Chapter

SWOT

acronym used to describe the particular Strengths, Weaknesses, Opportunities and Threats that are
potential strategic factors for a specific company

Strategy = opportunity/capacity

Opportunity has no real value unless a company has the capacity to take advantage of that opportunity.

Porters Competitive Strategies

Cost leadership

ability of a company or a business unit to design, produce and market a comparable product more efficiently
than its competitors

Differentiation

ability of a company to provide unique and superior value to the buyer in terms of product quality, special
features or after-sale service

Focus

ability of a company to provide unique and superior value to a particular buyer group, segment of the
market line or geographic market

Porter proposed that a firms competitive advantage in an industry is determined by its competitive scope
that is, the breadth of the companys or business units target market.

Cost leadership

lower-cost competitive strategy that aims at the broad mass market and requires aggressive construction of
efficient-scale facilities, vigorous pursuit of cost reductions from experience, tight cost and overhead control,
avoidance of marginal customer accounts, and cost minimization

Provides a defense against rivals

Provides a barrier to entry

Generates increased market share

Differentiation

involves the creation of a product or service that is perceived throughout the industry as unique.

can be associated with design, brand image, technology, features, dealer network or customer
service

Lowers customers sensitivity to price

Increases buyer loyalty

Can generate higher profits

 Cost focus

low-cost competitive strategy that focuses on a particular buyer group or geographic market and attempts
to serve only this niche to the exclusion of others

Differentiation focus

concentrates on a particular buyer group, product line segment or geographic market to serve the needs of a
narrow strategic market more effectively than its competitors

Chapter 7
Vertical integration

the degree to which a firm operates vertically in multiple locations on an industrys value chain from
extracting raw materials to manufacturing to retailing

Vertical Integration Continuum

International Entry Options for Horizontal Growth

Retrenchment strategies

used when the firm has a weak competitive position in some or all of its product lines from poor
performance

 Chapter 8

Financial Strategy

examines the financial implications of corporate- and business-level strategic options and identifies the best
financial course of action

The management of dividends and stock price is an important part of a corporations financial strategy.

Leveraged buyout

company is acquired in a transaction financed largely by debt usually obtained from a third party

Reverse stock split

investors shares are split in half for the same total amount of money

Marketing strategy

deals with pricing, selling and distributing a product

Chapter 9
Strategy implementation

the sum total of all activities and choices required for the execution of a strategic plan

Who are the people to carry out the strategic plan?

What must be done to align company operations in the intended direction?

How is everyone going to work together to do what is needed?

Offensive tactic

usually takes place in an established competitors market location

Multinational corporation (MNC)

 a highly developed international company with a deep involvement throughout the world, plus a worldwide
perspective in its management and decision making

Chapter 10
Integration Managers

Prepare a competitive profile of the company in terms of its strengths and weaknesses

Draft a profile of what the ideal combined company should look like

Develop action plans to close the gap between actual and ideal

Establish training programs to unite the combined company and make it more competitive

Staffing

To be a successful integration manager, a person should have:

Deep knowledge of the acquiring company

Flexible management style

Ability to work in cross-functional teams

Willingness to work independently

Sufficient emotional and cultural intelligence to work in a diverse environment

Executive type

executives with a particular mix of skills and experiences

paired with a specific corporate strategy

Chapter 11
Evaluation and Control Process


Enterprise Risk Management

corporate-wide, integrated process for managing uncertainties that could negatively or positively influence
the achievement of objectives

The process of rating risks involves three steps:

1. Identify the risks using scenario analysis, brainstorming or performing risk assessments

2. Rank the risks, using some scale of impact and likelihood

3. Measure the risks using some agreed-upon standard

Management audits

developed to evaluate activities such as corporate social responsibility, functional areas such as the
marketing department, and divisions such as the international division

useful to boards of directors in evaluating managements handling of various corporate activities

Responsibility centers

used to isolate a unit so it can be evaluated separately from the rest of the corporation

has its own budget and is evaluated on its use of budgeted resources

headed by the manager responsible for the centers performance



Benchmarking

the continual process of measuring products, services and practices against the toughest competitors or
those companies recognized as industry leaders

Chapter 12
Analyzing Financial Statements

1. Scrutinize historical income statements and balance sheets

2. Compare historical statements over time

3. Calculate changes that occur in individual categories from year to year

4. Determine the change as a percentage

5. Adjust for inflation