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0 Strategic Management > Holistic Analysis > Flashcards

Holistic Analysis Flashcards

1
Q

why is holistic analysis needed?

A

it solves the question of how to do things.

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2
Q

define the term holistic analysis

A

= a comprehensive strategic analysis of a company and its environment

= an input for strategy formulation

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3
Q

what are the three ways of conducting a holistic analysis?

A

SWOT
portfolio
value chain analysis

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4
Q

define the term SWOT analysis

A

analysis of a companies S, W, O and T from the aspect of their present and future impact on company performance

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5
Q

where is SWOT analysis applicable?

A

to all types of companies and their subunits (and also to other teams that are not firms)

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6
Q

which part of the swot analysis is internal and on what does it focus?

A

the SW, it focuses only on the present

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7
Q

which part of the swot analysis is the external and on what does it focus?

A

the OT, it focuses the present and future

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8
Q

what are the two approaches to the SWOT analysis?

A
  1. unstructured (for smaller companies, uses only one table)
  2. structured (for larger companies, uses many SWOT analyses for different predefined substructures (!= departments)(e.g., performance, financial, product, personnel, organisational etc.) - after that, an overall evaluation is done and presented in a user-friendly way
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9
Q

what is the most important rule of a SWOT matrix?

A

never to write activities into the matrix, only facts

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10
Q

what is a performance analysis?

A

it is the first step in the structured approach to SWOT analysis.

  1. defining ratios of different components (e.g. sales, profit, labour productivity ratio)
  2. analysis of why the performance is what it is = Du Pont System (= dissecting a component to see what it consists of and what we need to check when it starts decreasing)
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11
Q

state 4 advantages of the SWOT analysis

A
  1. applicable to all types of companies / teams
  2. easy to use
  3. use of external data to supplement management judgement
  4. facilitates communication within the company (when conducting the specific SWOT analyses)
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12
Q

state 1 disadvantage of the SWOT analysis and a way to reduce that

A

it is usually based on subjective assessment.

-> using objective indicators, gaining multiple opinions and using the average

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13
Q

define the term portfolio analysis.

A

= analysis of (im)balance of company’s strategic business units from the perspective of their present position and future market attractiveness

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14
Q

to what is the portfolio anaylsis applicable?

A

only to diversified companies (= that have several businesses or broad groups of products)

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15
Q

define the term strategic business unit

A

= relatively independent organisational unit with its own management, competitors and at least some business fuctions
–> defined by its organisation

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16
Q

define the term strategic business area

A

= relatively independent group of products with its own purchasing, R&D, prouction, and sales characterisitcs
–> defined by its content (of product/service)

17
Q

define the term experience curve and why is it important for the portfolio analysis

A

= cumulative experience gained leads to cost decreases

benefits from the experience curve can be competitive advantages for the firm (lower costs of production -> lower price)

18
Q

state five kinds of portfolio matrixes

A
  1. BCG matrix
  2. GE matrix
  3. Shell’s DPM matrix
  4. Hofer’s matrix
  5. international matrix
19
Q

define the x axis of BCG matrix (name and calculation)

+ explain 5 characteristics

A

relative market share RMS = MS our / MS bc = TR our / TR bc

  1. internal, present dimension
  2. no units
  3. middle point of the axis is 1
  4. logarithmic scale = ratios to each side of the middle are equal
  5. SBUs and SBAs are not necessarily overlapping (if they are not, there is just a bit more work regarding data collection)
20
Q

what is the most important step before making the BCG matrix?

A

choosing the Biggest Competitor for each business in the company separately!

21
Q

state the y axis of BCG matrix and explain 4 characteristics

A

business growth rate

  1. in %
  2. future and external dimension
  3. middle point = average growth rate of the whole economy
    (depends on your market scope - EU / world)
  4. linear scale = differences to each side of the middle are equal
22
Q

what is the plus of doing the BCG matrix with market shares rather than total revenues?

A

the matrix then also tells you what your b.c.’s market share is and also what kind of structure there is on the market (all other competitors have smaller parts than you and b.c.) - it can give you a better idea of what kind of strategy is needed

23
Q

how is the market share (of our company or the b.c.) calculated?

A

MS = TR of the company / TR of the industry

24
Q

describe the BCG matrix.

A

on top left, there are stars (investment opportunities).
top right, question marks (selective investment, there might still be market potential with these, but currently they don’t hold a big market share)
bottom left, cash cows (used for milking money)
bottom right, dogs (divestment. not a big market share and not expected to grow)
strategic business units (SBUs) are represented by circles. their size shows the relative size of the industry (in comparison to our other SBUs), while the shadowed area represents the relative size of our SBU (in proportion with other SBUs in the industry)

25
Q

what is the problem of question marks and dogs?

A

they can’t support their own investments, since they don’t have enough cash flow. hence the cash usually flows from cash cows to question marks and partly to stars, but mostly not to dogs, since they are not expected to grow at all.

26
Q

what is the best position for a company with multiple businesses (in terms of BCG matrix)?

A

to have their businesses balanced. if they were only to have cash cows, they would not exist anymore in a few years, because the market growth rate is slow with those. (same goes for others)

27
Q

define the GE matrix

A

compares competive position (x) and industry attractiveness (y)
emphasis on potential profitability

28
Q

describe the GE matrix (how it looks)

A

both axes are linear and normalised (0 is in the middle)
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29
Q

state 4 advantages of the portfolio analysis

A
  1. each SBU is evaluated individually
  2. raises issue of cash flow availability
  3. externally-oriented data to supplement management judgement
  4. facilitates communication within the company
30
Q

state 4 disadvantages of the portfolio analysis

A
  1. applicable only to diversified companies
  2. difficult to define groups of products/services
  3. standard strategies (cash cows, dogs, etc.) can miss opportunities
  4. illusion of scientific rigor (logarithmic scales and such), while it is still highly subjective (bc of point 3.)
31
Q

what is an alternative to portfolio analysis? define the term

A

value chain analysis = analysis of a company’s activities from the aspect of their value creation

32
Q

to what is VCA applicable?

A

to all types of companies and their units

33
Q

what is the purpose of VCA?

A
  1. to list all S, W of company’s value chain

2. list all O, T depending on value chains of suppliers, distributors, and buyers

34
Q

state the basic value chain (Porter’s)

A 
support:
- company infrastructure (general mng, accounting, legal, PR ...)
- HR mng 
- tech dev 
- procurement 
primary:
- inbound logistics 
- operations 
- outbound logistics 
- marketing and sales 
- service
35
Q

what are the 4 advantages to the VCA?

A
  1. better understanding of company logistics
  2. better understanding of company’s cost and positioning
  3. use of externally-oriented data
  4. facilitates communication
36
Q

what are the 2 disadvantages of the VCA?

A
  1. difficult to define specific activities

2. companies usually do not collect the necessary data

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