1. Chapter8Chapter8 GLOSSARYGLOSSARY EXIT Glossary Modern Management, 9 th edition Click on terms for definitions Business portfolio analysis Commitment principle Cost leadership Critical question analysis Demographics Differentiation Divestiture Economics Environmental analysis Focus General environment Growth Internal environment Mission statement Operating environment Organizational mission Retrenchment Social values Stability Strategic business unit Strategic control Strategic planning Strategy Strategy formulation Strategy implementation Strategy management Suppliers SWOT analysis Tactical planning

2. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Business portfolio analysis is the development of business-related strategy based primarily on the market share of businesses and the growth of markets in which businesses exist.

3. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary The commitment principle is a management guideline that advises managers to commit funds for planning only if they can anticipate, in the foreseeable future, a return on planning expenses as a result of the long-range planning analysis.

4. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Cost leadership is a strategy that focuses on making an organization more competitive by producing products more cheaply than competitors can.

5. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Critical question analysis is a strategy development tool that consists of answering basic questions about the present purposes and objectives of the organization, its present direction and environment, and actions that can be taken to achieve organizational objectives in the future.

6. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Demographics are the statistical characteristics of a population. Organizational strategy should reflect demographics.

7. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Differentiation is a strategy that focuses on making an organization more competitive by developing a product or products that customers perceive as being different from products offered by competitors.

8. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Divestiture is a strategy adopted to eliminate a strategic business unit that is not generating a satisfactory amount of business and has little hope of doing so in the future.

9. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Economics is the science that focuses on understanding how people of a particular community or nation produce, distribute, and use various goods and services.

10. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Environmental analysis is the study of the organizational environment to pinpoint environmental factors that can significantly influence organizational operations.

11. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Focus is a strategy that emphasizes making an organization more competitive by targeting a particular customer.

12. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary The general environment is the level of an organization’s external environment that contains components normally having broad long-term implications for managing the organization; its components are economic, social, political, legal, and technological.

13. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Growth is a strategy adopted by management to increase the amount of business that a strategic business unit is currently generating.

14. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary The internal environment is the level of an organization’s environment that exists inside the organization and normally has immediate and specific implications for managing the organization.

15. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary A mission statement is a written document developed by management, normally based on input by managers as well as nonmanagers, that describes and explains the organization’s mission.

16. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary The operating environment is the level of the organization’s external environment that contains components normally having relatively specific and immediate implications for managing the organization.

17. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary The organizational mission is the purpose for which, or the reason why, an organization exists.

18. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Retrenchment is a strategy adopted by management to strengthen or protect the amount of business a strategic business unit is currently generating.

19. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Social values are the relative degrees of worth society places on the manner in which it exists and functions.

20. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Stability is a strategy adopted by management to maintain or slightly improve the amount of business a strategic business unit is generating.

21. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary A strategic business unit (SBU) is, in business portfolio analysis, a significant organizational segment that is analyzed to develop organizational strategy aimed at generating future business or revenue. SBUs vary in form, but all are a single business (or collection of businesses), have their own competitors and a manager accountable for operations, and can be independently planned for.

22. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Strategic control, the last step of the strategy management process, consists of monitoring and evaluating the strategy management process as a whole to ensure that it is operating properly.

23. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Strategic planning is long-range planning that focuses on the organization as a whole.

24. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Strategy is a broad and general plan developed to reach long-term organizational objectives; it is the end result of strategic planning.

25. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Strategy formulation is the process of determining appropriate courses of action for achieving organizational objectives and thereby accomplishing organizational purpose. Strategy development tools include critical question analysis, SWOT analysis, business portfolio analysis, and Porter’s Model for Industry Analysis.

26. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Strategy implementation, the fourth step of the strategy management process, is putting formulated strategy into action.

27. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Strategy management is the process of ensuring that an organization possesses and benefits from the use of an appropriate organizational strategy.

28. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Suppliers are individuals or agencies that provide organizations with the resources they need to produce goods and services.

29. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary SWOT analysis is a strategy development tool that matches internal organizational strengths and weaknesses with external opportunities and threats.

30. © Prentice Hall, 2002 RETURN to Chapter termsEXIT Glossary Tactical planning is short-range planning that emphasizes the current operations of various parts of the organization.