Defining the organizations strategic direction

Question 1

What are the two most common used tools for analysing the external environment of the firm?

Answer 1

Porters Five Forces

Stakeholder analysis

Question 2

What are the five forces in Porters Five Forces?

Answer 2

• Threat of potential entrants
• Bargaining power of suppliers
• Bargaining power of buyers
• Threat of substitutes
• Degree of existing rivalry

(Recent 6th is the role of complements)

Question 3

What is an oligopolistic industry?

Answer 3

High consolidated industries with a few large competitors

Question 4

What is an exit barrier?

Answer 4

Costs or other commitments that M.A.K.e it difficult for firms to abandon an industry (Large fixed-assets investments, emotional commintment to the industry).

Question 5

What is an entry barrier?

Answer 5

Conditions that make it difficult or expensive for new firms to enter an industry (government regulation, large startup costs etc.)

Question 6

What is a switching cost?

Answer 6

Factors that make it difficult or expensive to change suppliers or buyers, such as investments in specialised assets to work with a particular supplier or buyer.

Question 7

What does vertical integration mean?

Answer 7

Getting into the business of ones suppliers (backward vertical integration) or ones buyers (forward vertical integration). For example, a firm that begins producing its own supplies has practiced backward vertical integration and a firm that buys its distributor has practiced forward integration.

Question 8

Which questions needs to be observed in a stakeholders analysis?

Answer 8

1, Who are the stakeholders
2, What does each stakeholder want
3. What resources do they contribute to the organization
4. What claims are they likely to make on the organization?

Question 9

What is a stakeholder?

Answer 9

Any entity that has an interest “stake” in the organization, can be: stockholders, employees, customers, suppliers, lenders, the local community, government, rivals etc.

Question 10

What is the porters internal analysis?

Answer 10

The analysis of the internal environment of the firm and most often begins with identifying the firms strengths and weaknesses.

Question 11

Which two activities does the internal analysis involve?

Answer 11

Support and primary activities

Question 12

What is primary activities in the internal analysis?

Answer 12

o Inbound logistics
 All activities required to receive, store, disseminate inputs
o Operations
 Activities involved in the transformation of inputs into outputs
o Outbound logistics
 Activities required to collect, store and distribute outputs
o Marketing and sales
 Activities to inform buyers about product and services and to induce their purchase.
o Service
 After sales activity required to keep the product or service working effectively.

Question 13

What are support activities in the internal analysis?

Answer 13

o Procurement
 The acquisition of inputs, but not their physical transfer, as that would be covered in inbound logistics
o HR management
 Activities such as recruiting, hiring, training, compensating personnel
o Technology development
 Activities involved in developing and managing equipment, hardware, software, produces and knowledge necessary to transform inputs into outputs.
o Firm infrastructure
 Functions as accounting, legal consel, finance, planning, public affairs, government relations, quality assurance, and general management necessary to ensure smooth functioning of the firm.

Question 14

What are tacit resources?

Answer 14

Resources of an intangible nature ( such as knowledge) that cannot be readily codified

Question 15

What are socially complex resources?

Answer 15

Resources or activities that emerge through the interaction of multiple individuals

Question 16

What is causal ambigutiy?

Answer 16

The relationship between a resource and the outcome it produces it poorly understood

Question 17

What kinds of internal analysis can be made within a firm?

Answer 17

Porters Internal analysis or Resource-based view (RBV)

Question 18

What is strategic intent?

Answer 18

• A long-term goal that is ambitious, builds upon and stretches firms core competencies and draws from all levels of the organisation. E.g. Apples mission of ensuring that every individual has a personal computer.

Question 19

What is the blue ocean strategy?

Answer 19

A form of strategy intent often suitable for startups, refers to untapped market space that firms create by redefining the dimensions of competition.

Question 20

How is a blue ocean defined?

Answer 20

Create uncontested market space
Make the competition irrelevant
Create and capture new demand

Question 21

How is a red ocean defined?

Answer 21

Competing in existing market (with sharks making the ocean red)
Beat the competition
Exploit the existing demand

Question 22

How does a stakeholder analysis model work?

Answer 22

1, Who are the stakeholders
2, What does each stakeholder want
3. What resources do they contribute to the organization
4. What claims are they likely to make on the organization?