03 Strategic Choice: Business & Corporate Strategy

Question 1

Strategic choices at the corporate and business level
–> Businness Level

Answer 1

Question 2

Strategic Business Unit

Answer 2

Question 3

How to compete in the market?
–> Def.
–> Two generic competitive strategies

Answer 3

The “heart” of strategy
- About how a company, business unit or organization creates value for its users
- this value > costs of supplying them
- this value > value of rivals.

Question 4

(CL) Cost Leadership - Sources

Answer 4

ex. coffee machine (many diff parts vs. fewer parts, easier to assemble)

Question 5

(CL) Cost-Based Strategies - 2 Requirements

Answer 5

Question 6

(D) Differentiation - Sources

Answer 6

• product attributes & introductions (Apple: iPhone, iPad, …)
• customer relationships (services, …)
• complements (coffee pads, coffee machine)

Question 7

(D) Differentiation - 2 Requirements

Answer 7

Question 8

(CL v D) Cost Leadership vs. Differentiation

Answer 8

Question 9

(CL v D) Generic Strategy Types

Answer 9

Question 10

(CL v D) U-Curve (Porter)

Answer 10

Question 11

(CL v D) Holistic Strategy

Answer 11

Ways to follow the strategy:
- Harness the power of your people and cultures
- Make good use of technology
- Utilize the power of business ecosystems
- Make investment decisions strategically

Question 12

(HS) Hybrid Strategies (Model)

Answer 12

Question 13

(HS) Hybrid Strategies - Different Forms

Answer 13

1. Sequential (Bosch; targeting the premium market & low-cost cars)
2. Multi-local (Migros; Migros & Denner)
3. Simultaneous (Uber)

Question 14

(DC) Digital Competition: Competing on Scale

Answer 14

Question 15

(DC) From thinking products to thinking platforms

Answer 15

Question 16

(NF) Normative Frame - Def.

Answer 16

Question 17

(NF) Concepts Related to Strategy & Responsibility

Answer 17

Question 18

(NF) Business’s Role in Society
–> 2 theories

Answer 18

1. Stakeholder theory
   - If a firm creates value for its stakeholders, it will create value for its shareholders
   - Managers have a duty to balance the shareholders’ (financial) interest against other stakeholders’ interests
2. Shareholder theory
   - Firms engaging in social development will waste wealth, ultimately negatively affecting society in the long-run. Social development is best in the hand of governments.
   - Managers have a duty to maximize shareholder value

Question 19

Strategic choices at the corporate and business level
–> Corporate Level

Answer 19

Question 20

Corporate Parenting
–> 2 Basic Attitudes

Answer 20

Question 21

(CD-CS) From Corporate Discount to Corporate Surplus

Answer 21

Value-adding activities
- Visions
- Synergies
- Coaching
- Provide central services and resources (e.g., financial management, purchasing, etc.)
- Intervention

Value-destroying activities
- Causing additional management costs
- Increasing bureaucratic complexity
- Concealment of financial performance

Question 22

(CD-CS) Quality of Corporate Management

Answer 22

Question 23

(DS) Diversification Strategies (Matrix)

Answer 23

Question 24

(DS) Connecting Strategic Choice and Capabilities

Answer 24

Question 25

(CST) Types of Corporate Strategy (3)

Answer 25

1. Portfolio Manager
   - e.g. Berkshire Hathaway
   - Portfolio optimisation of highly autonomous businesses
   - conglomerate as main strategy
2. Parental Developer
   - e.g. GE
   - Active and intervening role of corporate management to improve business performance
   - Vertical optimizer „plus“; Running corporate initiatives
3. Synergy Manager
   - e.g. VW
   - Functional integration of the businesses to realise operative synergies (costs and growth synergies)
   - Horizontal optimiser „plus“; One-firm approach, integrated corporate business model

Question 26

(CST S) Types of Synergies

Answer 26

Horizontal optimisation: Create new markets by combining competencies across units (e.g. create mobile defibrillators from its „medical unit“ and „consumer electronics unit“

Question 27

(CPM) Corporate Portfolio Management - BCG Matrix

Answer 27

Question 28

(CPM) Possibilities to Restructure Portfolio

Answer 28

Question 29

(CPM) BCG Matrix - Pros and Cons

Answer 29