strategy Functional Marketing strategy Product development
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Advertising and Promotion
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Pricing
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Financial strategy
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R&D strategy -
Operations strategy
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is the approach a functional area takes to achieve corporate and business unit objectives and strategies by maximizing resource productivity deals with pricing, selling, and distributing product a company or unit can (1) develop new products for existing markets or (2) development new products for new markets using a successful brand name to market other products is called line extension, and it is a good way to appeal to a company's current customers push strategy a marketing strategy in which a large amount of money is spent on trade promotion in order to gain or hold shelf space in retail pull strategy a marketing strategy in which advertising pulls the products through the distribution channels skim pricing a marketing strategy in which a company charges a high price while a product is novel and competitors are few penetration pricing a marketing pricing strategy to obtain dominant market share by using low price Dynamic pricing a marketing practice in which different customers pay different prices for the same product or service a functional strategy to make the best use of corporate monetary assets leveraged buy-out an acquisition in which a company is acquired in a transaction financed largely by debt usually obtained from a third party, such as an insurance company or an investment banker reversed stock split a stock split in which an investor's share are reduced for the same total amount of money tracking stock a type of common stock that is tied to one portion of a corporation's business a functional strategy that deals with product an process innovation technological leader a company that pioneers an innovation technological follower a company that imitates the products of competitors open innovation a new approach to R&D in which a firm uses alliance and connections with corporate, government, and academics labs to learn about new developments a functional strategy that determines how and where a product or service is to be manufactured, the level of vertical integration in the production process, and the deployment of physical resources job shop one-of-a-kind production using skilled labor connected line batch flow a part of a corporation's manufacturing strategy in which components are
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Purchasing strategy
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Logistic strategy
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standardized and each machine function like a job shop but is positioned in the same order as the parts are processed flexible manufacturing systems a type of manufacturing that permits the low-volume output of custom-tailored products at relatively low unit costs through economics of scope dedicated transfer line a highly automated assembly line making one mass-produced product using little human labor mass production a system in which employees work on narrowly defined, repetitive tasks under close supervision in a bureaucratic and hierarchical structure to produce a large amount of low-costs standard goods and services continuous improvement system a system developed by Japanese firms in which teams strive constantly to improve manufacturing processes modular manufacturing a system in which preassembled subassemblies are delivered as they are needed to a company's assembly-line workers who quickly piece the modules together into finished products a functional strategy that deals with obtaining the raw materials, parts and supplies needed to perform the operations functions multiple sourcing a purchasing strategy in which a company orders a particular part from several vendors sole sourcing relying on only one supplier for a particular part just-in-time (JIT) a purchasing concept in which parts arrive at the plant just when they are needed rather then being kept in inventories parallel sourcing a process in which two suppliers are the sole suppliers for two different parts, but they are also back up suppliers for each other's parts A functional strategy that deals with the flow of products into and out of the manufacturing process centralization to gain logistical synergies across business units, corporations began centralizing logistics in the headquarter group; this centralized logistics group usually contains specialist with expertise I different transportation modes, such as rail or trucking; they work to aggregate shipping volumes across the entire corporation to gain better contracts with shippers outsourcing is purchasing from someone else a product or service that had been previously provided internally; many companies have found that outsourcing logistics reduces costs and improves delivery time internet companies many are using the internet to
Human resources management (HRM) strategy
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Outsourcing errors
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Industry structure
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Strategies to avoid
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simplify they logistical system a functional strategy that makes the best use of corporate human asset 360-degree performance appraisal an evaluation technique in which input is gathered from multiple source outsourcing activities that should not be outsourced: companies failed to keep core activities in-house selecting the wrong vendor: vendors were not trustworthy or lacked state-of-the-art processes writing a poor contract: companies failed to establish a balance of power in the relationship overlooking personal issues: employees lost commitment to the firm losing control over the outsourced activity: qualified managers failed to manage the outsourced activity overlooking the hidden costs of outsourcing: transaction costs overwhelm other savings failing to plan an exit strategy: companies failed to build reversible clauses into their contracts Fragmented industry small and medium-sized local companies compete for relatively smalls shares of the total market, focus strategies will likely predominate, typical for products in the early stages of their life cycles, no large firms will emerge, and entry barriers will be low allowing a steam of new entrants into the industry Consolidated industry as an industry matures, fragmentation is overcome, and then industry tends to become dominated by a few large companies; although many industries start out fragmented, battles for market share and creative attempts to overcome local or niche market boundaries often increase the market share of a few companies; after product standards become established for minimum quality and features, competition shifts to a greater emphasis on cost and services; slower growth, over capacity, and knowledgeable buyers combine to put a premium on a firm's ability to achieve cost leadership or differentiation along the dimensions most desired by the market; R&H shifts from product to process improvements; overall product quality improves, and costs are reduced significantly follow the leader: imitating a leading competitor's strategy might seem to be a good idea, but it ignores a firm's particular strength and weaknesses and the possibility that the leader may be wrong hit another home run: if a company is because it pioneered an extremely successful product, it tend to search for another super product that will ensure growth and prosperity; the probability of finding a second winner is slight arms race: entering into a spirited battle with another
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Growth strategies
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Subjective factors affecting decisions Avoiding the consensus trap
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Evaluation of strategic alternatives
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firm for increased market share might increase sales revenue, but that increase will probably be more than offset by increases in advertising, promotion, R&D, and manufacturing costs do everything: when faced with several interest opportunities, management might tend to leap at all of them; at first, a corporation might have enough resources to develop each idea into a project, but money time, and energy are soon exhausted as the many projects demand large infusions of resources losing hand: a corporation might have invested so much in a particular strategy that top management is unwilling to accept its failure; believing that it is too much invested to quit, management may continue to throw "good money after bad" a directional strategy that expands a company's current activities external mechanisms: merger a transaction in which two or more corporations exchange stock, but from which only one corporation survives, acquisition the purchase of a company that is completely absorbed by the acquiring firm, strategic alliance a partnership of two or more corporations of business units to achieve strategically significant objectives that are mutually beneficial management's attitude towards risk pressures from stakeholders pressure form corporate culture needs and desires of key mangers devil's advocate an individual or a group assigned to identify the potential pitfalls and problems of a proposal dialect inquiry a decision-making technique that requires that two proposals using different assumptions be generated from consideration mutual exclusivity doing any one alternative would preclude doing any other success it must be doable and have a good probability of success completeness it must take into account all the key strategic issues internal consistency it must make sense on it own as a strategic decision for the entire firm an not contradict key goals, policies, and strategies currently being pursued by the firm or its units