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DOS > Chapter 11 - Strategic Development > Flashcards

Chapter 11 - Strategic Development Flashcards

1
Q

Strategic pathways

What are ‘strategic pathways’?

A

They are the methods and routes an organisation uses to move from its current state to achieve its future strategic objectives.

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2
Q

Strategic pathways

What are the three main types of strategic pathways identified by Thompson and Martin (2005)?

A

1) Organic growth
2) Mergers and acquisitions
3) Strategic alliances/joint ventures

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3
Q

Strategic pathways

What is ‘organic growth’ in a business context?

A

Growth achieved by using only internal resources, allowing the organisation to stay in control of its growth process.

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4
Q

Strategic pathways

What are key advantages of organic growth?

A

Familiarity with current strengths and weaknesses

Staggered investment
Minimal disruption to operations
Self-reliance in skill development

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5
Q

Strategic pathways

What is a ‘merger’?

A

The joining of two separate companies to form a single new company.

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6
Q

Strategic pathways

What is an ‘acquisition’?

A

The purchase of a controlling interest in another company.

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7
Q

Strategic pathways

What are the three types of acquisitions?

A

1) Horizontal acquisition
2) Vertical acquisition
3) Conglomerate acquisition

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8
Q

Strategic pathways

What are ‘strategic motives’ in mergers and acquisitions?

A

Motives like increasing market share, reducing competition, and gaining new market opportunities that drive M&A activities.

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9
Q

Strategic pathways

What are ‘financial motives’ in mergers and acquisitions?

A

Motives like achieving satisfactory returns, improving financial efficiency, and gaining tax advantages.

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10
Q

Strategic pathways

What are ‘managerial motives’ in mergers and acquisitions?

A

Motives driven by personal ambition, such as increased power, remuneration, or the desire to build a larger organisation.

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11
Q

Strategic pathways

What is ‘due diligence’ in M&A?

A

An extensive examination of the other party’s commercial, cultural, financial, and operational positions before a merger or acquisition.

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12
Q

Strategic pathways

What are the three key elements of due diligence?

A

1) Preparation
2) Execution
3) Closure

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13
Q

Strategic pathways

What is a ‘strategic alliance’?

A

A long-term contractual arrangement between firms to achieve mutual goals without forming a new company.

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14
Q

Strategic pathways

What are some benefits of strategic alliances?

A

Shared development costs
Overcoming regulatory barriers to takeovers
Access to complementary markets or technologies

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15
Q

Strategic pathways

What are limitations of strategic alliances?

A

Potential lack of new competencies
Loss of flexibility
Dependence on the partner, increasing associated risk

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16
Q

Strategic pathways

What is a ‘customer end network’ in strategic alliances?

A

A partnership aimed at widening the customer base and enhancing offerings to boost market share.

17
Q

Strategic pathways

What is a ‘supplier end network’ in strategic alliances?

A

A partnership with suppliers to improve relationships and offer lower prices, often used by industries like automotive manufacturing.

18
Q

Strategic pathways

What is a ‘formal partnership’?

A

A structured agreement to collaborate on specific activities within a partnership framework.

19
Q

Strategic pathways

What is a ‘joint venture’?

A

A new, independent company created by parent companies that continue to operate independently; for example, Opodo was founded by a group of European airlines.

20
Q

Evaluating strategic options

What is the purpose of key performance indicators (KPIs) in strategic planning?

A

KPIs measure business progress and help assess if strategic goals are being met, allowing for adjustments as needed.

21
Q

Evaluating strategic options

What are the three criteria Johnson et al. (2017) suggest for evaluating the most appropriate strategy?

A

Suitability, Acceptability, and Feasibility.

22
Q

Evaluating strategic options

: What does ‘suitability’ evaluate in a strategic option?

A

Whether the strategy helps solve organisational issues, leverages strengths, captures opportunities, addresses weaknesses, and fits mission, goals, and corporate culture.

23
Q

Evaluating strategic options

What does ‘acceptability’ assess in strategy evaluation?

A

Whether the strategy aligns with the interests of key stakeholders like shareholders, management, staff, customers, banks, government, media, and the public.

24
Q

Evaluating strategic options

What is ‘feasibility’ concerned with in strategy evaluation?

A

The organisation’s resources, competencies, competitive advantage, technology, legality, ethics, and time available to implement the strategy.

25
Q

Evaluating strategic options

What are ‘real options’ in strategic evaluation?

A

Strategic options that allow flexibility to adjust, delay, abandon, or extend a strategy as new information or opportunities arise.

26
Q

Evaluating strategic options

What is the ‘delay option’ in real options?

A

Postponing resource commitment until more key information is available.

27
Q

Evaluating strategic options

What is the ‘abandonment option’ in real options?

A

Arranging an exit strategy if the chosen approach fails to meet targets and expectations.

28
Q

Evaluating strategic options

What is the ‘platform option’ in real options?

A

Taking steps to extend or expand the strategy when new opportunities become available.

29
Q

Evaluating strategic options

What are Rumelt’s (1980) four principles for evaluating strategic plans?

A

1) Consistency
2) Consonance
3) Advantage
4) Feasibility

30
Q

Evaluating strategic options

What does ‘consistency’ mean in Rumelt’s principles for strategy evaluation?

A

Ensuring goals and policies are aligned across all divisions and personnel.

31
Q

Evaluating strategic options

What is ‘consonance’ in Rumelt’s evaluation principles?

A

The strategy’s fit with the external environment and its adaptability to change.

32
Q

Evaluating strategic options

What does ‘advantage’ mean in Rumelt’s principles for strategy evaluation?

A

Creating and sustaining a competitive advantage.

33
Q

Evaluating strategic options

What is ‘feasibility’ in Rumelt’s evaluation principles?

A

Having the ability and motivation to effectively carry out the strategy.

34
Q

Evaluating strategic options

What do both Johnson et al. (2017) and Rumelt suggest is essential in strategic evaluation?

A

Exercising caution, avoiding conflicts, ensuring consistency, and making sure strategic options are practical and implementable.

DOS (15 decks)

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