4: Business Strategy

Question 1

What are the three levels of strategy?

Answer 1

Corporate strategy
- for business as a whole

Business strategies
- strategies for strategic business units

Functional operational strategies

Question 2

What are the four stages of a strategic plan?

Answer 2

1. Strategic analysis (where we are now)
2. Strategic choice
3. Strategic implementation
4. Review and control

Question 3

7 steps in the formal strategic plan

Answer 3

External and internal analysis

Corporate appraisal

Mission and objectives

GAP

Strategic choice

Strategy implementation

Question 4

How does external analysis compare with internal analysis?

Answer 4

External - opportunities and threats

Internal - strengths and weaknesses

Question 5

Features of static or dynamic environments?

Answer 5

Static/slow change
Single product/market
Simple technology
Safe environment

Dynamic changes
Diverse product/market
Different environment
Dangerous to stand still

Question 6

What are the six aspects of a PESTEL analysis?

Answer 6

Political

Economic

Social and demographic

Technological

Ecological

Legal

Question 7

What is involved in Porter’s five forces analysis?

Answer 7

Competitive rivarly!

• threat of new entrants
• threat of substitutes
• bargaining power of suppliers
• bargaining power of customers

Question 8

What are the four types of competitor?

Answer 8

Brand - similar products
Industry - different markets and dist
Form - different products, same need
Generic - same disposable income

Question 9

Four competitor reaction profiles?

Answer 9

Laid back - no response to competitor moves

Tiger - responds aggressively to all competitor mives

Selective - reacts to some threats but not all

Stochastic - difficult to predict when or how they will react

Question 10

What are the resources in the 9Ms model?

Answer 10

Men/Women
Machines
Money
Material
Markets
Make up
Management
Methods
MIS

Question 11

Describe Porter’s value chain analysis?

Answer 11

Used to analyse the sequence of business activities which add value

The margin is what is measured

Consists of primary activities and secondary activities

Question 12

What is a Product Life Cycle analysis?

Answer 12

Application of life cycle theory to product or services

Presented as a diagram

These stages in order
- development
- introduction
- growth
- maturity
- decline

Question 13

What is the BCG matrix and what are the four positions?

Answer 13

Analyses the balance of a business’s product portfolio based on a combination of both market growth and share.

Star
Question mark
Cash cow
Dog

Question 14

Describe the star position in the BCG matrix?

Answer 14

Market share and growth are both high

Under constant threat from new entrants, business must continue to build

Cash neutral position

Question 15

Describe the question mark position in the BCG matrix?

Answer 15

High market growth, low market share

Must decide whether to harvest or build

Negative cash flow

Question 16

Describe the cash cow position in the BCG matrix?

Answer 16

High market share, low market growth

Reduced threat from new entrants

Business can hold position, or harvest for positive cash flow

Question 17

Describe the dog position in the BCG matrix?

Answer 17

Low market share, low growth

Business must decide whether to divest, or hold position if modest cash flows are being made

Question 18

What is a SWOT analysis?

Answer 18

Internal and external analysis combined

Used to perform a corporate appraisal to evaluate the strategic position of the organisation

Strength
Weakness

Opportunities
Threats

Question 19

What are the four main types in Mendelow’s stakeholder matrix?

Answer 19

Minimal effort can be direct

Keep informed

Keep satisfied

Key players need participation

Question 20

What are the two choices with strategies?

Answer 20

How to compete

How to grow

Porter: competitive advantage can be achieved by finding a position that competitors find hard to replicate

Question 21

The four types in Porter’s strategies?

Answer 21

Cost leadership
(Broad target, lower cost)

Differentiation
(Differentiation, broad target)

Cost focus
(Narrow target, lower cost)

Differentiation focus
(Narrow target, differentiation)

Question 22

What is the idea behind cost leadership?

Answer 22

Achieving a lower cost base than rivals allows the business to reduce prices

Question 23

What is the idea behind differentiation?

Answer 23

Standing out due to product feature or consumer perception

Question 24

What is the idea behind focus strategy?

Answer 24

Specialising on a clearly defined market segment

Question 25

The four types in Ansoff’s matrix?

Answer 25

Market penetration

Market development

Product development

Diversification

Question 26

What are the four matrix of Ansoff’s matrix?

Answer 26

Existing product, existing market
- market penetration

New product, existing market
- product development

Existing product, new market
- market development

New product, new market
- diversification

Question 27

What are the four functional strategies with strategy implementation?

Answer 27

HR management

Finance

Operations

Marketing

Question 28

Bonus internal analysis technique?

Answer 28

Analysis of distinctive competencies

Question 29

Ansoff’s matrix part 2?

Answer 29

Competitive: how the business competes

Functional: role of a function

Business: how things would adjust in due course after decisions are made

Product/market: how the business will grow

Question 30

What do strategic decisions include?

Answer 30

On the scope of a business’s activities

On implications for operational activities

Concerns for allocation of resources

Question 31

4 strategies in the BCG matrix?

Answer 31

Star - build - cash neutral

Question mark - harvest or build - negative cash flow

Cash cow - hold or harvest - positive cash flow

Dog - divest or hold - modest positive cash flow