BST Flashcards
Strategy level - mission and objectives
Corporate
Strategy level - product/market decisions
corporate
Strategy level major investment decision
corporate
Strategy level
financing
corporate
Strategy level
relations with external stakeholders
corpporate
Strategy level
marketing mix
business strategy
Strategy level
HRM
functional
Strategy level
hedge risk
functional
What is defined
The values and expectations of those who most strongly influence strategy about the scope and posture of the organisation
Mission
What are the elements of a successful mission
purpose
strategy
policies and standards of behaviour
value
What are these benefits of
provide a basis of control for the organisation (set managerial Goans on the basis of them)
Communicate nature of the organisation to stakeholders
Help install core values in the organisation
mission statement
What are these disadvantages of
PR exercises rather than a portrayal of values
Often full of generalisations from which it is impossible to tie down strategic implications or develop meaningful strategic objectives
May be ignored by those responsible for formulating or implementing strategy
mission statement
Three types of stakeholders
Internal, connected, external
Degree of dependency or reliance on stakeholders can be analysed according to which three criteria
disruption, replacement, and uncertainty
NFP - what is a target public
Group of individuals who have an interest or concern bout the charity
NFP - what is a client public
those who benefit from the organisations activities
What is defined
the network of organisations that enable the delivery of a product or service. Participants such as suppliers, customers, competitors interact through competition or collaboration
The eco sysetm
What approach is defined
environmental appraisal is a one off assessment which establishes the forces acting on the business at present and forecasts how these may develop during the years of the plan
rational planning appraoch
What approach is defined
The need for environmental scanning, continuous awareness by management of environmental issues, enabling them to be routinely considered in decision making
Strategic management approach
Consideration when validating and corroborating environmental information
- Integrity of source
- Forecasting and predictive record in past
- Degree of substantiation
- Age of the information
- Motivation of the providder
Static environments are characterised by
simple environment with few competitors, limited products and a slow rate of change
dynamic environment characterised by
complexity and rapid change
What is defined
the development of pictures of potential futures for the purposes of managerial learning and the development of strategic responses
Scenario planning
PESTEL
what relates t the distribution of power locally, nationally, and internationally
political
what is political risk
the possibility political factors will impact the business environment or prospects
What is defined
the stock of renewable and non-renewable natural resources which combine to yield a flow of benefits or services to people
natural capital
What should be used to identify macro factors in the external environment which may affect a particular industry
PESTEL
Risks under political include
Ownership risk
Operating risk (domestication)
transfer risk
political risk
Four elements of a mission
Purpose
Strategy
Policies and Standards of Behaviour
Values
What is described
Formal document stating the organisations mission, published in the organisation to promote desired behaviour
mission statement
What are the following benefits of
Provide basis for control
communicate the nature of the organisation to stakeholders
help install core values in the organisation
Mission statement
What are the following disadvantages of
PR exercises,
full of generalisations
May be ignored by those implementing strategy
Mission statements
What is the assumption of share holder wealth maximisation relied on for?
Making decisions using NPV or IRR
Evaluating divisional managers (ROCE/ROI)
Basis for bonuses
Benchmark to evaluate the board
What does SMART stand for
Specific
Measurable
Achievable
Relevant
Time bound
What type of stakeholders are employees and managers
Internal
What type of stakeholders are
Shareholders
Connected
What type of stakeholders are
Bankers
Connected
What type of stakeholders are
Suppliers and customers
Connected
What type of stakeholders are
Government and local authority
External
What type of stakeholders are
Interest and pressure groups
External
What type of stakeholders are
Community
External
What type of stakeholders are
Professional Bodies
External
What are the target public
Group of individuals who have an interest or concern about the charity
What are the client public
those who benefit from the organisation,
What are the three tiers in the business environment
Industry, Macro and degree of uncertainty
What is in the industry environment
threat of market entry
Bargaining power of buyer
substitutes
bargaining power of supplieres
rivalry amongst existing firms
What factors are in the macro environmetn
Political
Economic.
