Chapter 14: Business strategy and strategy models Flashcards
What is a business strategy?
A company’s long-term plan to achieve goals and stay ahead of competitors
What is a business idea?
Explains why the company exists and its vision, linking market position, value, and resources.
What is effectiveness (external) and efficiency (internal)?
Effectiveness: How well the company performs in the market and adapts to the market environment.
Efficiency: How well the company uses its resources and skills.
Combined Impact: These factors together define the company’s value proposition.
Describe the Ansoff Matrix and its growth strategies.
Market Penetration: Increase market share with current products through aggressive marketing.
Product Development: Introduce new products to the current market.
Market Development: Enter new markets with current products.
Diversification: Enter new markets with new products (high risk)
Describe the following 3 ways to create competitive excellence based on Porter´s as well as Ansoff`s business strategies:
- competitiveness by product leadership
- competitiveness by operational excellence
- competitiveness by customer intimacy
Product Leadership: Offering superior and innovative products that stand out from competitors.
Operational Excellence: Providing cost-effective solutions through efficient operations and low-cost production.
Customer Intimacy: Tailoring products and services to meet specific customer needs and building strong relationships.
Describe Michael Porter´s generic business strategies.
Cost Leadership: Be the cheapest producer to offer the lowest prices.
Differentiation: Offer unique products/services that stand out.
Focus: Target a specific market with either cost leadership or differentiation
Describe Blue Ocean Strategies.
Create a new market with no competition by innovating and differentiating.
Blue Ocean Strategy involves creating a new, uncontested market space that makes the competition irrelevant. By innovating and differentiating, companies can establish their products in a market with little to no competition, avoiding traditional competitive pressures.
Describe the resource-based view of strategy.
Build and develop key resources like skills and brand value for long-term competitive advantage.
A resource-based view focuses on building and developing a company’s resources over the long term, such as employee skills, brand value, and other key assets, to achieve a sustainable competitive advantage.
Describe the strategic planning process according to Kotler.
Business Idea: Define the core concept and value.
Analysis: Examine market conditions and internal capabilities.
Goal Setting: Set specific, measurable objectives.
Strategy: Develop plans to achieve goals.
Action Plan: Create a detailed implementation plan.
Implementation: Execute the plan and strategies.
Control & Evaluation: Monitor, assess, and adjust as needed.
- Business Idea: Define the core concept and value proposition of the business.
- Environmental and Company Analysis: Analyze both external market conditions and internal capabilities.
- Goal Setting: Establish specific, measurable objectives.
- Strategy Formulation: Develop strategies to achieve the set goals.
- Action Plan: Create a detailed plan to implement the strategies.
- Implementation: Execute the action plan and apply the strategies.
- Control and Evaluation: Monitor performance, assess outcomes, and make adjustments as needed.
What are the functional strategies?
Sub-strategies supporting the main business strategy, like marketing, production, and innovation.
Describe the strategic planning process from planned strategy to realized strategy according to Mintzberg.
- Planned Strategy: Initial plan.
- Deliberate Strategy: Intended for implementation.
- Realized Strategy: Final outcome, including changes and emergent strategies.
According to Mintzberg, the strategic planning process starts with a planned strategy -> evolves into a deliberate strategy intended for implementation -> and ultimately becomes a realized strategy, which may differ from the original plan and include emergent strategies that develop during execution.
What is a SWOT analysis?
SWOT-analysis evaluates a company across four dimensions:
Strengths (internal)
Weaknesses (internal)
Opportunities (external)
Threats (external).
It examines what advantages the company has, areas for improvement, market opportunities, and potential risks.
Describe the Boston Matrix as a portfolio analysis.
Evaluates products by growth rate and market share
- Cash Cows: High share, low growth—steady revenue.
- Dogs: Low share, low growth—limited potential.
- Question Marks: Low share, high growth—potential for growth.
- Stars: High share, high growth—needs investment.
Products shift positions as they grow and require more investment.
