Strategy

Front 1

What is strategy?

Back 1

A broad plan for achieving objectives

Front 2

What is a tactic?

Back 2

A scheme for a specific maneuver.

Front 3

WHat are three characteristics of strategic decisions?

Back 3

1) Important
2) Involve significant commitment of resources
3) Not easily reversible

Front 4

Three approaches to firm goals?

Back 4

1) Stakeholder - firm as a coalition of interest groups
2) Shareholder - exists to maximize owners' wealth
3) Social welfare - must respond to internal/external interest groups.

Front 5

Why is profit maximization a reasonable goal?

Back 5

1) Boards of dir. legally obliged to pursue shareholder interests.
2) Firm must replace its assets
3) must keep stock market value above break-up value

Front 6

Intended vs. inferred strategies?

Back 6

Intended is the articulated strategy of those with formal authority to engage in planning.

Inferred is attributed to org. by those outside the process.

Front 7

Mintzberg's critique of formal strategic planning?

Back 7

1) future is unknown
2) difficult to divorce formulation from implementation
3) formalization inhibits firm

Front 8

How does formalization inhibit firm's actions?

Back 8

1) inhibits flexibility
2) inhibits spontaneity
3) inhibits intuition
4) inhibits learning

Front 9

What are the three roles of strategy?

Back 9

1) decision support
2) coordination and communication
3) target

Front 10

What is the net present value (NPV) of a firm?

Back 10

the total value of a firm's discounted cash flows over the life of the firm.

Front 11

HOw do you apply a value maximiation approach to strategic choices?

Back 11

1) identify strategic alternatives
2) estimate cash flows associated with the strategies
3) decide on appropriate discount rate
4) select the strategy which generates the highest NPV.

Front 12

What is the paradox of value and values?

Back 12

companies that are most successful in creating shareholder value are NOT typically those that put profit maximization as their central goal, but rather those that have consistent mission.

Front 13

Why do macroenvironmental analysis?

Back 13

1) best growth may occur as a result of events in the macroenvironment
2) unanticpated macroenvironmental change can threaten plans

Front 14

What does PEST stand for?

Back 14

Political, Economic, Social, Technological

Front 15

What does SPIRE stand for?

Back 15

Social, Political, INtellectual, Religious, Economic.

Front 16

What does PEST+ consider?

Back 16

Political, economic, social, technological, ecological, institutional.

Front 17

WHat are four components of scenario development?

Back 17

1) identify specific macroenvironmental forces
2) ask basic what-if questions
3) develop scenario plot and logic
4) describe end-state of relevant world.

Front 18

What is the value of developing scenarios?

Back 18

1) identify opportunities and threats
2) test robustness of potential strategies
3) develop common language among managers for dealing with a rapidly changing environment

Front 19

What are the five objectives of industry analysis

Back 19

1) how does industry structure drive competition adn the level of idndustry profitability
2) assess industry attractiveness
3) use evidence regarding changes in industrys tructure to forecast future profitability
3) formulate strategies to change industry structure to improve industry profitability
4) identify key success factors

Front 20

What are four types of competitive possibilities?

Back 20

Perfect competition, oligopoly, duopoly, monopoly

Front 21

What are Porter's five forces?

Back 21

Suppliers, potential entrants, substitutes, buyers, industry competitors

Front 22

WHat to think about re: threat of entry?

Back 22

capital requirements, access to resources, legal/regulatory barriers, retaliation

Front 23

What to think about re: supplier leverage?

Back 23

buyers' price sensitivity, relative bargaining power

Front 24

What to think about re: substitute competition?

Back 24

buyers' propensity to substitute, depends on relative prices and performance

Front 25

What to think about re: industry rivalry?

Back 25

concentration, diversity of comeptitors, product differentiation, excess capacity and exit barriers, cost conditions

Front 26

What to think about re: buyer leverage?

Back 26

buyers' price sensitivity, relative bargaining power.

Front 27

Four things to think about re: analysis of potential threats

Back 27

1) what drives competition?
2) what are the main dimensions of competition?
3) how intense is competition
4) how can we obtain a superior competitive position?

Front 28

What are substitutes?

Back 28

products that cause customers to value your products less when they have them relative to having your product alone.

Front 29

What are complements?

Back 29

products that cause customers to value your produts more when they have them relative to having your product alone.

Front 30

What is hypercompetition?

Back 30

a situation where intense and rapid competitive moves create disequilibrium through the continuous creation of new compettive advantages and the destruction or neutraliation of opponents' competitive advantages.

Front 31

What is dynamic competition?

Back 31

continually brings innovation to an industry, resulting in a perpetual transformation of an industry's structure and often an overthrow of established market leaders.

Front 32

What is a strategic group?

Back 32

a group of firms in an industry following the same or similar strategy.

