Boundaries of the Firm

Question 1

What is strategy?

Answer 1

• Porter: “…about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value”

Question 2

What does good strategy provide answer for?

Answer 2

1. Where do we compete?
2. What unique value do we bring to markets?
3. What resources/ capabilities do we utilize to deliver value?
   § E.g. Unique reputation, specialist knowledge
4. How to sustain ability to create and provide unique value?

Question 3

What is the valuable approach?

Answer 3

○ Understand how firms organise and compete

○ Understand markets and nature of competition

○ Secure foundation for good strategic decisions

Question 4

What are horizontal boundaries of the firm?

Answer 4

Positioning in a market and how much space a firm wants to take up in a market

Size in any given market/ Scope

Question 5

What are vertical boundaries of the firm?

Answer 5

linear framework of supply chain

How to create/provide a product or a service

Question 6

What is strategic positioning?

Answer 6

§ On what basis does a firm compete?

§ Achieving and sustaining a competitive advantage
Key target: Value

Question 7

What is internal organisation?

Answer 7

§ Architecture or structure of the firm

§ Incentive structures