notes part 2.docx - Punctuate equilibrium describes...

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Punctuate equilibrium, describes corporations as evolving through relatively short bursts of fundamental change (revolutionary periods). Example of a mission statement is that of Google (6) To organize the world’s information and make it universally accessible and useful. Missions may be defined narrowly or broadly. A broad mission statement is a vague and general statement of what the company is in business to do. A narrow mission statement clearly states the organization’s primary products and markets, but it may limit the scope of the firm’s activities in terms of product or service offered, the technology used, and the market served. Objectives- are the end results of planned activity. They state what is to be accomplished by when and should be quantified if possible. Providing society with swag has become the world’s largest confectioner by sales. One prime objective is to increase 4-6 percent each year. The term goal is often confused with objective. A goal is an open-ended statement of what one wished to accomplish with no quantification of what is to be achieved and no timeframe for completion. Examples of goals: Profitability (net profits) Efficiency (low costs, etc.) Growth (increase in total assets, sales, etc.) Shareholder wealth (dividends plus stock price appreciation) Utilization of resources (ROE or ROI) Reputation (being considered a “top” firm) Contributions to employees (employment security, wages, etc.) Contributions to society (taxes paid, participation in charities, providing a needed product or service, etc.) Market leadership (market share) Technological leadership (innovations, creativity, etc.) Survival (avoiding bankruptcy) Personal needs of top management (using the firm for personal purposes, such as providing jobs for relatives) A strategy of a corporation is a comprehensive plan stating how the corporation will achieve its mission and objectives. It maximizes competitive advantage and minimizes competitive disadvantage. The typical business firm usually considers three types of strategy: corporate, business, and functional. 1. Corporate strategy describes a company’s overall direction in terms of its general attitude toward growth and the management of its various businesses and product lines. It’s composed of
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directional strategy, portfolio analysis, and parenting strategy. Corporate directional strategy is conceptualized in terms of stability, growth, and retrenchment. Cadbury Schweppes, for example, was following a corporate strategy of retrenchment by selling its marginally profitable soft drink business and concentrating on its very successful confectionary business. 2. Business strategy usually occurs at the business unit or product level, and it emphasizes improvement of the competitive position of a corporation’s products or services in the specific industry or market segment served by that business unit. Business strategies are composed of competitive and cooperative strategies. For example, Apple uses a differentiation competitive
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