Front 33

How do you identify a strategic group?

Back 33

1) identify principal strategic variables which distingusih firms.
2) position each firm in relation to these variables
3) identify clusters.

Front 34

What is rivalry?

Back 34

competitive external relations

Front 35

WHat are alliances?

Back 35

cooperative external relations including business relationships, intercompany relationships, interfirm cooperative arrangements and joint ventures.

Front 36

What situations do alliances fail?

Back 36

1) alliance between strong and weak partners
2) technology for market swaps are dangerous

Front 37

WHy form alliances?

Back 37

speed matters, a firm can't do everything itself, must find a way to distribute fixed costs over a global base of customers.

Front 38

Under what 2 situations are cartels likely to emerge?

Back 38

1) structural conditions
2) internal characteristics of the players

Front 39

What 5 structural conditions are likely to make cartels form?

Back 39

high concentration of prodcuers, small fringe, high barriers to entry, nonsubstituability, nondifferentiation.

Front 40

Four phases of the basic life cycle model

Back 40

introduction, growth, maturity, decline

Front 41

What are the two life cycle models?

Back 41

1) product life cycles
2) industry life cycles

Front 42

What are firm resources?

Back 42

firm resources consist of the productive assets owned by a firm and its workforce.

Front 43

What are 3 categories of firm resources?

Back 43

1) tangible (physical, financial)
2) intangible (tech, reputation, culture)
3) human (skills, knowhow)

Front 44

Six steps to identify organizational capabilities?

Back 44

1) Technology
2) product design
3) manufacturing
4) marketing
5) distribution
6) service

Front 45

What is Porter's value chain?

Back 45

Support activities (firm infrastructure, HR mgmt, tech development, procurement)

Primary activities (inbound log., ops, outbound log, mktg&sales, service)

Front 46

Two approaches to capacity development?

Back 46

1) internal development
2) external development

Front 47

What is competitive advantage?

Back 47

a firm possesses a competitive advantage over its rivals when it earns (or ahs the potential to earn) a persistently higher rate of profit.

Front 48

How does competitive advantage emerge?

Back 48

good positioning, adaptation, innovation

Front 49

What are two sources of competitive advantage?

Back 49

1) cost advantage
2) differentiation advantage

Front 50

What are seven drivers of cost advantage?

Back 50

economies of scale, economies of learning, production techniques, product design, input costs, capacity utilization, residual efficiency

Front 51

Two approaches to cost reduction?

Back 51

1) corporate restructuring
2) business process reengineering

Front 52

What are elements of corporate restructuring?

Back 52

plant closures
outsourcing
delayering and cuts in admin staff

Front 53

What are elements of business process reengineering?

Back 53

several jobs combined into one, minimizing steps, controls, and reconciliation, hybrid centralization/decentralization.

Front 54

What is product integrity?

Back 54

the consistency of a firm's differentiation.

Front 55

Three techniques for analyzing product attributes and positioning?

Back 55

1) multidimensional scaling
2) conjoint analysis
3) hedonic price analysis.

Front 56

What is business strategy?

Back 56

concerned with how a firm competes within a particular market

Front 57

What is corporate strategy?

Back 57

concerned with where a firm competes (scope of its activities)

Front 58

How do you define the scope of a firm's activities?

Back 58

1) product range
2) vertical integration
3) geography

Front 59

What are advantages of vertical integration?

Back 59

1) technical economies from integrating processes
2) superior coordination
3) avoids hold up problems and transaction costs of market contrats

Front 60

What are limits of vertical integration?

Back 60

1) limits flexibility
2) may compound risk
3) may create management difficulties

Front 61

Eight types of vertical relationships?

Back 61

spot sales/purchases, long-term contracts, agency agreements, franchises, joint ventures, vertical integration, supplier/customer partnerships, informal supplier/custoemr relationships

Front 62

Two key issues in designing vertical relationships?

Back 62

1) how is risk allocated between the parties?
2) are the incentives appropriate?

Front 63

Porter's competitive advantage of nations?

Back 63

argues that sustained competitive advantage depends on dynamic factors and contends that critical impact of a national environment is on the ability of firms embedded within it to upgrade and innovate.

Front 64

WHat is Porter's national diamond framework?

Back 64

Factor conditions, relating and supporting industries, demand onditions, strategy structure and rivalry.

Front 65

Three motives for diversification

Back 65

1) growth
2) risk reduction
3) profit

Front 66

Porter's 3 tests for diversification and shareholder value?

Back 66

1) attractiveness test (diversification works best when industries are attractive)
2) cost of entry test - entry costs can't capitalize all future profits.
3) better-off test - some form of synergy should be present

Front 67

3 potential diversification advantages?

Back 67

1) market power
2) economies of scope
3) economies from internalizing transactions.