Chapter 4 - Intro to business strategy Flashcards
What is a strategy?
A course of action, including specification of the resources required to achieve a specific objective
What is a corporate strategy?
Determined at board level for the business as a whole
What is a business strategy?
Form in strategic business units (SBU) Relates to how a particular market is appraoched
What is a functional/operational strategy?
Main functions within each SBU and how they effectively deliver strategies determined at corporate and business levels
What does strategic management involve?
Businesses’ scope
Long term direction
Allocation of resources
What characteristics of strategic decisions do Scholes and Johnson outline?
Scope of activities
Capabilities and the environment
Allocation of resources
Set off a chain of lesser operational decisions
Based on values and expectation of seniors
Dictate long term direction
What is a competitive strategy?
Generic strategies for competitive advantage
What is a product market strategy?
Determine where it competes and direction of growth
What is an institutional strategy?
Determines method of growth
What is strategy implementation?
Conversion of chosen strategies into detailed plans/objectives for operating units
What factors are considered when analysing the general environment? (PESTEL)
Political
Economic
Social/demographic
Technological
Ecological
Legal
How is the competitive environment analysed (Porter’s 5 forces)
Bargaining power of suppliers
Threat to entry
Threat of substitutes
Bargaining power of buyers
Rivalry amongst existing competitors
What are the 4 types of competitor named by Kotler?
Brand
Industry
Generic
Form
What are Kotler’s 4 reaction profiles?
Laid back - no response
Tiger - aggressive response to all
Selective - reacts to some
Stochastic - unpredictable
What aspects of a business should be analysed?
Resources and competencies
Value chain
Supply chain
Products and markets
What is a position audit?
Part of the planning process, examines the current state of the entity in respect of:
Resources
Products
Operating systems
Internal organisation
Current results
Shareholder returns
What factors should be reviewed in a resource audit (9 Ms model)?
Machinery
Make-up
Management
Management info
Markets
Materials
Men and women
Methods
Money
What is Porter’s value chain model?
Offers bird’s eye view of the business
Competitive advantage arises from how businesses organise and perform activities
What are value drivers?
Elements of a product/service and activities that increase the amount of value customers place on it
Means of differentiation
What is a cost driver?
Any activity that affects the cost of a product/service
What is supply chain management (SCM)?
Optimising the activities of businesses working together
Can involve:
Reduction in number of suppliers
Reduction in customers for focus
Easier supplier involvement
Joint problem solving
What is the product life cycle?
How a product demonstrates different characteristics of profit and investment over time
Stages:
Product development
Intro
Growth
Maturity
Decline
What is the BCG matrix?
Assesses business’s products in term of potential cash generation and cash expenditure requirements.
Businesses are either:
Stars
Cash cows
?
Dogs
What is relative market share?
Calculated by dividing an entity’s sales of a product or service in a specified market by the sales of the biggest competitor in that market.
