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Chapter 10 - Strategic Choices Flashcards

1
Q

The scope of strategic choice

What is the scope of strategic choice?

A

Strategic choice involves multiple approaches, including rational strategy, emergent strategy, adapting to external changes, organizational capabilities, culture, governance, and ethical considerations.

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2
Q

The scope of strategic choice

What are the three principal strategic choices suggested by Johnson et al (2017)?

A

1) Business strategy
2) Strategic direction and
3) Strategy methods.

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3
Q

The scope of strategic choice

What is rational strategy?

A

A strategy focused on identifying an optimal route to achieve a desired future.

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4
Q

The scope of strategic choice

What is emergent strategy?

A

A strategy where choices and alternatives evolve as the organization develops.

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5
Q

The scope of strategic choice

According to Michael Porter, what are the three methods for achieving competitive advantage?

A

Cost leadership, differentiation, and focus.

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6
Q

The scope of strategic choice

What is cost leadership?

A

Being the lowest-cost organization in a sector by managing relationships and costs across the value chain.

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7
Q

The scope of strategic choice

Name three tactics for reducing costs in a cost leadership strategy.

A

Reducing input costs, achieving economies of scale, and implementing efficient product/process design.

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8
Q

The scope of strategic choice

What is differentiation in a competitive strategy?

A

Creating unique value perceived by customers, encouraging them to pay a premium.

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9
Q

The scope of strategic choice

According to Johnson, what are the three drivers of differentiation?

A

Product/service attributes, customer relationships, and complements.

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10
Q

The scope of strategic choice

List Garvin’s (1987) eight dimensions of quality for product differentiation.

A

Performance, features, reliability, conformance, durability, serviceability, aesthetics, and perceived quality.

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11
Q

The scope of strategic choice

What is a focus strategy in Porter’s model?

A

Concentrating on specific market segments or niches, rather than targeting the entire market.

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12
Q

The scope of strategic choice

What are the two types of focus strategies with examples?

A

Cost focus (e.g., Claire’s Accessories) and differentiation focus (e.g., Breezes Resorts for couples).

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13
Q

The scope of strategic choice

What three factors are key to a successful focus strategy according to Johnson?

A

Identifying a distinct segment need, distinct segment value chains, and a viable market segment.

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14
Q

The scope of strategic choice

Why must competitive advantage be sustainable?

A

To generate long-term value, making it difficult for competitors to replicate.

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15
Q

The scope of strategic choice

What is business process re-engineering (BPR)?

A

A radical redesign of organizational processes to significantly improve efficiency, control costs, enhance product differentiation, or focus on specific customer needs.

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16
Q

The scope of strategic choice

Who introduced the concept of BPR, and when?

A

Hammer and Champy in 1993.

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17
Q

The scope of strategic choice

What is the ultimate goal of BPR?

A

To increase efficiency in achieving strategic objectives by redesigning processes.

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18
Q

Driving the business forward

What is a central strategic choice every organization needs to make?

A

The strategic direction for future development and growth, focusing on products/services and customers.

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19
Q

Driving the business forward

What is Ansoff’s Product/Market Growth Matrix?

A

A framework categorizing strategies based on whether a firm sells existing or new products/services to existing or new customers.

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20
Q

Driving the business forward

What are the four strategies in Ansoff’s matrix?

A

1) Market penetration
2) Market development
3) Product development, and
4) Diversification.

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21
Q

Driving the business forward

What is market penetration?

A

Increasing market share of existing products in existing markets through promotions, price reductions, or increased usage.

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22
Q

Driving the business forward

What is the risk level of market penetration?

A

It represents a relatively low-risk strategy.

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23
Q

Driving the business forward

What is market development?

A

Finding new customers for existing products, such as through exporting or new distribution channels.

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24
Q

Driving the business forward

What is the risk level of market development?

A

It is still reasonably low-risk.

