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63 Cards in this Set

  • Front
  • Back

What is strategy?

Action plan for outperforming competitors and achieving superior profitability

Four/five basic strategic approaches?

Low cost, differentiating, best cost, focus on niche (low cost or differentiating)

Two elements of business model?

Customer value proposition and profit formula

Three tests of winning strategy?

Fit test, competitive advantage test, performance test

Five tasks of crafting and executing strategy?

Develop strategic vision/mission statement/core values, set objectives, craft strategy, execute strategy, monitor/evaluate/correct

What is a strategic vision?

Management aspirations for the future; delineates long-term direction

Qualities of good strategic vision statements

Graphic, forward-looking, focused, wiggle room, feasible, good business sense, memorable

What is mission statement?

Describes present business and purpose - who we are, what we do, why we're here

Two kinds of objectives?

Financial and strategic

Hierarchy of strategy-making

Corporate, business, functional area, operating

What is strategic plan?

Strategic vision/mission + objectives + strategy

Four obligations of board of directors

Oversee financial reporting; critically appraise direction, strategy and business approaches; evaluate senior execs' leadership skills; institute compensation plan for top execs that serves shareholder interest

Six macroenvironment factors

PESTEL - political, economic, sociocultural, technological, environmental, legal/regulatory

Six additional questions (besides PESTEL) to assess competitive environment

How strong are competitive forces (Five Forces)? What are the driving forces? What market positions do rivals occupy (Strategic Group Mapping)? What strategic moves will rivals make next? What are industry's key success factors? Is industry outlook conducive to good profitability?

Five forces model of competition

From rival sellers, from potential new entrants, from producers of substitutes, supplier bargaining power, customer bargaining power

Three steps of driving force analysis

Identify driving forces, assess whether they make industry more or less attractive, determine strategy changes to prepare for their impact

Common drivers of industry change

Changes in industry growth rate, globalization, internet, changes in who buys and why, manufacturing innovation, marketing innovation, major firm entry/exit, diffusion of know-how, changes in costs/efficiency, reductions in uncertainty/risk, regulations, societal changes

Three questions to determine if driving forces make industry more or less attractive

Demand increase/decrease? Competition more/less intense? Higher/lower profitability?

Strategic group mapping?

Displays market/competitive positions of rivals. 2D map.

Common variables in strategic group mapping

Price, quality, geographic coverage, product-line breadth, degree of services offered, distribution channels, vertical integration, diversification

Michael Porter's Framework for Competitor Analysis

Four indicators of rival's likely moves: current strategy, objectives, capabilities, assumptions

Three questions to determine key factors

What product/service attributes are crucial, used by buyers to decide? What resources and capabilities are required? What shortcomings are a certain disadvantage?

Six questions for internal analysis

How well is present strategy working? What are our important resources/capabilities (VRIN)? Can we seize opportunities/overcome threats (SWOT)? Competitive cost structure and customer value proposition? Stronger/weaker than rivals? What strategic issues merit front-burner attention?

How well is current strategy working? Three questions

Achieving financial/strategic objectives? Financial performance above industry average? Gaining customers/market share?

Types of resources

Tangible - physical, financial, technological, organizational



Intangible - humans/intellect, brands/image/reputation, relationships, culture/incentives

Four tests of resource's competitive power

VRIN - valuable, rare, inimitable, non-substitutable

Five steps of competitive strength analysis

List 6-10 measures/key success factors, assign weights, score competitors, sum weighed ratings, draw conclusions

Blue-ocean strategy

Inventing a new industry or distinctive market segment to capture new demand

Five conditions for first-mover advantage

Building reputation/loyalty, creating future switching costs, property rights protections, get ahead on learning curve, set a technical standard

Four conditions for late-mover advantage

Pioneering is more costly and little learning curve, innovator's products are primitive, rapid market evolution/leapfrog, market uncertainties

Five objectives of mergers

Cost-efficiency, geographic expansion, new product categories, new technologies/resources/capabilities, hedge bets on direction of industry

