Chapter 9: Strategy and Development Modes Flashcards
What is the primary purpose of strategies in organizations?
Strategies ensure sustainable success by defining long-term goals and the paths to achieve them.
Can strategies be both explicit and implicit?
Yes, strategies can be explicitly formulated or implicitly recognizable in the actions and decisions of the organization and its members.
From where can strategies originate in an organization?
Strategies may be prescribed by managers or emerge from lower hierarchical levels.
What are the two basic dimensions of strategy?
Strategy content: Focuses on content-related outcomes.
Strategy process: Focuses on how to develop strategy content.
How does the St. Gallen Management Model relate to strategy?
It identifies strategy as one of the four structuring forces, emphasizing that structure follows strategy.
Why must an organization’s structure align with its strategy?
Structure and organization should serve as instruments to facilitate the realization of strategy, not as self-serving elements.
Give an example of how structure reflects strategy in international growth.
If a company focuses on foreign growth, its organization might include strong country-specific divisions to prioritize and develop individual markets effectively.
How does governance influence strategy?
Governance structures the influence and decision-making possibilities of responsible parties and guides strategy development.
Who are the main players in strategy formulation and implementation?
Board of Directors: Defines priorities, makes basic decisions, questions details, and monitors implementation.
Management/Specialist Departments: Handle detailed processing and implementation of strategy.
What characterizes strategy processes in organizations?
Strategy processes are marked by interaction between different levels: the board of directors, management, and specialist departments.
What are three different definitions of strategy?
- Determining long-term goals, adjusting approaches, and allocating resources over time.
- A pattern in a stream of decisions and actions.
- The way an organization moves forward and develops its value creation.
What do all definitions of strategy have in common?
They describe strategy as the path an organization chooses to achieve its goals.
What characterizes strategic decisions in profit-oriented companies?
- They are long-term.
- They impact the ability to generate and internalize value.
- They allocate expensive or hard-to-change resources.
- They consider competitors’ reactions and relevant markets.
- They positively impact return on investment.
What are the three reference levels of strategy in organizations?
- Normative Level: The organization’s role in society, values, and norms.
- Strategic Level: Focus on markets and long-term success prerequisites.
- Operational Level: Day-to-day business and efficient resource use.
How does strategy relate to normative and operational levels?
Strategy lies between normative orientation processes and operational coordination processes.
What is the goal of normative management?
To legitimize the company in society and among stakeholders.
Define “mission” in the context of an organization.
A consistent statement of purpose that reveals the company’s products/services, markets/customers, and philosophy.
How does “vision” differ from “mission”?
Vision illustrates the future-oriented and long-term image of a company, while mission defines what is to be achieved.
What role do values and norms play in normative management?
They guide actions and define fundamental behavioral maxims for the organization.
What is a mission statement?
A document outlining the company’s values and guidelines for dealing fairly with stakeholder concerns.
What is the purpose of operational coordination processes?
To stabilize organizational value creation in day-to-day operations through efficient processes and problem-solving routines.
What is included in operational management activities?
- Regular orientation and decision-making meetings.
- Planning and implementing performance and support processes.
What is the “business plan,” and what does it include?
A multi-year plan presenting the strategy and measures, linked to a financial plan that includes budgeted income statements and investment plans.
What does the financial plan in a business plan contain?
Planned annual results (budgeted income statements) and medium-term investment and financing plans (for approximately five years).
What are the key design fields in a strategy according to the SGMM?
- Service offering
- Service creation processes
- Business models
How does a company’s service offering influence strategy?
It is shaped by environmental changes (e.g., market development) and stakeholder expectations (e.g., customers and suppliers).
What questions are central to developing a business model?
- How is value created?
- For whom is this value created?
- How is this value internalized?
What is the main aim of strategic development processes?
To create sustainable competitive advantages and ensure competitiveness.
How can companies achieve sustainable competitive advantages?
By creating and utilizing protectable market positions and leveraging dynamic capabilities.
Define a competitive advantage from an outside-in perspective.
A brand or market positioning anchored with customers that is hard to replicate and increases willingness to pay.
Define a competitive advantage from an inside-out perspective.
A core competence that is valuable, rare, hard to imitate, and nonsubstitutable.
Give an example of an inside-out competitive advantage.
A company producing innovative fastening products due to superior innovation and stable production processes.
What are “economies of scale,” and how do they provide a competitive advantage?
Economies of scale occur when a company achieves lower costs due to large production volumes, offering a cost advantage over competitors.
What are the three possible competitive strategies in a competitive strategy matrix?
- Differentiation from competitors
- Comprehensive cost leadership
- Concentration on focal points (niche focus)
What strategy do low-cost airlines typically pursue?
Comprehensive cost leadership by reducing costs in service processes, employee salaries, and supplier choices.
What strategy do legacy carriers typically pursue?
Differentiation by offering high-quality intercontinental connections from strong economic hubs.
What risk do companies face if they don’t focus on one of the three competitive strategies?
They risk being “stuck in the middle,” achieving neither cost efficiency nor differentiation.
Why is protecting competitive advantages important?
It ensures the company can sustain its market position and profits necessary for innovation and growth.
What are examples of outside-in and inside-out elements of competitive advantage?
Outside-in: Customer relationships, strong brand, monopoly position.
Inside-out: Skilled employees, strategic location, efficient machinery.
