2. Strategic Positioning (Environment, Capabilities) Flashcards
PESTEL Framework
An instrument for scanning macro economic influences identifying change categorizing environmental factors into six key types (influencing strategy): Political/Economical/Social/Technological/Ecological/Legal
Political Factors
Include government policies taxation changes foreign trade regulations political risk in foreign markets and changes in trade blocks.
Economic Factors
Include business cycles interest rates personal disposable income exchange rates and unemployment rates.
Social Factors
Include changing cultures and demographics lifestyle changes consumerism and changes in culture and fashion.
Technological Factors
Include new discoveries and technology developments such as developments on the internet and nano-technology.
Ecological Factors
Refer to environmental issues like pollution waste and climate change.
Legal Factors
Include legislative and regulatory constraints or changes such as IPR competition law and health and safety law.
Using PESTEL: Megatrends
large-scale changes that are slow to form (globalisation/climate change)
Using PESTEL: Inflection points
when trends shift sharply up- or downwards
Using PESTEL: Weak signals
signs of future trends
Five Forces Framework
Analyzes industry attractiveness based on
* entry barriers
* substitutes
* buyer power
* supplier power
* rivalry.
When is rivalry at its maximum between competitors?
Degree of rivalry increases when competitors are of roughly equal size the market is mature and there are high fixed costs.
Barriers to Entry
Factors that need to be overcome by new entrants if they are to compete. High barriers to entry result in a low threat of entry.
Threat of Substitutes
Products or services that offer a similar benefit but have a different nature increasing the threat if they have a superior price/performance ratio.
Bargaining Power of Buyers
High when buyers are concentrated have low switching costs or can supply their own inputs.
Bargaining Power of Suppliers
High when suppliers are concentrated provide a specialist input or when switching costs are high.
Value Net
A map of organizations in a business environment demonstrating opportunities for value-creating cooperation and competition.
Industry Life Cycle
Describes the stages of growth and development through which industries pass from introduction to decline.
Blue Ocean Strategy
Focuses on creating new market spaces where competition is minimized contrasting with ‘Red Ocean’ where rivalry is intense.
Strategic capabilities and give 4 key criteria for achieving sustainable comp. advantage
Resources(what we have) and competences(how resources are used effectively) | value/rarity/inimitability/organizational support (VRIO)
Threshold vs distinctive capabilities
Threshold: necessary to compete (qualifiers). Distinctive: necessary to achieve competitive advantage (winners)
VRIO Framework
Assesses capabilities based on Value Rarity Inimitability and Organizational support to determine competitive advantage.
SWOT Analysis
A framework for identifying and analyzing the internal Strengths and Weaknesses and external Opportunities and Threats of an organization.
Benchmarking
Comparing performance against other organizations to understand relative performance and identify best practices. | Industry/Sector benchmarking: in same industry. Best-in-class benchmarking: other industries
Value Chain
Describes the activities within an organization that together create a product or service consisting of primary and support activities.
