Chapter 6 Entrepreneurial Strategy

Question 1

Why is strategic management important?

Answer 1

Strategic management is important to an organisation because it provides a sense of direction and outlines measurable goals. Suggested planning is useful for guiding day-to-day decisions and evaluating progress and changing approaches when moving forward.

Question 2

4 Strategic Management phases

Answer 2

The strategy formulation phase

The strategy evaluation phase

The strategy implementation phase

Sustainable competitive advantage

Question 3

THE STRATEGY FORMULATION PHASE

Answer 3

• DEVELOPMENT OF BUS MISSION
• ANALYSIS OF INTERNAL & EXTERNAL ENVIRONMENTAL
• SWOT ANALYSIS
• DEV LONG TERM OBJ

Question 4

THE STRATEGY EVALUATION PHASE

Answer 4

• ANALYSIS & REVIEW OF EXTERNAL AND INTERNAL FORCES

- EVALUATION using innovation and financial risk matrix

Question 5

THE STRATEGY IMPLEMENTATION PHASE

Answer 5

• DEV OF POLICIES AND ANNUAL OBJ
• ALLOCATION OF RESOURCES
• MEASURING PERFORMANCE
• TAKING CORRECTIVE ACTION
• CONTINUOUS EVALUATION

Question 6

SUSTAINABLE COMPETITIVE ADVANTAGE

Answer 6

• COST LEADERSHIP STRATEGY
• DIFFERENTIATION STRATEGY
• FOCUS STRATEGY
• CUSTOMER SERVICE
• CSR
• BBBEE

Question 7

The business mission

Answer 7

Identifies :

The target market

Needs of that target market

The means by which these p/s will achieved

Refrain from:

Reflecting sentiments

Using words that cannot be measured

Focuses on making profit

Question 8

9 components of a business mission (David)

Answer 8

CUSTOMERS

CONCERN FOR PUBLIC IMAGE

CONCERN FOR EMPLOYEES

CONCERN FOR SURVIVAL

PRODUCTS AND SERVICES

PHILOSOPHY

MARKETS

TECHNOLOGY

SELF CONCEPT

Question 9

Analysis of external environment

Read through pages 103-110

Answer 9

Social and political

International and national economic

Physical

Technological

Administrative and institutional

Communications and infrastructure

Legal and political

Competitive

Question 10

Analysis of internal environment

Answer 10

SWOT ANALYSIS

Strengths: these are resources and abilities to which the entrepreneur has access in order to take adv of OPP and fight off threats

Weaknesses: deficiencies in resources and processes available to the entrepreneur

Opportunity: a favorable situation that exists in the market that can be exploited for profit

Threats : indication of an undesirable situation that could lead to loss

Question 11

Generation of alternative strategies

Answer 11

Strength- opportunity strategy

Weakness - opportunity strategy

Strength - threat strategy

Weakness- threat strategy

Question 12

STRENGTH-OPPORTUNITY STRATEGY

Answer 12

Internal strengths are used to address external opportunities. Example surplus financial resources to expand to a second shop

Question 13

WEAKNESS-OPPORTUNITY STRATEGY

Answer 13

Strategies aimed at improving internal weaknesses by taking advantage of external opportunities

Taking over a new supplier for better prices

Question 14

Strength-Threat strategy

Answer 14

Using internal strengths of the business to avoid threats identified in the environment.

Using surplus financial resources to create biodegradable products when external emphasis is placed on environmentally friendly products.

Question 15

Weakness-Threat strategy

Answer 15

Defensive tactics aimed at reducing internal weaknesses and avoiding environmental threats.

Question 16

Evaluation criteria of strategies

Answer 16

Internal consistency: The strategy of an organisation should be supported by its internal strengths and addressed by its weaknesses

Realistic: The plan should be achievable even if it is challenging

Stakeholder benefit: the strategy will add value for the stakeholders

Focused on strategic problems: the strategy addresses key problems revealed through earlier analysis

Capable of solving key subproblems : the strategy addresses minor problems and symptoms of company deficiencies

Customer benefit: the strategy will add value for customers

Suitability: extent to which a strategy fits the situation identified in the strategic analysis and the way it should sustain and improve the competitive positioning of the venture

Question 17

Competitive advantage

Answer 17

Competitive advantage is the strategic advantage one business entity has over its rival entities within its competitive industry

Sustainable competitive advantage are long-term advantages that are not easily duplicable or surpassable and which allows an organisation to outperform its competitors

Question 18

Sustainable advantage strategies

Answer 18

Cost leadership

Differentiation

Focus strategy

Customer services corporate social responsibility

BBBEE

Question 19

Cost leadership

Answer 19

• a business’ ability to produce a p/a at a lower cost than competitors, if they can match the quality it would lead to a true competitive advantage.

Question 20

Differentiation strategy

Answer 20

The development of a p/s that offers unique attributes that customers view as as better than its competition. The added value allows firms to charge a premium for using their products .

Question 21

Focus strategy

Answer 21

Where an organization concentrates its resources and efforts on entering or expanding into a narrowly defined market segment

Question 22

Customer services

Answer 22

An organizations ability to have a positive interaction with their customers when supplying their needs and wants

Question 23

CSR

Answer 23

Corporate social responsibility is the continuing commitment by a business to contribute to Economic development and capacity building for sustainable livelihoods whilst improving quality of life of the workforce, their families, the community and society at large

Question 24

B-BBEEE

Answer 24

The governments initiative to promote economic transformation in order to ensure meaningful participation in the economy and business by black people.