E3 - 7. Making Strategic Choices Flashcards
What are the 4 steps in making strategic choices (and related models)?
- Select Generic Strategy (Porter)
- Decide on Strategic Direction (Ansoff)
- Decide on Method of Development
- Evaluate options (SAF)
What are Porter’s 3 generic strategies?
- Cost Leadership
- Differentiation
- Focus
What are the 4 strategic directions in Ansoff’s Matrix?
- Protect/build
- Product development
- Market development
- Diversification
What are the 4 possible benefits from product life cycle analysis?
- Maximise the value of products
- Maximise the use of resources - where best to allocate marketing, R&D etc
- Make product strategy decisions
- Protect against downturn through diversification
What 3 steps should be taken to maximise the benefits gained from business portfolio analysis?
- Decide which current business/products should receive more or less investment
- Develop growth strategies to add new products to the portfolio
- Compare results over time and vs competitors
What are the 4 quadrants of the BCG matrix?
- Stars (high growth, high share) > HOLD
- Question Marks (high growth, low share) > BUILD
- Cash Cows (low growth, high share) > HARVEST
- Dogs (low growth, low share) > DIVEST
What are the 5 main methods of strategy development, as per Johnson and Scholes?
- Internal Development
- Mergers/Acquisitions
- Strategic Alliances
- Joint Ventures
- Franchising
What are the 4 main benefits of internal development?
- Cost spread over longer time
- Avoids political/cultural issues of merging
- Requires slower rate of change
- Get exactly what we want
What are the 4 main disadvantages of internal development?
- Slow
- Lack expertise
- Risk of distraction from core
- Can be expensive
What are the 4 main benefits of mergers?
- Quick
- Take out competitor
- Acquire core competencies
- Cost efficient
What are the 4 main disadvantages of mergers?
- Cultural differences
- Buy ‘warts and all’
- Staff anxiety
- Risk of paying too much
What is a strategic alliance?
Two or more organisations share resources and activities to pursue a strategy, employing collaborative leadership
What 4 things are needed for a strategic alliance to succeed?
- Aligned goals
- Trust
- Realistic expectations
- Cultural alignment
What are the 2 main benefits and 2 main drawbacks of franchising?
+ Quickly propagate brand
+ Shared risk
- Possible conflict
- Possible reputation damage
What are the 4 benefits of performing value chain analysis?
- Identify costs and benefits of each activity
- Understand factors that drive costs
- Benchmark against competitors
- Understand linkages in the chain
