Chapter 1 Flashcards
What makes a successful strategy?
1) Simple, consistent, long-term goals
2) Profound understanding of the competitive environment
3) Objective appraisal of resources
4) Effective implementation
What is the definition of strategy?
A plan, method or series of actions designed to achieve a specific goal or effect.
Who is Alfred Chandler?
A business historian who contributed to business history and strategy
Who is Kenneth Andrews?
A business manager who contributed to the field of business strategy
What is the evolution of strategic management?
1) Financial Budgeting
2) Corporate Planning
3) Emergence of Strategic Management
4) The Quest for Competitive Advantage
$) Adapting to Turbulence
How does a company achieve a rate of return above the cost of capital? i.e how do we make money?
1) Industry attractiveness (which industry should we be in)
2) Competitive advantage (how should we compete)
Which one is corporate and business strategy?
1) Industry
2) Competitive Advantage
Industry is corporate strategy
Competitive Advantage is business strategy
What is strategy as positioning?
Competing for the present
What is strategy as direction?
Preparing for the future
What two questions does strategy as positioning answer?
1) Where are we competing?
2) How are we competing?
What does “where we are competing” entail?
Vertical scope
Geographical scope
Product scope
Vertical scope
The range of activities or functions that a business chooses to integrate within its organisation instead of outsourcing or relying on external parties
Product scope
The range or diversity of products or services that a business offers or intends to offer its consumers.
Geographical scope
Geographic areas or regions where a business conducts its operations or serves its consumers.
What does “how are we competing” entail?
What is the basis of our competitive advantage?
What is the basis of our competitive advantage?
What are our strengths, what is the extent of our advantage and what makes us unique from our competitors?
What three questions does strategy as direction answer?
1) What do we want to become?
2) What do we want to achieve?
3) How will we get there?
What does “what do we want to become” entail?
Vision statement
What does “what do we want to achieve” entail?
Mission statement
What does “how will we get there” entail?
1) Guidelines for development
2) Priorities for capital expenditures, R&D
3) Growth modes: organic, M&A, alliances
Strategy Hierarchy
1) Corporate Strategy
2) Business Strategy
3) Functional Area Strategies
4) Operating Strategies
Corporate Strategy
A multibusiness strategy that refers to the overarching plan and set of decisions made by the top management of a company to achieve long-term goals. It is a high-level strategy that provides direction and guidance for the entire company and sets out what a company wants to become and how a company is to achieve their goals.
Business Strategy
1) How to strengthen market position and gain competitive advantage
2) Actions to build competitive capabilities of single businesses
3) Monitoring and aligning lower-level strategies
Functional Area Strategies
1) Add relevant details to the how’s of the business strategy
2) Provide a game plan for managing activities in ways that support the business strategy
Operating Strategies
1) Add detail and completeness to the business and functional strategies
2) Provide a game plan for managing specific operating activities with strategic significance
Mission Statement
1) Provides a concise statement of why the organisation exists and what it is to achieve
2) Defines and illustrates the values and philosophy of the organisation
3) Describe how the organisation will serve those affected by its work
Vision Statement
1) “What we want to be”
2) Should stretch the resources and capabilities of the firm
3) Should inspire people in the organisation to achieve things they never thought possible
4) Should unite people in the firm to work towards one common goal
Strategic Planning vs. Strategic Thinking
Planning cannot generate strategies. But given viable strategies, it can program them; it can make them operational.
Strategic Programming involves:
1) Codification
2) Elaboration
3) Conversion of strategies
Strategy as Decision Support
Improves the quality of decision making
Strategy as a Coordinating Device
Creates consistency and unity
Strategy as Target
Improves performance by setting high aspirations
Strategy as Animation and Orientation
Motivates and mobilises
Why are companies increasingly accepting responsibilities that extend well beyond the immediate interest of shareholders?
1) For ethical reasons
2) For reasons of self interest
3) Sustainability
4) Reputation
5) License to operate
What was Milton Friedman’s view of CSR?
1) Unethical and undesirable:
2) Unethical because management spent shareholders’ money on projects and causes that were not approved of by owners
3) Undesirable because corporate executives made decisions by determining what the interests of society were
