Equity lvl2 - Reading 32 (Strategy) Flashcards
Define Malleability/Mutability
“extent to which a comp and its competitors can influence industry factors (such as industry demand, corp performance, market expectations)”
Define classical style in terms of less/more predictable and less/more malleable
more predic, less malleable
One goal of using classical style
optimize efficiency (Porter 5 Forces is example of classical). it uses quantitative prediction tools
Define adaptive style in terms of less/more predictable and less/more malleable
Less predictable, less malleable
How do companies use adaptive style?
company must be able to react quickly to change
Define shaping style in terms of less/more predictable and less/more malleable
less predictable and more malleable
One goal os using shaping style
“used to influence the unpredictable business environment to further their business interest”
example of type of company that uses shaping style
software company
Define visionary style in terms of less/more predictable and less/more malleable
more predictable and more malleable
How does visionary style work?
“does not take environment as given but seeks to alter it to further the company’s interest”
What doe a visionary style need to work?
adequate resources to commit and staying focused on long-term goal vs. changing the strategy
Define survival style
“when company faces severe restrictions on its access to capital”
How does survival style work?
“company should defensively focus on shoring up capital, cutting expenses, etc to be ready when bus. environ. improves and longer-term strategy can be formulated”
The oil industry typically uses which style
classical because it is predicable and less malleable
The fashion industry typically uses which style
adaptive because consumer taste changes and it is not very predictable
explain pitfall in strategy formulation: predicable environment
many companies assume their bus. environment is predicable
explain pitfall in strategy formulation: inaccuracy in gauging the dimensions
overestimating the predictability of the bus. environment and ability to affect it
explain pitfall in strategy formulation: predefined timetables
not adapting the changes in business environment
explain pitfall in strategy formulation: cultural mismatch
when corp cult. is acustomed to one style when another may be more appropriate
explain pitfall in strategy formulation: relying on single style for multi division company
one overall strategy may not work for company with many different divisions
explain pitfall in strategy formulation: not evolving with changes in industry life cycle
styles may need to change as industry life cycle changes