Describe the GE-McKinsey Matrix as a portfolio analysis.
Evaluates business units by industry attractiveness and competitive strength.
High Attractiveness, Strong Position: Invest and grow.
High Attractiveness, Weak Position: Selectively invest or improve.
Medium Attractiveness, Strong Position: Maintain or invest selectively.
Medium Attractiveness, Weak Position: Manage for earnings or divest.
Low Attractiveness, Strong Position: Harvest or divest.
Low Attractiveness, Weak Position: Divest or exit.
Helps identify strategies based on market position and industry attractiveness.
Why is the external environment scanning important of a company?
Helps understand competitors and market trends, reducing the risk of misjudging strengths, opportunities, weaknesses, and threats
Describe Michael Porter´s Five Forces model.
Identifies five competitive forces:
- Industry Rivals: Intensity of competition.
- Supplier Power: Suppliers’ influence on prices/quality.
- New Entrants: Potential new competitors.
- Substitutes: Alternative products/services.
- Buyer Power: Customers’ influence on prices/quality.
Describe the stakeholder model and the power/interest matrix based on the stakeholder model.
Stakeholder Model: A company interacts with various stakeholders (customers, employees, suppliers, shareholders, community). Managing these relationships is crucial for success.
Power/Interest Matrix: Categorizes stakeholders by power and interest:
- High Power, High Interest: Manage closely.
- High Power, Low Interest: Keep satisfied.
- Low Power, High Interest: Keep informed.
- Low Power, Low Interest: Monitor.
Describe and exemplify the different factors in a PESTLE analysis.
The PESTLE model expands SWOT analysis by examining:
Political: Government policies, stability, and regulations.
Economic: Economic conditions, growth rates, and inflation.
Social: Demographic trends, cultural attitudes, and lifestyle changes.
Technological: Innovations, R&D, and technological advancements.
Legal: Laws, regulations, and legal issues.
Environmental: Environmental regulations and ecological concerns.
A thorough PESTLE analysis provides comprehensive insights into external factors impacting an organization.
Describe the work process when using scenario technique as an analytical method.
- Define Question: What are you addressing?
- Set Scope/Time: Determine analysis limits.
- Identify Stakeholders: Who is involved?
- Map Forces/Drivers: Identify key influences.
- Identify Uncertainties: What is uncertain?
- Group Factors: Organize influencing factors.
- Determine Extremes: Identify possible outcomes.
- Define Scenarios: Name and describe scenarios.
- Research Needs: Identify further research.
- Formulate Decisions: Make decisions for each scenario.
Describe the Business Model Canvas strategy model by using an example.
- Customer Segments: Who you serve (e.g., tech-savvy millennials).
- Value Propositions: What you offer (e.g., eco-friendly tech gadgets).
- Channels: How you reach customers (e.g., online store).
- Customer Relationships: How you interact (e.g., personalized support).
- Revenue Streams: How you earn money (e.g., sales, subscriptions).
- Key Resources: Essential assets (e.g., R&D team).
- Key Activities: Crucial tasks (e.g., product development).
- Key Partnerships: Important partners (e.g., suppliers).
- Cost Structure: Costs involved (e.g., production, marketing).
Give examples of problems that may arise in strategy development in a company.
- Strategy Formulation: Crafting a clear, actionable strategy.
- Alignment with Values: Ensuring strategy matches core values.
- Adaptability: Adjusting strategy during implementation.
- Future Uncertainty: Managing unknown future market conditions.
What is a smart objective? Compare it to a VACT objective.
SMART Goal:
- Specific: Clearly defined.
- Measurable: Quantifiable to track progress.
- Achievable: Realistic and attainable.
- Relevant: Aligned with broader objectives.
- Time-bound: Set within a specific timeframe.
VAGT Goal:
- Visionary: Inspirational and forward-thinking.
- Accepted: Supported by stakeholders.
- Goal-oriented: Focused on achieving specific outcomes.
- Time-bound: Defined by a clear deadline
