1 Flashcards
what is strategy?
long term direction and scope of an organisation- an advantage in a changing environment by order, resources and competencies to fulfilling stakeholder obligations.
what is a competency?
the way that an organisation uses or deploys its resources and capabilities.
what are the three levels of strategy?
1- corporate strategy
2- strategic business unit- SBU
3- operational strategy
where is corporate strategy determined ?
which is determined at main board level for the whole business
what is strategic business unit?
a section within a large business responsible for planning developing and producing and marketing its own products and services to compete within their particular markets.
what is operational strategy?
refers to the main functions within each SBU such as productions and finance etc. how they deliver the strategies effectively to compliment the strategiesis determined at corporate level
what is policy?
a set of rules made by an organisation to guide its decision making?
what is the rational model of strategy?
it is used to explain how an organisation determines strategy
what are the stages of rational model of strategy? how many are there?
3
1- analysing
2- choice
3- implementation
in the rational model of strategy what happens in stage 1
analysing- assessing the impact on organisations, strategic position and options by analysing organisations external environment for threats and opportunities and strategic purpose.
in the rational model of strategy what happens in stage 2
choice- identifying and evaluating alternative strategies and selecting the one to pursue and determine the way it will be achieved. e.g what products to continue/ discontinue
in the rational model of strategy what happens in stage 3
implementation- how strategies are put into action
- organisation needs to consider if the strategy is acceptable and feasible to key stakeholders
what is intended strategy?
strategy and organisation that is set after analysis and discussion which it will implement
- if full realised it becomes a deliberate strategy
( no change to strategy)
what is emergent strategy
when managers or directors of the SBU interpret the intended strategy and adapt it to changing external circumstances to take advantage of opportunities or mitigate threats
what is realised strategy
strategy that an organisation really follows
the product of the organisation’s- intended, deliberate, emergency strategies
what are the differences between private and public sector strategies?
- public- operate political rather market environment ( private is opposite)
- private - key is profitability but public is about accomplishing organisations mission and giving best service
3.private - important to provide value to shareholders/customers where the end user pays directly for goods and services - aka business value
BUT in public- the end user does not pay directly for services but would pay via tax for services- called public value
what is public value?
relates to the value an organisation contributes to society
what are mandates?
defined as what an organisation is formally/ informally required to do or not do by external authorities
what is globalisation?
refers to the many ways in which countries are connected by transactions beyond nation stay boundary e.g foreign exchange markets.
characteristics of globalisation
- globalisation services- e.g banking
- global financial markets- e.g international trading of financial assets and currencies
- multilateral agreements
- increased power of supranational organisations e.g the EU
layers of business environment
1- the macro- environment ( broad environmental factors that impact to a greater or lesser extent to organisations)
2- industry of sector- ( the organisation operates within, micro environment)
3-competitors
4- the organisation
3- markets
( numbers mean each layer)
what is pestle analysis ?
used to identify the broad environmental factors within the macro environment that impact an organisation positively or negatively
pestle stand for? ( external environment analysis)
P olitical factors- regulation, taxes
E conoomic factors- employment, interest rates
S ocial factors- demographic, age, population growth
T echnological factors - AI, benefits+limitations of tech
L egal factors- business, employment laws, data protection
E cological factors- climate change, disasters, pressure groups and consumer demands
what is scenario planning ( external environment analysis)
- useful tools for organisations where the high levels of uncertainty arising from complexity/ dynamism in external environment.
- it includes a detailed view of how the business environment of an organisation may develop in the future based on groupings of key environmental influences and drivers of change where theres a high levels of uncertainty
what are the stages of scenario planning?
4
1- identify key drivers
2- build scenarios
3- developer contingency plans
4- monitor environment and adjust plans
scenario planning stage 1
- identify key drivers
-identify key assumptions or forces in environment which will be the basis of scenarios ( can be taken from a pestle analysis) - seek to understand the determinant of and trends in key assumptions/ factors
- focus on the forces that have had or are expected to have the most impact and forces that have the greatest potential uncertainty.
scenario planning stage 2
- build scenarios
build scenarios from different and logically consistent configurations of assumptions about outcomes. - No numerical probabilities here
scenario planning stage 4
- monitor environment and adjust plans
closely monitor environment indicators to determine when a particular scenario is becoming reality so that a contingency plan can be activated
what are porters five forces ( external environment analysis) ( definition)
a framework that analyses an organisation industry in terms of 5 competitive forces
what are the 5 stages of porters forces?
1 - threat of new entrance
2- threat of substitutes
3 - power of buyers
4- power of suppliers
5- extent of rivalry between competitors
what is stage 1 in porters forces
- threat of new entrance
how easy or difficult it is for new organisation to enter the industry - barriers of entry- high start up costs
- response of existing firms- price discrimination/ collusion
what is stage 2 in porters forces
threat of substitutes
concerned with availability of different products or services that meet the same need of customers
look outside traditional industry
what is stage 3 in porters forces
-powers of buyers
concerned with where the buyers of the industries products or services are powerful enough to demand lower prices or better quality
- can be done on bargaining powers and individual negotiation and depends on the number of customers ( greater influence)
what is stage 4 in porters forces
power of suppliers
where the suppliers to the industry can exert a pressure and charge higher prices
dominant suppliers will exert higher pressure on fewer suppliers leads to higher pressure
what is stage 5 in porters forces
extent of rivalry
concerned with direct competitiveness, rivalry between an organisation and immediate competitors.
factors that effect competitive rivalry-high fixed cost,
high exit barriers
what are factors that effect competitive rivalry
high fixed cost
high exit barriers
what is porters diamond?( external environment analysis)
a model to understand competitive advantage that nations or regions within a nation possess due to certain factors that characterise them
used for organisations if they should move or expand in another nation or region
what are the four factors that porters diamond proposes?
porters diamond proposes that location and national advantages are due to the following four factor:
- local factor conditions- raw materials/ labor, strong technology industry, more skilled workers, excellent infrastructure to create advantages
- local firm strategy- structure and rivalry, domestic rivalry can drive domestic firms to compete and have competitive advantage ( Lower prices) allow them to move into international market
- local demand conditions- refers to the size and nature of the customer base within the nation for products/ service which also drives innovation and product improvement
- Local related support industries- groups of supporting firms and their proximity can help give competitive advantage for a particular industry. e.g supply chains