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25
Driving the business forward What is product development in Ansoff's matrix?
Selling new products to existing customers, often involving cross-selling.
26
Driving the business forward Why is product development considered slightly riskier?
It may require investment in new products and depends on the firm’s relationship with its customers.
27
Driving the business forward What is diversification according to Ansoff's matrix?
Selling new products to new customers, which offers high growth potential but is also risky.
28
Driving the business forward Name and describe the four types of diversification.
) Vertical integration - moving into adjacent activities (e.g., manufacturing to retailing), 2) Horizontal integration - expanding into similar levels of the value chain (e.g., TV production to film), 3) Concentric diversification - widening product offerings (e.g., Microsoft developing Xbox), 4) Conglomerate diversification - entering unrelated industries (e.g., Virgin from music to air travel).
29
Driving the business forward What is an example of vertical integration from Ferrero?
Ferrero's purchase of Turkey's Oltan Gida (a hazelnut supplier) and its acquisition of Thornton’s in the UK for retail outlets.
30
Driving the business forward What does forward vertical integration entail?
Acquiring or controlling distribution channels to reach customers directly, as Ferrero did with Thornton's.
31
Business level strategy What does business-level strategy focus on?
The development of strategy and choices within a defined business unit.
32
Business level strategy Why is it important to define boundaries in business-level strategy?
To ensure strategic decisions clearly affect a specific area of the business and maintain focus.
33
Business level strategy What is the purpose of creating strategic business units (SBUs) in large organizations?
To allow focused strategy and agility, enabling quick decision-making in response to a changing environment.
34
Business level strategy What is the BCG (Boston consulting group) matrix?
A tool that categorizes SBUs based on market growth rate and relative market share, assessing financial performance.
35
Business level strategy How is relative market share measured in the BCG matrix?
By comparing the SBU's market share with that of the largest competitor.
36
Business level strategy What are the four categories in the BCG matrix?
Stars, Cash Cows, Question Marks, and Dogs.
37
Business level strategy What are 'Stars' in the BCG matrix?
SBUs with high market growth and high market share that offer good future returns; they require investment to develop further.
38
Business level strategy What is the long-term potential of Stars in the BCG matrix?
Over time, Stars can become Cash Cows as they move through the industry life cycle.
39
Business level strategy What are 'Cash Cows' in the BCG matrix?
SBUs with low market growth but high market share; they generate cash income without needing much investment.
40
Business level strategy What is a typical use of the cash generated by Cash Cows?
It can be reinvested into Stars or used to provide returns to shareholders.
41
Business level strategy What are 'Question Marks' in the BCG matrix?
SBUs with high market growth but low market share; they may require investment if they have potential or otherwise should be sold.
42
Business level strategy What strategic decision must be made for Question Marks?
Assessing whether they can become Stars or should be sold off.
43
Business level strategy What are 'Dogs' in the BCG matrix?
SBUs with low market growth and low market share, often tying up funds and providing poor returns.
44
Business level strategy When might an organization decide to keep a Dog?
If it serves a useful niche function despite low profitability.
45
Business level strategy How does the BCG matrix connect with corporate parenting?
It helps the corporate parent achieve a balanced mix of businesses in the corporate portfolio.
46
Corporate-level strategy and strategic models
47
Corporate-level strategy and strategic models
48
Corporate-level strategy and strategic models
49
Corporate-level strategy and strategic models
50
Corporate-level strategy and strategic models
51
Corporate-level strategy and strategic models What does corporate-level strategy consider?
The entire organization, rather than a single business unit.
52
Corporate-level strategy and strategic models What is a 'red ocean' in strategic terms?
An existing, highly competitive market where profits and growth are limited, favoring only the strongest organizations.
53
Corporate-level strategy and strategic models Why is a red ocean easier to enter?
Because the industries are already defined, allowing new entrants to follow established competition patterns.
54
Corporate-level strategy and strategic models What is a 'blue ocean' strategy?
A strategy where an organization creates a new market by offering a unique mix of benefits valued by customers, avoiding direct competition.
55
Corporate-level strategy and strategic models What are the four questions in the Four Actions Framework for blue ocean strategy?
1) What factors can be eliminated? 2) What factors should be reduced below standard? 3) What factors should be raised above standard? 4) What factors should be created that the industry has never offered?
56
Corporate-level strategy and strategic models What are the risks and rewards of a blue ocean strategy?
