=> environmental analysis: the process of scanning the environment for threats and
=> organizational analysis: the process of analysing a firm’s strengths and weaknesses.
A Hierarchy of Plans:
=> strategic plans: plans that reflect decisions about resources allocations, company
priorities, and steps needed to meet strategic goals.
=> tactical plans: generally, short-range plans concerned with implementing specific aspects
of a company’s strategic plans.
=> operational plans: plans setting short-term targets for daily, weekly or monthly
-identifies the various businesses that a company will be in, and how these businesses will
relate to each other.
=> concentration strategy: involves focussing the company on one product or product line.
- companies have several growth strategies, all of whom focus on internal activities that will
result in growth.
=> market penetration: boosting sales of present products by more aggressive selling in the
firm’s current markets.
=> product development: developing improved products for current markets.
=> geographic expansion: expanding operations in new geographic areas or countries.
- there are tow basic integration strategies, both of which focus on external activities.
=> horizontal integration: acquiring control of competitors in the same or similar markets
with the same or similar products.
=> vertical integration: owning or controlling the inputs to the firm’s processes and/or
channels through which the products or services are distributed.
=> diversification: expanding into related or unrelated products or market segments.
=> related diversification: means adding new but relating products or services to an existing
=> conglomerate diversification: means diversifying into products or markets that are not
related to the firm’s present businesses.
=> retrenchment: the reduction of activity or operations.
=> divestments: another investment reduction strategy involving seeing or liquidating one or
more of a firm’s businesses.
=> investment reduction: reducing the company’s investment in one or more of its lines of
Business-Level (Competitive) Strategies:
=> cost leadership: becoming the low cost leader in an industry.
=> differentiation strategy: a firm seeks to be unique in its industry along some dimension
that is valued by buyers.
=> focus strategy: selecting a market segment and serving the customers in that market
niche better than competitors.
- a functional strategy is the basic course of action that each department follows so that the
business accomplishes its overall goals.
- an example can be seen in McDonalds, who implemented its cost-leadership strategy by