Chapter 11 - Strategic Development Flashcards
Strategic pathways
What are ‘strategic pathways’?
They are the methods and routes an organisation uses to move from its current state to achieve its future strategic objectives.
Strategic pathways
What are the three main types of strategic pathways identified by Thompson and Martin (2005)?
1) Organic growth
2) Mergers and acquisitions
3) Strategic alliances/joint ventures
Strategic pathways
What is ‘organic growth’ in a business context?
Growth achieved by using only internal resources, allowing the organisation to stay in control of its growth process.
Strategic pathways
What are key advantages of organic growth?
Familiarity with current strengths and weaknesses
Staggered investment
Minimal disruption to operations
Self-reliance in skill development
Strategic pathways
What is a ‘merger’?
The joining of two separate companies to form a single new company.
Strategic pathways
What is an ‘acquisition’?
The purchase of a controlling interest in another company.
Strategic pathways
What are the three types of acquisitions?
1) Horizontal acquisition
2) Vertical acquisition
3) Conglomerate acquisition
Strategic pathways
What are ‘strategic motives’ in mergers and acquisitions?
Motives like increasing market share, reducing competition, and gaining new market opportunities that drive M&A activities.
Strategic pathways
What are ‘financial motives’ in mergers and acquisitions?
Motives like achieving satisfactory returns, improving financial efficiency, and gaining tax advantages.
Strategic pathways
What are ‘managerial motives’ in mergers and acquisitions?
Motives driven by personal ambition, such as increased power, remuneration, or the desire to build a larger organisation.
Strategic pathways
What is ‘due diligence’ in M&A?
An extensive examination of the other party’s commercial, cultural, financial, and operational positions before a merger or acquisition.
Strategic pathways
What are the three key elements of due diligence?
1) Preparation
2) Execution
3) Closure
Strategic pathways
What is a ‘strategic alliance’?
A long-term contractual arrangement between firms to achieve mutual goals without forming a new company.
Strategic pathways
What are some benefits of strategic alliances?
Shared development costs
Overcoming regulatory barriers to takeovers
Access to complementary markets or technologies
Strategic pathways
What are limitations of strategic alliances?
Potential lack of new competencies
Loss of flexibility
Dependence on the partner, increasing associated risk
Strategic pathways
What is a ‘customer end network’ in strategic alliances?
A partnership aimed at widening the customer base and enhancing offerings to boost market share.
Strategic pathways
What is a ‘supplier end network’ in strategic alliances?
A partnership with suppliers to improve relationships and offer lower prices, often used by industries like automotive manufacturing.
Strategic pathways
What is a ‘formal partnership’?
A structured agreement to collaborate on specific activities within a partnership framework.
Strategic pathways
What is a ‘joint venture’?
A new, independent company created by parent companies that continue to operate independently; for example, Opodo was founded by a group of European airlines.
Evaluating strategic options
What is the purpose of key performance indicators (KPIs) in strategic planning?
KPIs measure business progress and help assess if strategic goals are being met, allowing for adjustments as needed.
Evaluating strategic options
What are the three criteria Johnson et al. (2017) suggest for evaluating the most appropriate strategy?
Suitability, Acceptability, and Feasibility.
Evaluating strategic options
: What does ‘suitability’ evaluate in a strategic option?
Whether the strategy helps solve organisational issues, leverages strengths, captures opportunities, addresses weaknesses, and fits mission, goals, and corporate culture.
Evaluating strategic options
What does ‘acceptability’ assess in strategy evaluation?
Whether the strategy aligns with the interests of key stakeholders like shareholders, management, staff, customers, banks, government, media, and the public.
Evaluating strategic options
What is ‘feasibility’ concerned with in strategy evaluation?
The organisation’s resources, competencies, competitive advantage, technology, legality, ethics, and time available to implement the strategy.
