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Business Strategy > 1st Half > Flashcards

1st Half Flashcards

1
Q

What is strategy?

A

1) the set of actions managers take in order to outperform competition and achieve superior profitabiltiy.

2) a central, integrated, externally oriented concept of how the business will achieve its objectives

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2
Q

What constitutes a competitive andvantage?

A

Meeting customer needs either more effectively (higher value perceived) or more efficiently (at lower cost)

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3
Q

What is the winning strategy test?

A

A winning strategy must pass 3 tests:

1) fit test
2) competitive advantage test
3) performance test

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4
Q

What is the strategy making - strategy executing process?

A

1) develop vision, mission, and a set of core values
2) set objectives to measure performance and track progress
3) craft a strategy to reach objectives
4) execute efficiently and effectively
5) monitor and correct

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5
Q

What is a strategic vision?

A

Management’s aspirations for the company’s future and the course and direction intended to achieve them. It provides direction and sets the far apart from its rivals

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6
Q

List some vision statement Do’s and Dont’s

A

Do’s:
be graphic
be forward looking
keep it focused
have some flexibility
keep it feasible
make it memorable

Dont’s:
don’t be generic
don’t use superlatives
don’t be present looking
don’t use uninspiring terms

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7
Q

What is a mission statement?

A

A mission statement defines present operations: what the company does and who it serves. it is focused on describing the business and not on making a profit.

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8
Q

What are core values?

A

The beliefs, and behavioural norms which make up the firm’s culture

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9
Q

What are the characteristics of well stated objectives?

A

Well stated objectives are:
1. Specific
2. Measurable
3. Challenging
4. Time bound

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10
Q

What types of objectives can a company set?

A

1) financial objectives (focused internally)
2) strategic objectives (focused externally like market position)

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11
Q

What are the three levels of strategy?

A

1) Corporate / International level (product diversification / geographic diversification: int/global/transnational/multidomestic)

2) Business level (cost leadership vs differentiation strategy)

3) Function / Department level (marketing, finance, operations strategy)

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12
Q

What is the PESTEL analysis

A

Macro environment analysis of strategic components covers:
1) political
2) economic
3) social
4) technological
5) legal and regulatory
factors

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13
Q

Describe Porter’s five forces

A

Suppliers, substitutes, buyers, and potential new entrants determine rivalry among competitors.

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14
Q

What is a strategic group?

A

A group consisting of industry members with similar competitive approaches and positions in the market

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15
Q

How do you build a strategic group map?

A
  1. identify competitive characteristics
  2. plot firms on a two variable map using pairs of competitive characteristics
  3. assign firms occupying about the same map location to the same strategic group
  4. draw circles around each strategic group proportional to the size of the group’s share of total industtry sales revenue
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16
Q

What variables are typically used to create group maps?

A
  1. price vs quality
  2. geographic coverage (local, regional, national, global)
  3. Product line breadth (wide, narrow)
  4. Degree of service offered
  5. distribution channel (retail, wholesale, internet, multiple)
  6. degree of vertical integration
  7. degree of diversification
17
Q

What should a company do when its industry is attractive, relatively unattractive, or unattractive?

A

in order it should: aggresively invest, protect its present position, find a buyer to acquire its business

18
Q

What is a SWOT analysis?

A

a tool for identifying situational reasons underlying a firm’s performance:

Strengths: the basis for strategy (what to leverage)

Weaknesses: deficient capabilities

Opportunties: the basis for strategic objectives

Threats: the basis for defense strategies

19
Q

What is the VRIN test?

A

To achieve a sustainable competitive advantage, a firms resources should have the following characteristics:

  1. Valuable (allow to pursue opportunities, neutralize threats)
  2. Rare
  3. Inimitable (difficult or costly to imitate)
  4. Nonsubstitutable
20
Q

Which two factors make it hard to imitate resources and capabilities?

A
  1. Social complexity: culture, interpersonal relations, customers and suppliers relationships, R&D.
  2. Casual ambiguity: how the firm uses resources and capabilities.
21
Q

What types of resouces are there?

A

Tangible and Intangible

22
Q

What is the purpose of value chain analysis

A

The value chain outlines the primary activities and related support activities that create customer value. A value chain analysis permits a deep look at the firm’s cost structure and its ability to profitably offer low prices.

23
Q

What is a comparative value chain analysis?

A

a comparison, activity by activity, of how effectively and efficiently a firm delivers value to its customers relative to its peers

24
Q

Which are the main 2 strategies for building competitive advantage?

A
  1. Low cost strategy
  2. Differentiation strategy
25
Q

List some cost cutting measures

A
  1. economies of scale
  2. learning curve
  3. supply chain efficieny
  4. bargaining power
  5. selling direct to consumers bypassing distributors
  6. reduce material handling and shipping costs by having suppliers locate plants or warehouses close to the firm
26
Q

which market circumstances favor low cost strategies?

A
  1. lots of competition
  2. many substitutes
  3. few ways to differentiate
  4. buyers incur low switching costs
27
Q

how do you effectively approach differentiation?

A
  1. study carefully buyers needs
  2. incorporate features that appeal to buyers (tangible and intangible features)
  3. higher prices to recoup differentiation costs
28
Q

which areas of production and distribution should a company look at for driving up product value

A
  1. Sales and marketing
  2. Quality control processes
  3. Product features and performance
  4. Customers services
  5. Production R&D
  6. Technology and innovation
  7. Input quality
  8. Employee skill and training
29
Q

Why is differentiation difficult for rivals to imitate?

A
  1. reputation
  2. buyers relationships
  3. unique product or service
30
Q

Which market circumstances favor differentiation?

A
  1. buyers’ needs are divers
  2. few firms follow a similar differentiation approach
  3. rapid change in technology and product features
31
Q

What does supplier’s bargaining power depend on?

A
  • company’s ability to vertically integrate and take the supplier’s place
  • fraction of the cost of supplier’s product relative to the total cost of the good
  • whether the supplier provides a differentiated input difficult to outsource
32
Q

Describe a company’s value chain

A

Primary activities:
1. supply chain management
2. operations
3. distribution
4. sales and marketing
5. customer service

Support activities and costs
1. R&D, technology
2. HR
3. General administration

33
Q

Important factors to consider when picking strategic alliances

A
  1. cultural affinity
  2. common goals
  3. ensuring partners respect their commitment
  4. not choosing a direct competitor

Business Strategy (2 decks)

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