Social
Technological
Legal
Environmental
What are the elements of strategic analysis
Internal and external analysis
Corporate appraisal
Mission and objectives
Gap analysis
What follows from strategic analysis
Strategic choice
what follows from strategic choice
strategic implementation
What is the model for strategic analysis - strategic choice - strategic implementatoin
rational planning
What is the rational planning model approach to environmental appraisal
one off assessment establishing the forces acting on business at present and forecast how these may develop during the years of the plan
What is the strategic management approach require need for
environmental scanning, continuous awareness by management of environmental issues enabling them to be routinely considered indecision making
What are three key elements of an effective information system
Gathers environmental information
validates and corroborates the information
disseminates the information so those who need it can find it
Internal source of environmental information
employees
internal records systems
formal information resources
External source of environmental information
trade media
published accounts of rivals, suppliers and clients
government statistical reports
online
market reports
Issues to consider validity of environmental information
integrity of source
forecasting and predictive record in the past
degree of substantiation (more than one)
age of information
motivation of provider
How can information be disseminated
clear intranet
periodic briefing reports
periodic seminars to brief management
annual management development sessions at in or external business
What deals with changes that have an immediate short term impact
crisis management
In static environments, what is useful predictor of the future
historic and current environment - little help in dynamic
What is defined
The development of pictures of potential futures for the purposes of managerial learning and development of strategic responses
Scenario planning
what tries to take a longer term view of different ways an industry may develop
scenario planning
Steps in scenario planning
identify key factors (PESTEL)
understand historic trend re key forces
Build future scenarios
What is used to identify macro factors that affect an industry
PESTEL
What is defined
a company or assets may be expropriated or nationalised by the state , normally with compensation (confiscation without)
ownership risk
What factor does ownership risk relate to
political
what is defined
the firm may be required to take local patterns, there may be a guaranteed minimum shareholding for local investors
operating risk - indigenisation/domestication
what kind of factor is operating risk - indigenisation/ domestication
political
What is defined
may affect company ability to transfer funds or repatriate prfoits
transfer risk
What kind of factor is transfer risk
Political
What is defined
government of host country may change taxes or steel a stake in business to increase power or satisfy local public opinion
political risk
How can political risk be managed
detailed risk assessments before investing
partnering with local business to increase acceptance
avoid total reliance on one country
What does a falling domestic exchange rate mean for imported and domestically produced products and exports
exports more competitive
imports more expensive
Factors to consider economic
exchange rates,
interest rates,
economic infrastructure
Social factors
Population demographic,
family strucutre
diversity
social mobility
Cultural factors affecting strategy
market for product
promotional strategies
methods of conducting business
methods of managing staff
expectations of business conduct
Technology factors
The base
Changes
advances
automation
Environmental factors
Climate changes
energy gap
waste recycling
bio diversity
genetically modified organisms
Two main objectives of Green Finance strategy
align investment and CF generated by the private sector with sustainable growth
ensure any green initiatives lead to a strengthening of UK financial sector competitiveness
Three pillars to Government green finance strategy
Greening finance
financing green
capturing the opportunity
What is greening finance
ensuring financial decision making takes account of risks and opportunities generated by climate and environmental issues
What is financing green
encourage public and private investment in sustainable projects and other projects to help achieve carbon targets
What are the three legal factors
Systemic factors
cultural factors
context and regulatory factors
How does global competition affect firms
provides opportunity of new markets to exploit
presents threat of new sources of competition in home
offers opportunity to locate activity or supply chain (cheaper)
Drive cross border acquisition
What is globalisation
the production and distribution of products and services of a homogenous type and quality on a worldwide basis
Levitt global village characterised
consumers globally have same needs attitudes using same product, world one entity
Global corporation characterised by
world one entity
extended supply chain
Global HRM
Ohmae’s Five Cs - what for
number of reasons which may encourage firm to act globally
Five C’s
Customer
Company itself
competition
currency volatility
Country
What is porters diamond used for
national competitive advantage
what are the key determinants of Porter’s diamond
Firm Strategy , Structure , Rivalry
Demand conditions
Related and supporting industries
Factor conditions q
What are factor conditions
HR sells, physical, knowledge, capital, infrastructure
What are basic factors
natural resources (climate, semi skilled and unskilled) - inherited or their creation involves little investment
What are advanced factors
modern digital communications, highly educated personnel, research labs
necessary to achieve higher order competitive advantages
What is the role of demand conditions
the home market determines how firms perceive interpret and respond to buyer needs, puts pressure on firms to innovate and prodics launch for global ambitions
related supporting industires
competitive success in one industry often linked to success in related industries.
Role of structure
national cultural factors create certain tendencies to orientate business people to certain industriesS
Role of Strategy
Industries in different countries have different time horizons and funding needs etc. National capital markets set different goals for performance (banks v equity sh)
When an industry faces difficult times what are options
innovate in the industry to sustain competitive position
shift resources to another industry (diversification)
What happens if there is little domestic rivalry
firms happy to rely on home marketesW
What do tough domestic rivals teach firms
about competitive success
What is a cluster
linking of industries through relationships which are either vertical or horizontal. Supposedly key factor in competitive advantage of nations
How does porter claim firms gain competitive advantage
Lower costs to supply resulting in higher profitability (cost leadership)
Differentiated services/reputation resulting in higher prices and sales revenue (differentiation)
If home diamond factors give a comparative cost advantage over foreign rivals what should management adopt
cost leadership
If home factors give differentiation advantage over foreign rivals, management should adopt strategies based on
differentiation
If diamond does not confer advantage, what should management do
focus on sub sections which large players may have overlooked
Political risks for international business
stability of government
international relationships
ideology of government and role in economy
informal relationships between government officials and business
Dangers of foreign investment
expropriation
restriction on profit repatriation
cronyism
arbitrary charges in tax
pressure groups
What is protectionism
discouraging imports (e.g. raise tariff barriers and impose quotas)
is prWhat are tarrifs/custom duties
tax on imports, importer required to pay either % of value of imported good or per unit of good imported
what is an ad valorem duty
% of value imported good
what is specific duty
paid per unit of good imported
What are non-tariff barriers
restrictions on the quantity of a product allowed to be imported into a country
What are minimum local content rules
specified minimum local content of product allowed to be imported into a country.
