or services – threat of substitute products or services, based on the ability of consumers to find what they want from other sellers Bargaining power of suppliers – ability of resource suppliers to influence the price that one has to pay for their products or services Bargaining power of customers - ability of customers to influence the price that they will pay for the firms’ product or services Grand or Master Strategies Growth Strategy – involves expansion of the organizations current operations Stability Strategy – maintains current operations without substantial changes Renewal strategy – tries to solve problems and overcome weaknesses that are hurting performance Liquidation – business operations cease and assets are sold to pay creditors Combination strategies – pursuers’ growth, stability and retrenchment in some combinations Growth and Diversification Strategies Concentration – growth within the same business area Diversification – growth by acquisition of or investment in new and different business areas Vertical integration – growth by acquiring suppliers and distributors Restructuring Strategies Restructuring – changes the mix or reduces the scale of operations Turnaround – strategy tries to fix specific performance problems Downsizing – strategy decreases the size of operations Divestiture – sells off parts of the organization to refocus attention on core business areas Global Strategies Globalization strategy – adopts standardized products and advertising for use worldwide Multi-domestic strategy – customizes products and advertising to best fit local needs Transactional strategy – seeks efficiencies of global operations with attention to local markets Cooperative Strategies Strategic alliance – organizations join together in partnership to pursue an area of mutual interest Co-operation – strategy of working with rivals on projects of mutual benefit E-business strategy – strategically uses the Internet to gain competitive advantage B2B business strategy – uses IT and web portals to link organizations
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