Chp 3: Strategy, reputation and risk

Question 1

What is strategic intelligence?

Answer 1

Strategic Intelligence should provide a company with the information it needs about it’s business environment to anticipate change, design strategies and drive growth and profits

Question 2

What are the five main stages in a product life cycle (PLC)?

Answer 2

1. Introduction
2. Growth - gaining customer support
3. Shakeout - growth slows; does it need something else?
4. Maturity - consistent performer but low growth
5. Decline - demand falls; exit?

Question 3

Describe the Boston Consulting Group (BCG) matrix?

Answer 3

Used to assess a product portfolio

x-axis: Relative Market Share (High to Low)
y-axix: Market Growth Rate (Low to High)

Key - (x)(y)
LH - Question mark or problem child
HH - Star
HL - Cash Cow
LL - Dog

Question 4

Porter argued a company needs to determine it’s competitive advantage and it’s competitive scope - what are the options for those questions?

Answer 4

Advantage - Low cost or a differentiator

Scope - Narrow target (focused on a defined market group) or broad target (whole market)

Question 5

What are the four sectors of Ansoff’s growth vector matrix?

Answer 5

1. Market penetration - existing products in existing markets; uses sales, promotions etc. to gain market share
2. Market development - existing products in new markets; finds new customers for old products
3. Product development - new products in existing markets; riskier as will require capital investment
4. Diversification - new products in new markets; riskiest but with signfiicant growth potential

Question 6

List eight potential problems with acquisitions and mergers?

Answer 6

1. Cost
2. Customers may resent takeover
3. Incompatibility between systems, products, customers etc.
4. Assymetric information may lead to inflated prices
5. Driven by managements personal goals?
6. Non-financial factors often overlooked
7. Poor record of benefitting acquired shareholders more
8. Fees charged for advice

Question 7

According to Johnson et al, what three criteria should new strategies be evaluated by?

Answer 7

1. Suitability for the organisation
2. Acceptability to stakeholders
3. Feasibility

Question 8

What is the foresight technique?

Answer 8

Similar to forecasting excpet it creates a range of possible outcomes based upon current trends

Question 9

What is Game Theory?

Answer 9

The study of how strategic interactions among ratinal players produce strategic outcomes not intended by the players

Question 10

What is the difference between ‘Load Testing’ and ‘Stress Testing’

Answer 10

Load determines is a system, process etc. can cope with anticipated levels of demand

Stress testing aims to find the breaking point of a system process etc.

Question 11

What are the three pillars for Basel III that support sound banking strategies?

Answer 11

1. Minimum amounts of capital required for banks to maintain stability
2. Better visibility of risks using systems of supervisory review
3. Better levels of disclosure that encourage a market that is disciplined

Question 12

What are the four global stress testing scenarios suggested by Wade (2016)?

Answer 12

1. Global bazaar - improved tech makes consumers less loyal so organisations have to work harder to maintain their position
2. Cautious Capitalism - trust in organisations is eroded by cyber risks, reducing the opportunites for tech and digital innovation
3. Territorial dominance - consumers crave local products not global, leading to greater protectionism and lower levels of growth and digital innovation
4. Regional marketplaces - governments and companies form bonds and shun international cooperation. So expansion is stifled and supply chains are affected

Question 13

What is Probity risk?

Answer 13

The risk of untruthful or misleading behaviour by one or more participants in a process