6. Strategy Formulation Flashcards
1
Q
‘strategic’ refers to
A
organisation as a whole
2
Q
strategic planning
A
structured process of organisations defining their future direction, goal and objective setting, and developing strategies to achieve these.
‘big picture’ stuff
3
Q
strategy
A
basic means by which the firm competes
4
Q
reactive/defensive reasons for going international
A
- globalisation of competitors
- trade barriers
- regulations and restrictions
- customer demands
5
Q
proactive/aggressive reasons for going international
A
- economies of scale
- growth opportunities
- resource access and cost saving
- incentives
6
Q
strategic management process
A
- strategic planning process
- implementation process
7
Q
strategic planning process
A
- define/clarify mission and objective
- assess environment for threats and opportunities
- assess internal strengths and weaknesses
- consider alternative strategies using competitive analysis
- choose a strategy
8
Q
- Establish mission and objectives
A
- objectives flow from the mission
- mission: mission statement
- objectives: marketing, production, finance, profitability, research and development
9
Q
- Assess external environment
A
- global risks
- regional risks
- national risks
10
Q
- Analyse internal factors
A
- internal analysis: tech capabilities, distribution channels, promotion capabilities
- competitive analysis: SWOT, distinctive competencies, comparative advantage, e-business
11
Q
- Evaluate global and international strategic alternatives
A
- globalisation
- localisation
12
Q
institutional effects on international competition
A
- attractiveness of overseas markets
- entry barriers and industry attractiveness
- antidumping as an entry barrier
13
Q
competitive analysis
A
shows the firm’s capabilities, key success factors and current competitors (global and local) for the proposed market
14
Q
Porter’s 5 Forces industry-based framework
A
- rivalry among existing competitors
- bargaining power of suppliers
- bargaining power of buyers
- threat of new environments
- threat of substitute products or services
15
Q
P1. rivalry among existing competitors
A
- concentration (amount)
- relative size of competitors
- industry growth rate
- fixed costs vs variable costs
- product differentiation
- buyers switching costs
- diversity of competitors
- exit barriers
16
Q
P2. bargaining power of suppliers
A
- supplier concentration
- availability of substitute inputs
- importance of supplier input to buyer
- supplier’s product differentiation
- importance of industry to suppliers
- buyer’s switching costs to other inputs
- supplier’s threat of forward integration
- buyer’s threat of backward integration
17
Q
P3. bargaining power of buyers
A
- number of buyers relative to sellers
- product differentiation
- switching costs to use other products
- buyer’s profit margins
- buyer’s use of multiple sources
- buyer’s threat of backward integration
- seller’s threat of forward integration
- importance of product to the buyer
- buyer’s volume
18
Q
P4. threat of new environments /entrants
A
- barriers to entry
- incumbent’s defence of market share
- industry growth rate
19
Q
P5. threat of substitutes
A
- complete or partial substitute
- relative price of substitute
- relative quality of substitute
- switching costs to buyer
20
Q
application of Porter’s framework
A
- not all industries are equal in terms of their potential profitability and attractiveness
- strategists should assess opportunities and threats underlying each competitive force affecting an industry, and then estimate the likely profit potential of the industry
- challenge is to stake out a position that is strong and defensible relative to the five forces
21
Q
strategy diamond
A
- staging
- arenas
- vehicles
- differentiators
- economic logic
22
Q
Strategy diamond: staging
A
Pace and sequence of major strategic moves of a firm
23
Q
Strategy diamond: arenas
A
What business will be competed, where and with how much emphasis. Arenas clarify product categories, customer segments, geographic markets and customer markets.
24
Q
Strategy diamond: vehicles
A
How we will get there, describe manner in which arenas will be served
25
Strategy diamond: differentiators
How a firm will succeed in the marketplace
26
Strategy diamond: economic logic
Where will we generate profits
27
Globalisation
Establishment of worldwide operations and the development of standardised products and marketing.
28
Localisation
Local markets are linked together within a region, allowing more local responsiveness and specialisation
29
Pressures to globalise
Degree to which companies need to integrate and coordinate all of their value chain activities on a worldwide basis to achieve global efficiencies and better respond to competitive threats:
- high production costs
- declining tariffs: encourage trading across borders and open up new markets
- ICT (tech) explosion: makes the coordination of remote operations easier and increases the commonality of consumer tastes
30
Pressures to localise
Degree to which companies need to tailor their products or services to satisfy local market demands:
- unique consumer preferences: result from cultural or national differences
- domestic subsidies
- new production technologies
- localised business development: counters aggressive local competition
- government regulations
31
4 international strategies (Bartlett and Ghoshal)
1. international strategy
2. global standardisation strategy
3. transnational strategy
4. localisation strategy
32
international strategy
basic strategy with low pressures for global integration and localisation, often involves exporting of specialised products/services developed in home market; simplistic and minimal globalisation of a specialised product with little regard for importing country environment
33
global standardisation strategy
strategy with goals and directions set out on a global basis to maximise efficiency with little customisation of products/services across markets; conformity or sameness in global integration with no regard for local environment
34
transnational strategy
strategy where firm moves key activities to wherever they can be carried out best while still adapting to local product or service preferences; globalisation efficiency whilst still localising to host environment
35
localisation (multi-domestic) strategy
strategy where goals are developed and implemented independently for specific countries because of a high need for local responsiveness; little global integration as focus is placed on responding to host environment
36
transnational strategies analysis
- achieve low cost through global efficiency
- provide differentiated products and services
- account for local customer differences in geographic markets
- use e-business for global expansion
37
CAGE distance framework
looks specifically for the distance between nations; identifies differences between countries that companies should address when creating international strategies and understanding host country environments.
38
CAGE - C
cultural distance; how different in terms of culture are we?
- language
- religion
- social norms
- perceptions of time, authority
39
CAGE - A
administrative distance; how different in terms of administration are we?
- colonial ties
- local currency
- laws and regulations
- trade agreements
40
CAGE - G
geographical distance; how different in terms of geography are we?
- physical distance between countries (relevant for heavy products)
- ports and airports
- access to waterways
- neighbouring countries
41
CAGE - E
economic distance; how different in terms of economy are we?
- population
- incomes
- development
- education
42
cultural sensitivity
determines the impact and importance of culture in industries
- high linguistic content products
- cultural/national identity products
- products of varying size, standards, country-specific quality standards
43
administrative sensitivity
determines what industries governments will have highest involvement in
- national 'champion' goods
- large employers/suppliers for government
- degree to which natural resources are exploited
44
geographic sensitivity
determines what role geography will play in a product/industry, and with what intensity
- fragile/perishable products
- supervision and operational requirements
45
economic sensitivity
determines what economic differences exist and the impact and to which severity these will have
- production cost differences
- different distribution or business systems
46
CAGE framework analysis
- visibly shows differences
- helps one understand liability of foreignness
- helps assess natural ownership and compare foreign competitors
- helps compare markets
- allows companies to discount by distance
47
e-business for global expansion
benefits of B2B depends on internet usage
48
e-global - when to choose
- trade is global in scope
- business does not involve delivering physical orders
- business model can be easily hijacked by local competitors
49
e-local - when to choose
- production and consumption are regional in scope
- customer behaviour and market structures differ lots across regions but are similar within a singular region
- supply-chain management is very important to success (physical product that has to be delivered)
50
influence of culture on strategic choices
- China & Japan have longer-term time horizons than the USA
- high uncertainty-avoidance cultures prefer non-equity modes of entry
- high power-distance cultures tend to use more equity modes of entry abroad
