Chapter 4 Flashcards
Define Corporate Strategy
Strategies determined at main board level for the business as a whole
Define Business Strategy
Strategies for Strategic Business Units (SBUs) and individual markets e.g. how to gain a competitive advantage
Define Functional/Operational Strategies
Strategies for the main functions within each SBU (operations, finance, HR).
What are the 4 main stages of strategic planning?
Strategic Analysis
Strategic choice
Strategy Implementation
Review & Control
What is the difference between a static and dynamic environment?
Static environments have slow change with simple technology. Normally single products/markets
Dynamic environments are fast paced with diverse products/markets.
What does PESTEL stand for?
Political
Economic
Social
Technological
Environment
Legal
What is PESTEL analysis used for?
It reveals the key influences in the organisation’s macro-environment rather than its market.
What is Porter’s 5 Forces analysis used for?
Assessing the attractiveness of an industry in terms of LR profitability
What are Porter’s 5 forces?
Threat of new entrants
Bargaining power of suppliers
Threat of substitutes
Bargaining power of customers
Competitive rivalry
What are the 4 types of competitors according to Philip Kotler?
Brand - similar size firms with similar products
Industry - similar products but different markets
Form - different products that satisfy the same needs
Generic - different products but compete for the same customer
What are the 4 reaction profiles to competitors according to Kotler?
Laid back - no response
Tiger - Aggressive responses
Selective - reacts to some threats in some markets but not to others
Stochastic - difficult to predict how the will act
What is Value Chain Analysis used for?
A form of internal analysis used to analyse the sequence of business activities which add value to production.
Define a Star on the BCG Matrix
High market growth, High Market share. Business should build position
Define a question mark on the BCG matrix
Low market share, high market growth. Business should either harvest or build
Define a cash cow on the BCG Matrix
High market share, Low Market growth. Business should hold or harvest
Define a dog on the BCG matrix
Low market share, low market growth. Business should divest or hold
What is Ansoff’s matrix?
Highlights the different growth strategies available.
Define Market penetration
More sales of existing products to existing markets
Define product development
Offering new products for existing markets
Define market development
Finding new markets for existing products
Define diversification
Developing new products for new markets.
What is the difference between a Hold and a Harvest strategy?
Hold - continuing to support the product financially to maintain it’s position
Harvest - running down investment in the product and just managing cash flow
