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35 Cards in this Set
- Front
- Back
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What is strategy? (Definition) |
The determination of the long-run goals and objectives of an enterprise and theadoption of courses of action and the allocation of resources necessary forcarrying out these goals. |
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(1) Competitive Advantage |
When two or more firms compete within the same market, one firm possesses a competitive advantage over its rivals when it earns (or has the potential to earn) a persistently higher rate of profit. Grant & Jordan |
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(1) The Two Types of Strategy |
Intended Strategy versus Emergent Strategy |
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(1) Why strategize? |
Strategy reduces vulnerability to risk factors and chance. |
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(2) Environment of the Firm |
Macro: Micro: Political Competitors Economical Suppliers Social Customers Technological |
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(2) Porter's Five Forces (Definition) |
Porter's five forces analysis is a framework that attempts to analyze the level of competition within an industry and business strategy development. Functions: Supplier-Buyer Bargaining Power, Potential Entrants-Substitutes, Industry Competitors. |
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(2) Porter's Five Forces (Suppliers & Buyers Bargaining Power) |
Factors affecting bargaining power: Production/Purchase Cost Degree of Differentiation / # Substitutes Intensity of Competition Market Size Buyer Information Vertical Integration (Supply Chain Ownership) Switching Costs PED / PES Volumes of Purchase (High / Low) |
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(2) Porter's Five Forces (Threat of Substitutes) |
Product substitution refers to the replacement of a purchasing habit from a product towards another which is similar but more attractive due to other factors such as cost or quality. Highly affected by degree of differentation and switching costs. |
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(2) Porter's Five Forces (Threat of Entry) |
Threat of Entry represents the cost for newcomers to join the industry: - Capital Requirements - Economies of Scale - Absolute Cost Advantages - Access to Distribution Channels - Political & Legal Barriers - Retaliation from Existing Firms |
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(2) Why analyze industries? |
1. Explain change and differences in profitability 2. Assist in positioning firms advantageously 3. Predict possible industry changes 4. Identify opportunities |
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(2) Porter's Five Forces (Limitations) |
1. Omits important variables 2. Cannot be applied to complex industries 3. Ineffective on narrower industries 4. Methods are contested as flawed 5. Static model against changing environment http://www.themanager.org/2015/11/porters-five-forces/ |
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(3) Resource-Driven Strategy (Definition) |
A strategy reliant on exploiting emerging external opportunities rather than changing to meet the demands of a specific market. The strategy meets these opportunities by synergising its organizational capabilities with the key industry success factors. |
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(3) Dynamic Capabilities |
Dynamic capabilities are unique to each company and rooted in the company’s history. They’re captured not just in routines, but in business models that go back decades and that are difficult to imitate. http://www.strategy-business.com/article/00225?gko=d24f3 |
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(4) Porter's Generic Strategies (Definition) |
OR (1) Low Cost < ----------------- > (2) Differentiation (a) Industry < ------------------ > (b) Single Segment 1a: Cost Leadership | Tesco, Wallmart 1b: Cost Focus Southwest, Redbox 2a: Differentiation BMW, Apple 2b: Diff. Focus | Breezes Resorts |
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(4) Porter's Generic Strategies (Lore) |
“A cost leader must achieve parity or proximity in the bases of differentiationrelative to its competitors to be an above-average performer, even though itrelies on cost leadership for its competitive advantage” - Porter |
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(4) Porter's Generic Strategies: Cost Leadership (Key Elements) |
1. scale-efficient plants 2. design for manufacture 3. control of overhead and R&D 4. process innovation 5. outsourcing 6. avoidance of marginal customer accounts |
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(4) Porter's Generic Strategies: Cost Leadership (Requirements) |
1. Capital Investment 2. Process Engineering Skills 3. Frequent Reports 4. Tight Cost Controls 5. Specialisation of Jobs 6. Incentives based on quantitative targets |
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(4) Porter's Generic Strategies: Differentiation (Key Elements) |
Emphasis on branding, advertising, design, service, quality and new product development. |
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(4) Porter's Generic Strategies: Differentiation (Requirements) |
1. Marketing Abilities 2. Product Engineering Skills 3. Cross-Functional Coordination 4. Creativity 5. Research Capability 6. Incentives linked to Qualitative targets |
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(4) Achieving Differentiation Advantage |
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(4) Achieving Cost Advantage |
1. Minimize Costs 2. Maximise Resource Utilization 3. Activity Linkages 4. Location, Timing |
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(5) Industry Life Cycle |
Introduction - Product Innovation Growth - Scaling Up Maturity - Increasing Efficiency Decline - Exit, Pursuing Market Leadership, Target Niche Segments, etc |
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(5) Scenarios vs Forecasting |
Forecasting: One Path to One Future Scenarios: Multiple Paths to Multiple Futures |
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(5) Forecasting |
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(5) Stakeholders |
Internal: Employees, Manager, Owner External: Supplies, Society, Government, Creditors, Shareholders, Customers |
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(5) Stockholder Perspective |
Firm Goal = Maximize Shareholder Wealth "Productive use of resources" |
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(5) Stakeholder Perspective |
Firm Goal = Maximize Firm Value for Stakeholder "Long-term value maximization" |
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(5) What are Stakeholders? |
• Any identifiable group or individual who can affect the achievement ofan organisation’s objectives or who is affected by the achievement of anorganisation’s objectives • Includes: as above PLUS public interest groups, protest groups,government agencies, trade associations, competitors, the media andunions. |
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(5) Porter & Kramer Value Philosophy X |
Profit Maximization, Creating Shared Value, Fair Trade, Philantropy, Avoidance |
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(5) Mitchell et al Stakeholder Salience O |
Power vs Legitimacy vs Urgency 1/3 = Latent Stakeholder 2/3 = Expectant Stakeholder 3/3 = Definitive Stakeholder |
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(5) Eden & Ackerman Stakeholder Mgt ◻ |
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(5) Savage et al Stakeholder Cooperation +- |
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(6) Innovation on Strategic Advantage |
- Creates differentiation via product or service design and changes the basis of competition. |
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(6) Innovation - Economic Hypothesis |
Why do firms innovate? - Add to their knowledge base - Increase entry barriers - Protect market share |
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