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
