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Chapter 8 Outline

Chapter 8 Outline - Chapter 8 Strategy Formulation and...

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Chapter 8: Strategy Formulation and Implementation I. Thinking Strategically Strategic Management is the set of decisions and actions used to formulate and implement strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals. Strategic thinking means to take the long-term view and to see the big picture, including the organization and the competitive environment, and to consider how they fit together. Responsibility is on top managers and chief executive. However, firms are encouraging middle- level, front-line managers, and front-line employees to think strategically. o What is Strategic Management See definition above. Managers ask questions like the following to make choices about how to position their organization in the environment with respect to rival companies. a. What changes and trends are occurring? b. Who are out customers? c. What products or services should be offer? d. How can we offer these products or services efficiently? o Grand Strategy Grand Strategy is the general plan of major action by which an organization intends to achieve its long-term goals. Includes three general categories: Growth, Stability, and Retrenchment. A separate category can be defined for global operations. Growth can be promoted internally by investing in expansion or externally by acquiring additional business divisions a.Internal growth can include development of new or changed products. I.e. Toyota’s Camry hybrid. b. External growth typically involved diversification (businesses related to current product lines or into new areas). I.e. Citibank and Travelers merging to form Citigroup. Stability , sometimes called a pause strategy, means that the organization wants to remain the same size, or grow slowly and in a controlled fashion. Retrenchment is when the organization goes through a period of forced decline by either shrinking current business units or selling off or liquidating entire businesses. Liquidation means selling off a business unit for the cash value of the assets, thus terminating its existence. Divestiture involves the selling off of businesses that no longer seem central to the corporation – i.e. JCPenny sold its share in Eckerd Drugstores to focus on their core business of department stores and catalog sales.
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