Chapter 3 - Strategy Formulation And Implementation

Question 1

What is the framework used to identify growth opportunities and make business decisions to achieve growth (pg 142)?

Answer 1

Ansoff matrix

Horizontal = existing vs new products 
Vertical = new vs existing markets 

Market penetration strategy
Product development strategy
Market development strategy
Diversification strategy

Question 2

What are the drivers of internationalisation (pg 165)?

Answer 2

Five main themes 
1 - internationalisation
2 - geographical and organisation specific advantages 
3 - international strategy 
4 - market selection 
5 - entry mode

Question 3

What tool can you use to help to balance cash resources within a business (pg 157)?

Answer 3

Boston consultancy Group matrix

Horizontal- market share low to high
Vertical - market growth low to high

Question marks
Stars
Dogs
Cash cows

Question 4

What is international strategy potential driven by (factors) (pg 166)?

Answer 4

George Yips globalisation framework

1- Market drivers
2- Cost drivers
3- Government drivers
4- Competitive drivers

Question 5

What is the method to pursue strategy of organic development and its benefits / disadvantages (pg 178)?

Answer 5

Organic development is one where building on and developing ones own capabilities using the previous years earnings are reinvested.

Benefits

• organisations knowledge and capabilities are enhanced.
• the investment is spread over time
• minimal disruption
• gives ability to penetrate a new geographical market without acquisition or merger
• retain the market / area of expertise
• low risk

Disadvantages

• slower than external growth
• difficult to build market share if already a market leader
• financial stake in the business may expect faster growth of profits / revenues than can be achieved

Question 6

What is the method to pursue strategy of development through merges and acquisitions and its benefits / disadvantages (pg 178)

Answer 6

A merger is when one enlarged organisation is formed from individual organisations. Usually with shareholder consent.
An acquisition is otherwise known as a takeover. A smaller company is purchased outright by a larger collent - and may be with opposition - however in reality this may not be the case.

Benefits

• to keep up with a changing business environment or market changes
• due to competition
• cost efficiencies (from synergies)
• asset strip
• brand rames

Question 7

What is the method to pursue strategy of development through strategic alliances and its benefits / disadvantages (pg 187)?

Answer 7

A strategic alliance is when two or more organisations share resources or activities to pursue a common strategy.

Benefits

• obtain resources
• critical mass
• co-specialisation
• learning and manufacturing opportunities
• competitive pressures
• capital pooling

Question 8

What is the tool for evaluating suitability of an organisation (pg 200)?

Answer 8

TOWS matrix (Johnson, Whittington, Scholes et al)

Horizontal - internal factors - strengths and weaknesses
Vertical - external factors - Opportunities and Threats

SO - use strengths to explore and exploit opportunities
WO - take advantage of opportunities to overcome weaknesses
ST - use strengths to manage and avoid threats
WT - minimise weaknesses and avoid threats

Question 9

What are three organisational structures (pg 234)?

Answer 9

Centralised
Decentralised
Hybrid

Question 10

What framework helps organisations to evaluate and improve performance (Pg 247)

Answer 10

The McKinsey 7s framework (Waterman, Peters and Phillips)

Look at the organisation as a while, 7 variables are important but all interlinked.

Structure 
Systems
Style
Staff
Skills
Strategy 
Shared values (around which the organisation is built and the centre of the model)

Question 11

What are the stages in a linear supply chain (pg 245)

Answer 11

Raw materials
Upstream 
Procuring organisation
Downstream 
Consumers

Question 12

What is three areas is finance used to make decisions in (pg 269)

Answer 12

• Decisions on the capital structure of the company
• Dividend decisions - the money to be paid to shareholder
• investment decisions - such as budgeting

Question 13

What tool can help assess why some nations are more competitive than others (pg 171)

Answer 13

Porters Diamond

• Organisations strategy, industry structure and rivalry
• Home demand conditions
• Related and supporting industries
• Factor conditions

Question 14

What tool helps with ascertaining national advantage (pg 171)

Answer 14

Porters Diamond

Organisational strategy
Home demand
Related and supporting industries
Factor conditions