Chapter 5: Strategizing Flashcards
What is strategizing?
mode of management centered on achieving goals through strategy practices.
What is strategy?
integrated and coordinated set of commitments and actions aimed at achieving a goal or purpose.
What is professional strategizing?
Profressional strategizing refers to integration of socio-environmental factors into core of strategizing process in order to create value.
What is a competitive strategic advantage?
refers to an advantageous strategic position achieved in competition with peers.
What phases does the strategizing process consist of?
1) shaping of purpose and objectives,
2) analyzing context,
3) formulating strategies and
4) executing them.
What is a collaborative strategy?
advantageous strategic position achieved in collaboration with peers.
What is co-opetition?
describes complementary nature of collaboration and competition as bases for strategizing.
What is responsible competitiveness?
achieving competitive advantage as above-average value creation for wider range of stakeholders.
What is irresponsible competitiveness?
achieving competitive advantage at expense of stakeholders.
What is a vision statement?
delineates what management ultimately wants to achieve. Crucial to search for reinforcing relationship between vision’s social, environmental and economic impacts.
What is a mission statement?
defines what management and its organization is and does at a certain point in time, typically including market, customers, products etc.
What is the internal environment?
represented through the company’s value chain, which provides a broad picture of the company.
What are strategic objectives and goals?
They translate vision and mission to medium- and long-term operational goals.
What is the external environment?
Environment outside of the firm. First layer is the industry environment, second is general macro environment.
Name two ways of looking at competitive advantages?
- Environmental view fucoses on company’s external environment as a source of competitive advantage.
- Resource-based view focuses on internal environment.
What are inside-out linkages?
describe how internal environment influences external environment
What are outside-in linkages?
describe the influence of external factors on the internal company environment.
Name two common tools for analyzing the environment
Use PESTLE to analyze macro environment (Political, economic, social, technological, Legal and Ecological). On industry level, use Porter’s five forces.
Name four common techniques for getting an ongoing environmental analysis
- Environmental scanning to identify early signs of changes.
- Monitoring to provide ongoing observation of environmental trends.
- Forecasting anticipated outcomes as detected through monitoring.
- Assessing importance and timing of strategic answers.
What is a value chain model?
description of company’s activities as they are bundled into functions.
What is a social margin?
difference social cost of products and services offered by companies and e.g. jobs created
What is an environmental margin?
difference between environmental value of ecosystems and environmental cost of CO2 caused by the product.
What is the resource-based view of strategizing?
aims to explain how resources (physical, social, organizational and financial) and their management contribute to achievement of competitive advantages.
What is competence?
something an organization and its management are good at. Core competences are central to competitiveness.
What is a distrinctive competence?
valuable activity that a company is better at than competitors and leads to competitive advantage.
What are the three main questions to identify strategic characteristics of competence?
- Is resource available?
- Is resource heterogeneously distributed?
- Is the resource hard to imitate?
What is a SWOT-analysis?
environmental assessment tool summing up good and bad internal and external factors. Changing internal and external environments require professional strategizing responses to change.
Name the three types of strategies?
- Corporate level strategies
- Business level strategies
- Functional level strategies
What is a corporate level strategy?
in how many markets do we want to operate and how much of my value chain do we do ourselves?
What is a business level strategy?
how to manage a strategic business unit competing on a certain product market
What is functional level strategy?
how do single business units support strategic objectives.
What is diversification?
increasing the number of markets you’re competing in
What is divestment?
reducing the number of markets you’re competing in.
What is horizontal integration?
running parallel businesses competing in unconnected ,markets
What is vertical integration?
managing businesses in different levels of value chain.
What is the aim of functional level strategizing?
Functional level strategizing aims at development of strategies of single business functions that support the overall strategy.
What is unrelated diversification?
new business with no link to current businesses.
Name the components of the BCG matrix
- Stars (strong market share and market growth rate)
- Question marks (low market share but high market attractiveness)
- Cash cows (strong market share, low market attractiveness)
- Dogs (low market attractiveness and market share, dump)
What is related diversification?
new business that has a close link to current businesses
Name three business unit level strategies
- Cost leadership (lowest costs and therefore lower prices than competitors)
- Differentiation (aim to create products providing unique value compared to competitor)
- Cost and differentiation focus strategies focus on a niche in the market that they are most attractive to
What is a business model?
unique formula of organization’s value proposition, creation, exchange and capture
What is hardwiring?
professional management strategy refers to implementation in organizational infrastructure.
