a3 Strategic thinking Sirategy 40 A strategy (countable noun) is a plan or series of plans for achieving success. Strategy (uncountable noun) is the study of the skills, knowledge, ete. required to make such plans. Strategie success in a commercial organization is often measured in terms 0/ profitability, the amount of money it makes in relation to the amount invested An important pact of planning is resource allocation, This is the way finance, people and assets ~ equipment, buildings, know-how, etc. going to be used to achieve a particular objective. are A company’s senior executives make strategic decisions or formulate strategy. Sometimes an organisation will publicly state its main overall objective or vision in its mission statement. Companies sometimes form strategic parmerships, working rogether to achieve a specific strategic goal. For example, MG Rover entered a partnership with a Chinese c: manufacturer to enable it to produce and sell in China. A company may also make a strategic move, such as acquiring a competitor, designed to increase their market share HED Companies and markets Company A dominates the ma Company B has @ toe-hold in the market Company Cis attacking the market Company D is withdrawing from the matket. When a company a defends b attacks | ¢ establishes a foothold/ | tochold in d invades | © dominates f deaws from Business Vocobulery in Use (advanced) amarket, it a eS ™ aL | being successful in it. starts selling in it for the first time. preparation for gaining a larger pare, | cecupies a small part offre in | starts to be very successful in i is the biggest competitor in it, stops selling in it.Look at the questions from shareholders at the annual meeting of Topaz, a car company Complete the chief executive's answers with appropriate forms of expeassions from A opposite 1 7 { Why has the company bought {This was a © {. our its rival, Rivera? {broaden our customer base. z < (We have taken steps ro ensure that our are used more offectively. This is an important part of ( Some of Topaz’s plants have ) | very low productivity. Whar {are you doing abour this? J |_ our straregic process. \ iy ® _ 3 Nx a7 7 Sie { Why are you dosing) This is an iss We one of the plants? | don’t have infinite financial resources and we want 10 concentrate investment on the most productive plants at fr = — (Was this the only goal that was) (We looked at 2 number of difference ») considered? Did you also look | | and decided that the hi-tech option was the best | at the possibility of being one to follow. a miss producer of vehicle \- SEE ad $$, a 4 Match the underlined phrases below to the expressions in B opposite thar refer to the same idea. Coffeeway (CW) is a successtul Amencan chain of coffee shops. It wanted to (1) aggressively enter the Chinese coffee shop marke with shops all over China. CW signed an agreement with a partner, Dragon Fnterprises (DE). CW and DE decided to (2) start by opening just one coffee shop in Shanghai in order to test she market. This was very successful, so CW and DE decided to open shops all over China. Ir took CW and DE five years to (3) be the biggest in the marker, with a 70 per cent marker share among coffee shop chains in China. One of their competitors California Coffee, tried to (4) protect its marker share by cutting prices. But this strategy did not work, and California C (5) leave the marker. fee later sold its outlets to CW/DE and decided to. a oe 0 aU Think about your organization or one you would like to work for. Look at its website and find its mission statement. if it doesn't have one, what would you suggest? SwsinessVocobulory in Ue [edvenced) 4hCompetition ¢ main competitors in a particular industry are ss key players. Smaller competitors may be referred 0 as minor players. Competition in an industry can be: m cutthroat m@ ferocious m™ intense m™ fierce m keen me low-key mm stiff mm tough The usual pattern for a new industry is to have a lunge number of competitors: these may be start-ups ~ completely new companies ~ and there may be companies already established in other sectors that also want to get into the industry, perhaps by setting up a new subsidiary or business unit, (See Unit 19) BREED Competing’ ana Competing and competitive are adjectives related to ‘competition’. Two companies may produce compering products — produers thar compere with each other. A competitive prodnct is one thar has seal and specific benefits in relation tr others of the same ype: ‘competitive’ *Competing’ also oveurs in these combinations: (bids price offers for a company in a takeover suppliers companies offering similar products or services technologies technical ways of doiag something “Competitive’ also occurs in these combin: —— ions: position where a company is in relation ro its competitors in of size, growth, ete pressure the force that one competitor ean bring to bear in relation to another prices prices that are similar to or lower chan those for i apne similar products | threat something that one Competitor may do to weaken another’ position advantage superior products, performance, ete. thet a competitor edge can offer in relation w others strategy a plan or plans for success in relation to competivors, and the study of this in business schools 42 Business Vocabulary in Use (advanced)7A Look at the adjectives describing competition in A opposite. Which is the edd one aut, and why? Look at B opposite. Match the two parts of these extracts containing expressions with ‘competing’. 