Ch 5: Strategy Flashcards
Name Porter’s five forces.
- Potential entrants
- Buyers
- Substitutes
- Suppliers
- Rivalry
Define strategy.
- The determination of the basic long-term goals and objectives of an enterprise,
- and the adoption of course of action and allocation of resources necessary for carrying out these goals.
Describe Dynamic capabilities by Marsch.
The firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments.
Describe Absorptive capacity by Marsch.
A firm’s ability to recognize the value of new information, assimilate it, and apply it to commercial ends.
Describe Mutual learning according to Marsch.
Mutual learning between members of an organization and an organizational code: exploration and exploitation
What´s the difference between corporate- and business strategy?
- Corporate strategy: in what set of businesses should we be?
- Business-level strategy: how should we compete in each of our businesses? And which strategy should be used?
Define economies of scale and economies of scope.
Economies of scale
cost saving from volume (e.g. manufacture more cars with one factory)
Economies of scope
cost savings from variety (e.g. use marketing department for multiple car brands)
Describe Chandler’s view on strategy, and how small companies should act different from larger companies.
- In the beginning companies often have a low product diversification strategy and a simple structure (centralized, low complexity, low formalization).
- As the company continues to grow (often vertical) the product diversification strategy tends to become more complex and the structure functional.
- Finally the company grows into a high product diversification strategy and a divisional company structure (more independent divisions).
Mention some critics against Chandler’s strategy.
- Only large and successful companies were included in his study
- The companies were a part of the new technological change and became large and achieved economies of scale
- meant growth strategy when he referred to strategy. Growth was more important than profitability, his definition of effectiveness
- The study tend to be a little outdated
What is Cost-leadership according to Porter? What´s required in form of skills, resources and other organizational requirements?
- process engineering skills
- intense supervision of labor
- sustainable capital investment and access to capital
- products designed for ease in manufacture
- low-cost distribution system
- tight cost control
- frequent and detailed control reports
- structured organization and responsibilities
- incentives based on meeting strict quantitative targets
What is Differentiation according to Porter? What´s required in form of skills, resources and other organizational requirements?
- strong marketing abilities
- product engineering
- creative flair
- strong capability in basic research
- reputation for quality or technological leadership
- strong cooperation from channels
- strong coordination among functions in R&D, product development and marketing
- subjective measurement and incentives instead of quantitative measures
- amenities (bekvämligheter) to attract highly skilled labor and creative people
Cost or Differentiation focus in a narrow segment?
- low-cost or differentiation in a narrow segment: product variety, type of buyer, distribution channel, geographical location
- combination of policies targeted directed at the particular strategic target
What’s a Prospector according to Miles & Snow?
- exploring and exploiting new market opportunities
- low formalization
- heavy R&D
- inherent inefficiency; innovation more important than high profitability
- loose structure, low division of labor, low degree of formalization, decentralization
- goals: flexibility
- environment: dynamic
- companies: typical entrepreneurial companies with a high degree of innovation e.g. Google
What’s a Analyzer according to Miles & Snow?
- adopting innovations after they have been proven by others
- risk minimization + maximizing opportunities for profit
- imitation
- respond to the lead of key prospectors
- moderately centralized controls; tight control over current activities and looser control for new undertakings
- goals: stability and flexibility
- environment: changing
- Companies: Unilever, Nestlé and Pacific brands.
What’s a Defender according to Miles & Snow?
- limited set of products
- narrow segment of the potential market, niche
- market penetration
- limited product development
- ignorance of developments outside the area of current interest
- tight control; extensive division of labor, high degree of formalization; centralized
- goals: stability and efficiency
- environment: stable
- Companies: grocery chains, and other things that specialize in a specific market e.g. small electric motors for mirrors and electric windows on cars, railway signaling equipment etc.
