Chapter 7 - Competitive Advantage Flashcards
What’s the relationship between Corportate Parent and SBUs
Parental Relationship
What’s the benefits and costs/disadvantages of having a Corporate Parent
DISADVANTAGES/COSTS: HR, Payroll, Stifles Innovation, Time consuming, slow decisions, demotivates staff as they can’t make their own decisions. ADVANTAGES: Resources, Money, Staff, knowledge, expertise, reputation, credit rating, Economies of Scale, synergy
What are the 3 approaches a Corporate Parent might adopt
- Portfolio Manager - 2. Synergy Manager, 3. Parental Developers
What model is best for Portfolio managers (projects)1
BCG matrix
Describe variables of the BCG Matrix and each element
MARKET GROWTH AND RELATIVE MARKET SHARE. High growth and high share is STAR. High growth and low share is QUESTION MARK. Low growth and high share is CASH COW, low growth and low share is DOG.
What are portfolio Managers - what do they do
Asset strippers. Reduce costs and get a financial result. They acquire undervalkued companies and improve them via restructure.
What are synergy managers
They believe together is more. 2+2=5. They share resources and economies of scale. Share knowledge and expertise.
What do parental developers do and which model can be used by them
They aim to add value and add key skills that SBU may not have. Ashridge Model.
What are the two variables of Ashridge Model
Feel (understand) AND Benefit (help)
What are the two variables of BCG
RELATIVE Market Share and market growth
What are the elements of the Ashridge Model - explain
HEARTLAND - Parents understand SBU and have resources to help. BALLAST - Parent understand but do not have the resources to help. VALUE TRAP - Parents can help as they have resources but do NOT understand the business at all. ALIEN - Parents do not understand and cannot help SBU
What are SBUs
They have their own distinct products and managers and held accountable and they have more knowledge than parent
Who uses Strategy clocks and what are the main elements and explain
SBUs. NO FRILLS - low price standard products. LOW PRICE - undercut competitor prices. HYBRID - lower price but better quality or more volume than competitors. DIFFERENTION - Unique products or services
What are the other ways that SBUs can get competitive advantage
Lock in/Contracts - Regular changes to Strategies and plans and products - Collaboration with customers supplies and competitors
What are the advantages of collaborations with a customer or supplier
Share knowledge, cost, specific