It offers higher risks but also the potential for greater rewards by operating in an uncontested market space.
57
Corporate-level strategy and strategic models What is corporate parenting in corporate-level strategy?
The centralised control needed in a diversified organization to add value across different business units.
58
Corporate-level strategy and strategic models Why is a centralised structure important in corporate parenting?
It provides efficiencies and control across various business units, though the extent of centralisation varies by organization.
59
Corporate-level strategy and strategic models What did Goold et al. (1994) identify in terms of corporate parenting?
Five core activities through which a corporate parent can add value: envisioning, facilitating synergies, coaching, central services/resources, and intervention.
60
Corporate-level strategy and strategic models What is 'envisioning' in corporate parenting?
Providing a clear, overall vision for all aspects of the organization.
61
Corporate-level strategy and strategic models What does 'facilitating synergies' mean in corporate parenting?
Enabling cooperation and sharing of resources across different business units.
62
Corporate-level strategy and strategic models What is the purpose of 'coaching' in corporate parenting?
Developing business unit managers to foster a shared vision and align their strategies with the corporate vision.
63
Corporate-level strategy and strategic models What are 'central services and resources' in corporate parenting?
A: The efficient use of central expertise and resources that serve the entire organization.
64
Corporate-level strategy and strategic models What is 'intervention' in corporate parenting?
Aligning and correcting the performance of individual units as necessary to meet overall corporate objectives.
65
Internationalism as a strategic option What is 'internationalisation' in strategic terms?
It refers to the strategic options for operating outside an organisation's country of origin.
66
Internationalism as a strategic option What is 'globalisation' in strategic terms?
Strategies that involve a high level of coordination of extensive activities dispersed in multiple countries, often with no regard for borders.
67
Internationalism as a strategic option What are the four elements that assess a nation's competitive advantage?
1) Factor conditions 2) Demand conditions 3) Related and supporting industries 4) Firm strategy, structure, and rivalry
68
Internationalism as a strategic option What are 'factor conditions' in assessing national competitive advantage?
Resources available in a country, split into basic (e.g., natural resources, unskilled labour) and advanced factors (e.g., education, research capability).
69
Internationalism as a strategic option How do 'demand conditions' affect a nation's competitive advantage?
Strong demand and sophisticated customer tastes drive up quality and lower costs through economies of scale and learning.
70
Internationalism as a strategic option What role do 'related and supporting industries' play in national competitive advantage?
They provide a robust local supply chain, enhancing quality and cost advantages.
71
Internationalism as a strategic option How does 'firm strategy, structure, and rivalry' influence national competitive advantage?
Intense domestic rivalry fosters performance, potentially leading firms to seek export markets.
72
Internationalism as a strategic option What is the 'cluster effect' in international competitiveness?
A concentration of competitive firms within a country, making them strong competitors internationally.
73
Internationalism as a strategic option According to Yip (1992), what are the four drivers of internationalisation?
1) Market drivers 2) Cost drivers 3) Government drivers 4) Competitive drivers
74
Internationalism as a strategic option What are 'market drivers' in globalisation?
The standardisation of markets as global customers increasingly demand similar products (e.g., Apple iPhone, Heineken).
75
Internationalism as a strategic option What are 'cost drivers' in globalisation?
Cost savings achieved by economies of scale and lower labour costs in developing countries.
76
Internationalism as a strategic option How do 'government drivers' encourage globalisation?
Through national policies and WTO agreements that promote free trade.
77
Internationalism as a strategic option What are 'competitive drivers' in globalisation?
Competitive advantages gained by having an integrated global strategy, reflecting the nature of global competition.
78
Internationalism as a strategic option What is Porter's Diamond?
A model that explains why certain nations are more competitive in specific industries due to domestic conditions.
79
Internationalism as a strategic option What is 'simple export' as an international strategy?
Exporting goods/services from the production country, with local market handling marketing and branding.
80
Internationalism as a strategic option What is 'multi-domestic' strategy?
Producing goods and services locally in each market, tailored to the specific needs of each domestic market.
81
Internationalism as a strategic option What is 'complex export' strategy?
Manufacturing remains in the home country, while pricing, positioning, and branding are managed in the home country.
82
Internationalism as a strategic option What is a 'global strategy' according to Porter?
A strategy involving highly coordinated activities across multiple countries.

DOS (15 decks)

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