1 wohat isto stop supposedly competing bids from mining giants Inco Ld } rte wert and Falconbridge Lid, 24 b Commatouch can position itself in suppliers fiom secretly agreeing to the midcle of the competing keep prices high? a en a 3 Diamond Fields Resources Ine was © offerings, with prices ranging from ihe tise of compating $300 ts $450, j aon d The saltaace is 25 per cent cheaper technologies by offering “unified than competing 2 messaging solutions 1 Complete the sen mnees with words from B opposite that can follow ‘compeuitive’, 1 He was criticized for being soo Eurocentric and failing to pay sufficient attention to the competitive... from South east Asia 2 Businesses can-sustain their performances over the long term by having some competitive to keep them ahead. (2 possibilities) 3 For che money-conscious consumer, alremnacive retail ourlees can offer organic food at more competitive 4 First Chicago will enhance its competitive aun. and boost its finaricial growsh through the transaction, which is expected 1 add to earnings immediately. 5 Mall stores are under more competitive than at any time in their 40-year history, with new discounters and superstores incteasingly moving in alongside traditional malls 6 Decades of management theorizing around the world have produced mountains of books, many of which promise to deliver the secrets of suocess, But there is no consensns on competitive Cel J ered (07 OL Think about your organization or one you would like to work for. Who are its fiercest Ce Oa eu eed Business Yocobulery in Use (advanced) aib Companies and their industries HY Competitive forces ;portant strategic thinker is Michac! Porter!, He defines che five competitive forces work in any induscry. Potential entrants T Threat of new entrants ¥ ———__Barpaining Bargaining ~————) Suppliers power of | Industry competitors |«— power of Buyers | uu suppliers: Rivalry among existing firms buyers ——_ Threat of subscirare productsiservices ———_ | Substitutes HED S07 analysis SWOT stands for strengths, weaknesses, opportunities, threats In formulating strategy, a company shonld look ac its strengths and weaknesses in relation to its comperizors. For example, a good sales team 1s a strength and poor internal communication is a wes ‘The company should also look at opportunities and threats in its environment: che strength of competitors, government regulation, the way that society is changing ete. These are external factors. For example, a change in a country’s legislation on broadcasting might present an opportunity for a group that wants 0 buy a television company there, The change would probably also pose threat to exisiting broadcasters. ‘The ways char a company organizes and combines its human resources, know-how, equipment and other assets are what Hamel and Prahalad ? call ics core competencies. These are internal factors. (See Unit 7) Be good at something Porter says that competitive advantage can be based on: mi cost leadership: offering products or services at the lowese cost; this is one strategy to adopt in volume industries where competitors produce large numbers of similar products m differentiation: offering products or services that give added value in terms of quality or service compared to competitors focus: using one of the ahove two strategies to concentrate on a niche, a specific part of the marker with particular needs. The danger, says Porter, is when a company does nor fallow any of chese particular strategies and is stuck in the middle. * Competitive Strategy (Simon & Schuster 1998) Competig for the Future (Harvard Business School Press 1996) 44 Business Yocobuiary in Use (advanced)8.3 Look ar A opposite and che examples (1-5) below of the expressions in the diagram boxes. Match each example to an appropriate form of one of the expressions. 1 Coca-Cola and Pepsi Gola in soft drinks 2 A company that is thinking of selling computer games when it has not sold them before 3 Digical photogeaphy in celation to ‘caditional’ photogcaphy 4 Car manufacturers in relation to component mamnfactuzers 5 Component manufacturers in relation to car manufacturers Donna is presenting a SWOT analysis of her travel firm. Complete the table below with the expressions in iralics. (The frst one has beea done for you.) “We have some very good locations for our travel agency shops in cities all over Europe. “There may be an economic slowdown next year, and travel is one of the things people aut back on frst are big enough to negotiate very good prices with hotels and airlines.” “Internet booking of teavel is increasing, and we want to ger into this? We need co improve staff traindrg ~ we have a new computer system but a lot of the staff can't get the most from ie. “There are some very good aniline travel companies already established. They may challenge our position.” “We have high staff turnover? “Consumers are looking for tore exotic places tw go on holiday, and we are planning to offer these destinations* Ce mn | Coed leeetions | | Look at the mission statements of three companies. Which strategy in C opposite does each correspond to? 1 ‘To make sports cars for discerning enthusiasts with good technical knowledge. 2 To sell clothing more cheaply than the depertment stores. 2 To sell electrical goods with a high level of aftersales service. loa oo Analyze your organization or one you would like to work for in relation to the industry it is Cres Business Yocabulery in Use (advericed) 45