2.7 Key Terms

Boston Consulting Group (BCG) Matrix: Helps companies evaluate each of its strategic business units based on two factors: (1) the SBU’s market growth rate (i.e., how fast the unit is growing compared to the industry in which it competes) and (2) the SBU’s relative market share (i.e., how the unit’s share of the market compares to the market share of its competitors). 2.5

Business-Level Plans: Mission statement (purpose) and strategic plans of a firm’s SBUs. 2.4

Cash Cow: A product with low growth and a high market share. 2.5

Contract Manufacturing: Allows companies to hire manufacturers to produce their products in another country. 2.3

Corporate-Level Plans: In large organizations, top executives will develop strategic plans for the corporation as a whole. 2.4

Direct Investment: (Owning a company or facility overseas) is another way to enter a foreign market, providing the most control but also having the most risk. 2.3

Diversification Strategies: Involve entering new markets with new products or doing something outside a firm’s current businesses. 2.3

Dog: A product with low growth and low market share. 2.5

Export: Exporting is defined as the sale of products and services in foreign countries that are sourced or made in the home country. Importing is the flipside of exporting. Importing refers to buying goods and services from foreign sources and bringing them back into the home country.^[1] 2.3

Franchising: This is a longer-term (and thus riskier) form of licensing that is extremely popular with service firms, such as restaurants like McDonald’s and Subway, hotels like Holiday Inn Express, and cleaning companies like Stanley Steamer. 2.3 

General Electric (GE) Approach: Portfolio planning approach that helps a business determine whether to invest in opportunities. 2.5

Green Marketing: Marketing environmentally safe products and services in a way that is good for the environment. 2.2

Harvest: When a company decides to harvest a product, the firm lowers its investment in it. The goal is to try to generate short-term profits from the product regardless of the long-term impact on its survival. 2.5

Joint Ventures: Combine the expertise and investments of two companies and help companies enter foreign markets. 2.3

License: Firms can also license, or sell the right to use some aspect of their production processes, trademarks, or patents to individuals or firms in foreign markets. 2.3 

Market Penetration Strategies: Focus on increasing a firm’s sales of its existing products to its existing customers. 2.3

Marketing Plan: This is a strategic plan at the functional level that provides a firm’s marketing group with direction. 2.3

Market Development Strategies: Focus on entering new markets with existing products. For example, during the recent economic downturn, manufacturers of high-end coffee makers began targeting customers who go to coffee shops. 2.3

Mission Statement: The purpose of the organization and why it exists. 2.2

Mystery Shoppers: People who act as customers. They might visit competitors to learn about their customer service and their products. 2.2

Objectives: It is what organizations want to accomplish—the end results they want to achieve—in a given time frame. 2.3

Portfolio: A group of businesses, just as a collection of artwork or investments. 2.5

Portfolio Planning Approach: Involves analyzing a firm’s entire collection of businesses relative to one another. 2.5

Product Development Strategies:  Involve creating new products for existing customers. A new product can be a totally new innovation, an improved product, or a product with enhanced value, such as one with a new feature. 2.3

Question Marks or Problem Children: The question or problem that arises when a product has a low share of a high-growth market. 2.5

Situation Analysis: Analyzing both the external (macro and micro factors outside the organization) and the internal (company) environments. 2.1

Star: A product with high growth and a high market share. To maintain the growth of their star products, a company may have to invest money to improve them and how they are distributed as well as promote them. 2.5

Strategies: It is the means to the ends, the game plan, or what a firm is going to do to achieve its objectives. 2.3

Strategic Business Unit (SBU): A business or product line within an organization that has its own competitors, customers, and profit center for accounting purposes. 2.4

Strategic Planning Process: Conducting a situation analysis and developing the organization’s mission statement, objectives, value proposition, and strategies. 2.1

SWOT Analysis: Based on the situation analysis, organizations analyze their strengths, weaknesses, opportunities, threats, or conduct. 2.1

SWOT Analysis: Based on the situation analysis, organizations analyze their strengths, weaknesses, opportunities, and threats. 2.1

Target Markets: Groups of customers, they (who? Change the word to “companies”) want to reach when they are developing their value propositions. 2.1

Target Markets: Groups of customers, want to reach when they are developing their value propositions. 2.1

Tactics: Include specific actions, such as coupons, television commercials, banner ads, and so on, taken to execute the strategy. 2.3

Value Proposition: A thirty-second “elevator speech” stating the specific benefits a product or service offering provides a buyer. 2.1