Introduction To Business Strategy Flashcards
The 3 levels of strategy?
Corporate
Business
Functional (operational)
What 6 things does strategy consider?
{Long-term Swear}
Long term
Sustainable competitive advantage
Whole organisation
External environment
All stakeholders
Resources
What is corporate strategy?
Strategy determined at board level for whole business
What is business strategy?
Strategy for:
Strategic business units (SBUs)
Individual markets
E.g. gaining sustainable competitive advantage.
What is functional strategy?
Strategy focusing on:
Main functions within each SBU.
E.g. operations, finance, HRM and marketing.
What is a strategic plan?
Statement of:
- Long-term GOALS
- STRATEGIES to get there.
4 stages of (formal/traditional/rational) strategic planning per Johnson and Scholes)?
Strategic analysis (Where are we now?)
Strategic choice (Select plan)
Strategy implementation
Review and control
What is external analysis?
Evaluating opportunities and threats outside the business.
What 4 types of factors are analysed in external analysis?
{P.G. T.B.}
Physical
General
Task
Business
The 4 S’s of static environments?
Static
Single product/market
Simple technology
Safe environment
The 4 D’s of dynamic (future) environments?
Dynamic changes
Diverse product/market
Difficult environment
Dangerous to stand still
Factors in PESTEL analysis?
Political
Economic
Social and demographic
Technological
Ecological/Environmental
Legal
Porter’s five forces analysis of competition in an industry?
{TBC}
Threat of new entrants
Threat of substitutes
Bargaining power of customers
Bargaining power of suppliers
Competitive rivalry
Kotler’s 3 types of competitor for competitor analysis?
{BIF}
Brand
Industry
Form
Kotler’s brand competitor
Similar size + product
Kotler’s industry competitor
Similar product different market/distribution
Kotler’s form competitor
Different product same need
Kotler’s generic competitor?
Different product but same disposable income
Kotler’s four competitor reactions for competitor analysis?
Laid back
Tiger
Selective
Stochastic
Kotler’s laid back competitor reaction
No response when competitor moves
Kotler’s tiger competitor reaction
Aggressive response to all competitor moves
Kotler’s selective competitor reaction
Reacts to threats in some MARKETS but not others
Kotler’s stochastic competitor reaction
Unpredictable
Resource audit
Analyses TANGIBLE AND INTANGIBLE resources available
9Ms model of resources available to businesses?
Men
Machines
Money
Material
Markets
Make up
Management
Methods
MIS
Porter’s value chain analysis
Assess how each business activity adds value by measuring cost and sales revenue of each activity. Activities that don’t add value can be identified and reduced/removed.
Porter’s value chain 5 primary activities?
{moosi}
Marketing and sales
Operations
Outbound logistics
Services
Inbound logistics
Porter’s value chain 4 support activities?
PHaT Fuck
Procurement
Human resource management
Technology development
Firm infrastructure
Product life cycle (PLC) analysis?
Application of life cycle theory to products/services
Usually plotted on a graph of sales and cash flow v amount. Showing introduction, growth, maturity and decline.
BCG matrix: High market growth high market share
Star
BCG matrix: High market growth low market share
Question mark
BCG matrix: High market share low market growth
Cash cow
BCG matrix: Low market share low market growth
Dog
BCG analysis: Star
High market share but threat from new entrants. So requirement to build.
Cash neutral position.
BCG analysis: Question mark
Business must decide to harvest or build
Build = inject more finance so negative cash flow
BCG analysis: Cash cow
Low risk of new entrants. So hold pistol. and harvest.
Positive cash flow.
BCG analysis: Dog
Must decide to divest or hold.
Hold if modest cash flows.
SWOT: Sections from internal analysis
Strengths and weaknesses
SWOT: Sections from external analysis
Opportunities and threats.
Mendlow’s power-interest stakeholder matrix: low interest and low power
Minimal effort can be directed
Mendlow’s power-interest stakeholder matrix: High interest low power
Keep informed
Mendlow’s power-interest stakeholder matrix: low interest high power
Keep satisfied
Mendlow’s power-interest stakeholder matrix: High interest high power
Key players - need participation
What is used to decide how to compete?
Porter’s generic strategies
(position competitors find hard to replicate)
What is used to decide how to grow?
Ansoff’s matrix
Porter’s generic strategies:
Competition: Lower cost
Competitive scope: Broad target
Cost Leadership
Porter’s generic strategies:
Basis of competition: Differentiation
Competitive scope: Broad target
Differentiation
Porter’s generic strategies:
Basis of competition: Lower cost
Competitive scope: Narrow target
Cost focus
Porter’s generic strategies:
Basis of competition: Differentiation
Competitive scope: Narrow target
Differentiation focus
Porter: Cost leadership
Lower cost base than rivals so reduce prices
Through:
Economies of scale
Cheaper supply
Reduced labour cost
Porter: Differentiation
Stand out though features/perception
Through:
Branding
Innovation
Quality
Performance
Porter: Focus strategy
Specialise on clear market segment(s)
Through:
Identifying segment with similar needs
Picking differentiation or cost focus
Developing marketing mix to meet segment needs
Ansoff’s matrix:
Products: Existing
Markets: Existing
Market penetration
More sales of existing products to existing markets.
E.g. price cuts, advertising
Ansoff’s matrix:
Products: New
Markets: Existing
Product development
Develop new products for existing markets
E.g. r&d
Ansoff’s matrix:
Products: Existing
Markets: New
Market development
Find new markets for existing products
E.g. new customer segments or geographical locations
Ansoff’s matrix:
Product development: New
Markets: New
Diversification
Develop new products for new markets
1. Related diversification (same type of product)
2. Unrelated diversification (completely different type of product)
Johnson, Scholes and Whittington’s 3 tests for strategy evaluation?
{S.trategy F.ucking A.ce}
Suitability
Feasibility
Acceptability
Johnson, Scholes and Whittington’s 3 tests for strategy evaluation: Suitability
Is it consistent internally and externally?
Exploit strengths?
Mitigate weaknesses?
Take advantage of opportunities?
Minimise threats?
Johnson, Scholes and Whittington’s 3 tests for strategy evaluation: Feasibility
Within resources and capability?
Finance, time-scale, other resources, internal competencies
Johnson, Scholes and Whittington’s 3 tests for strategy evaluation: Acceptability
Will key stakeholders be happy?
Risk/return
4 key functions of a business (for functional strategy)
{Functions Help Our Mum}
Finance
Human resource management
Operations
Marketing