What are minimum prices and anti dumping action
To stop sale of products overseas at lower prices, anti dumping measures include quotas, min prices or extra exercise duties
What are embargoes
total ban or zero quota
What are subsidiaries for domestic producers
financial help from government departments giving domestic producer cost advantage over foreign producers
What are exchange controls and exchange rate policy
regulations designed to make it difficult for importers to obtain currency needed to buy foreign goods
What are unofficial non-tarrif barriers
admin controls such as slow inspection processes, changing standards which are hard for o/s suppliers to anticipate and respond to
What are free trade areas, customs unions, and common markets examples of
trade bocs
What is a customs union
agree a common policy on barriers to external countries. tariffs, taxes and duties harmonised amongst members
What is the triad theory
USA, EU and Japan three main blocs, rejects idea homogenous products can be developed and sold throughout the world. MNC have to develop products for circumstances of each trait.
define porters five forces
five competitive forces influence the state of competition in an industry
What are porters five forces
Threat of new entrants
bargaining power of customers
threat of substitute products or services
bargaining power of suppliers
rivalry amongst existing firms
What do new entrants bring
extra capacity and more competition
Examples of barriers to entry
economies of scale and scope
product differentiation
capital requiremetns
switching costs
access to distribution channel
cost advantages of existing producers
response of incumbents
what can lower entry barriers
changes in environment
technological change
new distribution channels for products or services
Industry with low barriers to entry characterised by
large number of small firms
What are economics of scale
those arising within the business from the organisation of production (internal) or attainable by the business because of the growth of the industry as a whole
what are substitute products
product/service produced by another industry which satisfies the same customer need
How may substitutes affect proftability
ceiling on prices
affect volumes of demand
force expensive investment and service improvements
What determines threats from substitutes
relative price/performance and switching costs
Different types of buyers
industrial customers and distributors
governmental or other NFP
Consumers wanting better quality
What increases buyer power
customer buys large proportion of total output
product not critical to customer business
low switching cost
size of purchase relative to size of supplier
high degrees of price transparency
What factors affect bargaining power of suppleir
number and size
threat of new entrants/substitutes
whether they have other cusotmers
importance of products to customer
extent products differentiated
level of switching costs
what affects intensity of competition
rate of market growth
fixed costs
ease & cost of switching
importance of capacity utilisation
degreee of uncertainty about rival actions
Strategic importance
exit barrieres
When should five forces reused
identify key forces affecting the organisation and opportunities available and threats to consider
What are limitations of five forces
ignores role of state
not helpful for NFP
positioning view
assumes max SH wealth
dynamic industries
ignores potential for collaboration
some industries may have additional forces
What is the ‘sixth force’
complementors
Define industry
group of organisations supplying market offering similar products using similar technology
what are the key stages of industry life cycle
introduction, growth, shakeout, maturity, decline
industry life cycle define introduction
newly invented product or service made available for purchase and organisations attempt to develop buyer interest. competitive advantage if first
industry life cycle define growth
period of rapid expansion of demand or activity as industry finds market and competitors attracted by potential
industry life cycle shakehout
period in which market growth begins to slow and weaker players leave
industry life cycle maturity
relatively stable period, little changes in sale vol Y2Y , competitions intensifies as growth slows
Industry life cycle decline
falling off in activity levels as firms leave the industry and it ceases to exist/is absorbed into another
what phase of lifecycle when are R&D costs highest
introduction - still at growth as well as seek to extend product before competition
lifecycle when is profitability stable high or under pressure
maturity
When may mergers or rationalisation happen phase of lifeccle
shakehout
what must be in place for the gap to be closed by exporting when domestic performance declines
different product life cycle patterns in different countries
Benefits to identifying strategic segments
better tailor products and marketing
closer definition of competitors
identify mobility barriers
What are mobility barriers
factors making it hard for a firm in one strategic group to develop or migrate to another function as barriers to entry
What to mobility barriers relate to
branding/user tech
industry characteristics (mass volume/quliaty)
distinct skills
legal barriers
Buyers in the public sector - industrial segments where government institutions are significant buyers
Public accountability
governments rarely monolithic
political considerations
purchasing by tender
Executive directors are involved with
the day to day running of the business
NED provide
an independent view to help facilitate strategic decision making process by proviidng objective challenge and criticism
what is CG concerned with
direction and control of the company and helps determine structure of organisation, objectives, and relationship between organisation management, BOD and SH
Is there a legal distinction between duties of ED and NED
No - do have differing roles
