Introduction to business strategy Flashcards
What is strategy?
The direction and scope of an organisation over the long term. It considers;
- Long term
- Whole organisation
- Resources and environment
- Stakeholders
- How to gain a sustainable competitive advantage
Levels of strategy
- Corporate - board level strategies
- Business strategies - strategic business units strategies
- Functional strategies - for functions within each SBU
PESTLE (external analysis)
Political Economic Social and demographic Technological Legal Environmental
Porter’s 5 forces analysis (external analysis)
- Threat of new entrants
- Threat of substitutes
- Power of suppliers
- Power of buyers
Competitor analysis; types of competitor (external analysis)
- Brand - similar firm,similar products
- Industry - similar product, different market
- Form - different products, same need
- Generic - fight for disposable income
Competitor analysis; competitor reactions (external analysis)
- Laid back - No response
- Tiger - responds aggressively to all moves
- Selective - reacts to some threats but not others
- Stochastic - difficult to predict what they will react to
9M’s to identify resources available (internal analysis)
- Machines
- Make up
- Man/ Women
- Management
- Money
- MIS
- Methods
- Markets
- Material
Porter’s value chain to analyse the sequence of business activities (internal analysis)
Primary;
- Inbound logistics
- Operations
- Outbound logistics
- Marketing and sales
- Services
Secondary:
- Firm infrastructure
- Technology department
- HR management
- Procurement
Product life cycle (internal analysis)
- Research and development
- Introduction
- Growth
- Maturity
- Decline
BCG matrix (internal analysis)
Star - High market share, high growth
Dog - Low market share, low growth
Question mark - Low market share, high growth
Cash cow - High market share, low growth
SWOT analysis
Used to perform a corporate appraisal to evaluate strategic position
- Strengths
- Weaknesses
- Opportunities
- Threats
Mendelow’s matrix for managing stakeholders interests
Low interest, low power - minimal effort
Low interest, high power - keep them informed
High interest, low power - keep satisfied
High interest, high power - involve as much as possible
How to achieve a sustainable competitive advantage
- Cost leadership
- Differentiation
Ansoff’s matrix to look and growth opportunities
Market penetration - Same product, same market
Market development - Same product, new market
Product development - New product, same market
Diversification - New product, new market
Evaluation of the strategy
- Suitability - is it consistent
- Feasibility - is it within resources and capability
- Acceptability - risk vs return perspectives of stakeholders