What is softwiring?
implement professional management strategies throughout organization’s social fabric.
What are the three main corporate governance mechanisms?
- Executive pay
- Concentration of ownership
- Board of directors (choosing a diverse board from different stakeholders can contribute to business performance)
Explain the four elements of a business model
- Value proposition: what value does organization offer to whom? (how do stakeholders benefit from business?)
- Value creation: how does organization create value (main production activities?)
- Value exchange: How does organization exchange value? (marketing, distribution, local outlets)
- Value capture: how is value created by an organization captured (how are revenue and costs generated?)
What are deliberate strategies?
- Value proposition: what value does organization offer to whom? (how do stakeholders benefit from business?)
- Value creation: how does organization create value (main production activities?)
- Value exchange: How does organization exchange value? (marketing, distribution, local outlets)
- Value capture: how is value created by an organization captured (how are revenue and costs generated?)
What are unrealized strategies?
These are intended strategies that do not get realized
What are emergent strategies?
Not intended strategies that were realized
What are the principles of strategizing?
- Goal of professional strategizing is achievement of responsible competitiveness
- Strategizing process consists of 1) shaping objectives, 2) analyzing context, 3) shaping strategies and 4) evaluating strategies
- Mission and vision statements are important for strategizing activity
- Three strategic environments are internal, industry and macro environments
- Strategy hierarchy consists of corporate strategy, business unit strategy and functional strategy
- Professional strategizing can create diversification advantage
- Executing professional management strategies is based in hardwiring and softwiring
- Activity maps can be used to understand how practiced strategy corresponds to ideal strategy
- Strategies are practiced as business models’ value proposition, creating, exchange and capture
What are the four elements of the strategizing process?
- Shaping objectives
- Analyzing context
- Formulating strategies
- Executing and evaluating
What is a value proposition?
statement summarizing why customers would buy your product or service, highlighting its clearest benefits
Name the three categories of problems when analyzing the context
- Simple problems: easy to solve, have a clear solution. This is the technical level and has intervention level 1.
- Complex problems: Resist solving and problems and solutions are not clear. Intervention levels 2 and 3. Organizational level
- Wicked problems: resist defining, problem and solutions not understood on a societal level. Intervention level 4.
What elements does a value proposition consist of?
- What you will deliver to customers
- Benefits reaped by customers
- Why customers should choose you over your competition.
Name the four different types of failures?
- Failure by government, market and civil society
- Negative externalities by state, market and civil society
- Positive externalities of state, market and civil society
- Collective action by market, state and civil society
Name the four levels of the reframed canvas model
Level 1: create, design, capture and scale value
Level 2: Negative externalities: destroy value
Level 3: Positive externalities: spread value
Level 4: Systems and common solutions
What is level 1 of the reframed canvas model about?
- Corporate Self Responsibility: CSR = profit maximization or cost reduction.
- Logic:
1. Cost reduction through ecology
2. Compliance to laws
3. Not being irresponsible - Challenge
1. Short-term
2. Ecology>social>economic
3. Not very Entrepreneurial
What is level 2: negative externalities of the reframed canvas model about?
- Corporate social responsibility: limit reputational losses
- Logic:
1. Reputation is a major part of value
2. Limits losses when problems appear
3. Dealing with negative externalities - Challenges:
1. Improvisation rather than solution
2. PR: window dressing; philantrophy
3. Greenwashing internal effects
What is level 3: positive externalities of the reframed canvas model about?
- Corporate Social Responsibility: CSR= strategic and moral entry
- Logic:
1. Social enterprise: Entry strategy
2. Big companies: purpose-driven
3. Linked to future growth markets positive externalities - Challenges:
1. Niche: Scaling Very hard to do
2. System doesn’t change people responsible for internal alignment in big companies are crowded out
What is level 4: systems and common solutions of the reframed canvas model about?
- Corporate Societal Responsibility: CSR = systemic and new economy
- Logic:
1. Fix system in order to thrive
2. First mover advantage
3. Business is always about networking - Challenge:
1. Creating the right partnerships
2. Negative frames in society
Who are the four partners in the executing and evaluating phase?
- Competitors – market
- Value chain
- NGOs, buyers, coopetition
- Government – Regulators
What is the Quintiple P model about?
This goes into even more detail than the 3BL and consists of:
1. People
2. Planet
3. Prosperity
4. Peace
5. Partnering