Six factors needed to benefit from alliance

Pick good partner, be sensitive to cultural differences, benefit both sides, ensure commitments met, swift decision-making, learn/adjust

Three advantages of alliance over integration/merger

Lower investment, more flexible, more rapidly deployed

Five reasons to enter foreign markets

Gain new customers, achieve lower costs through scale/experience/purchasing power, exploit core competencies, gain access to resources/capabilities, spread business risk

Five reasons competing across national borders makes strategy more complex

Different home-country advantages (Porter's Diamond Framework), location-based value chain advantages, government policies/tax/inflation, currency/exchange rates, buyer tastes

Porter's Diamond of National Competitive Advantage

Demand conditions; factor conditions; related and supporting industries; firm strategy, structure and rivalry

Five strategic options for entering foreign markets

Export, license, franchise, subsidiary, alliance/joint venture

Three international strategies

Multidomestic (local/local), global (global/global), transnational (global/local)

Profit sanctuaries

Country markets that provide a company with substantial profits because of strong or protected market position

Three ways to gain competitive advantage in international markets

Lower costs; sharing, replicating or transferring resources/capabilities; cross-border coordination

Five ways local companies can defend against multinational companies

Exploit shortcomings in distribution/infrastructure, knowledge of local customer needs/preferences, knowledge of local labor force, acquisition/rapid growth, transfer expertise to cross-border markets and compete internationally

Four facets of crafting a diversification strategy

Picking new industries/means of entry, leverage cross-business value chain relationships and strategic fit into competitive advantage, establish investment priorities, initiate actions to boost combined performance

Three tests for diversification

Industry attractiveness, cost-of-entry, better-off

Three means of entering new businesses

Acquisition, internal startup, joint ventures

Four questions in choosing mode of entry into new businesses

Do we have all the resources/capabilities? Entry barriers? Is speed important? What's the least costly method that fits objectives?

Six steps in evaluating diversified company's strategy

Evaluate industry attractiveness, evaluate business unit competitive strength, determine value of strategic fit, check for resource fit, rank business units, craft new strategic moves

Integrated social contracts theory

Universal norms form social contract, local cultures can go beyond

10 basic managerial tasks, 1-3 (building an organization capable of good strategy execution)

Staffing the organization; building necessary organizational capabilities; structuring the organization and work effort

10 basic managerial tasks, 4-8 (managing internal operations)

Allocating resources to strategy execution effort, instituting policies/procedures that facilitate strategy execution, instituting best practices and employing process management tools, installing information and operating systems, using rewards/incentives to promote better strategy execution

10 basic managerial tasks, 9-10 (corporate culture and leadership)

Instilling a corporate culture conducive to good strategy execution, leading the strategy execution process

Four types of organizational structure

Simple, functional, multi-divisional, matrix

Three ways to build competencies and capabilities

Develop internally, acquire through mergers, access through partnerships

Four considerations in structuring work effort to promote successful strategy

Decide what to do internally/outsource, align organizational structure with strategy, centralize/decentralize authority, facilitating collaboration with partners/allies

Three ways policies facilitate strategy execution

Provide top-down guidance, ensure consistency, promote creation of work climate

Six Sigma for existing process

DMAIC - define, measure, analyze, improve, control

Six Sigma for new process

DMADV - define, measure, analyze, design, verify

Four steps in changing a problem culture

Identify facets that pose obstacles, specify what should be in new culture, talk openly about both, take visible/forceful actions to ingrain

Five unhealthy cultures

Change-resistant, politicized, insular, unprincipled/greedy, composed of incompatible subcultures

Culture is (four parts)?

Shared values, ingrained attitudes, core beliefs, company traditions

Outsourcing advantages

Perform better/more cheaply, not crucial to competitive advantage, improves flexibility/speed, reduce risk exposure to changing tech/preferences, assemble diverse expertise quickly, concentrate on core business

Outsourcing disadvantages

Hollow out own capabilities, lack of direct control, outside parties lack incentives to make investments

Three steps to developing competitive advantage

Distinctive competencies, cost advantage, value creation

Three steps in creating core competency

Develop, coordinate, refine