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Business, Technology, and Finance > Introduction to Business Strategy > Flashcards

Introduction to Business Strategy Flashcards

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1
Q

Define strategy

A

The direction and scope of an organisation over the long term, which achieves advantage for the organisation through its configuration of resources within a changing environment, to meet the needs of the markets and to fulfil stakeholder expectations.

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2
Q

What factors does strategy consider?

A
  1. The longer-term
  2. The whole organisation
  3. Resources
  4. External environment
  5. All stakeholders
  6. How to gain a sustainable competitive advantage
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3
Q

What are the levels of strategy

A
  1. Corporate
  2. Business
  3. Functional (operational)
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4
Q

Define corporate strategy

A

Strategies determined at main board level for the business as a whole

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5
Q

Define business strategy

A

Strategies for strategic business units and individual markets

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6
Q

Define functional (operational) strategies

A

Strategies for the main functions within each SBU

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7
Q

Define a strategic plan

A

A statement of long-term goals along with a definition of the strategies and policies that will ensure the achievement of these goals

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8
Q

What are the four main stages of strategic planning according to Johnson and Scholes?

A
  1. Strategic analysis
  2. Strategic choice
  3. Strategy implementation
  4. Review and control
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9
Q

What is a resource-based strategic advantage?

A

Focus on developing internal resources and competencies that are hard to imitate and find or create markets to exploit these strengths.

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10
Q

What is a positioning strategic advantage?

A

Focus on analysing the external environment to identify customer needs and adapting to meet these needs

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11
Q

What is the risk of resource-based strategic advantage?

A

The organisation may fail to react to long-term industry trends and may find their existing resources and competencies are no longer valued by the customer

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12
Q

What is the risk of positioning strategic advantage?

A

As customer’s needs change over time the organisation is forced to constantly evolve and develop new competencies

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13
Q

Define emergent strategies

A

Behaviours that are adopted and have a strategic impact. They emerge over time in response to the environment.

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14
Q

Define external analysis

A

Looks at factors outside the business that can present opportunities or threats

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15
Q

What makes up the external environment?

A
  1. Task environment

2. General environment

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16
Q

Define the task environment

A

Relates to factors of particular relevance to the business, such as competitors, customers, and suppliers

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17
Q

Define the general environment

A

Covers all the political, legal, sociocultural, ecological, and technological influences in the countries a business operates in

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18
Q

What are the features of static environments?

A
  1. Static/slow change
  2. Single product/market
  3. Simple technology
  4. Safe environment
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19
Q

What are the features of dynamic environments?

A
  1. Dynamic changes
  2. Diverse product/market
  3. Difficult environment
  4. Dangerous to stand still
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20
Q

What factors are included in a PESTEL analysis?

A
  1. Political
  2. Economic
  3. Sociocultural
  4. Technological
  5. Environmental
  6. Legal
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21
Q

What can Porter’s five forces analysis be used for?

A

To assess the attractiveness of an industry in terms of long-run profitability

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22
Q

What are the five competitive forces?

A
  1. Competitive rivalry
  2. The threat of new entrants
  3. Bargaining power of suppliers
  4. Threat of substitutes
  5. Bargaining power of customers
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23
Q

Define the five competitive forces

A

Five forces that determine the level of competition and therefore profitability of the industry

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24
Q

What reduces the threat of new entrants?

A

Barriers to entry such as…

  1. Capital requirements
  2. Economies of scale
  3. Brand loyalty
  4. Patents
  5. Access to distribution
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25
Q

What increases competitive rivalry?

A
  1. A large number of rivals
  2. High fixed costs
  3. Low industry growth
  4. Low switching costs
  5. High exit barriers
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26
Q

What increases the power of customers?

A
  1. Small numbers of large customers
  2. Large numbers of competitors
  3. Low levels of product differentiation
  4. Low switching costs
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27
Q

What increases the power of suppliers?

A
  1. Small numbers of large suppliers
  2. Suppliers products are differentiated
  3. The supplier has other buyers they can sell to
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28
Q

What increases the threat of substitutes?

A
  1. Price of substitute is low
  2. Low switching costs
  3. The relative performance of substitute is comparable
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29
Q

What is a competitor analysis used for?

A

To analyse the competitive rivalry within the industry

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30
Q

What are the four types of competitor according to Philip Kotler?

A
  1. Brand
  2. Industry
  3. Generic
  4. Form
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31
Q

Define a brand competitor

A

Similar sized firms with similar products

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32
Q

Define an industry competitor

A

Similar products but different markets or distribution methods

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33
Q

Define a generic competitor

A

Different products but compete for the same disposable income

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34
Q

Define a form competitor

A

Distinctly different products that satisfy the same need

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35
Q

What are the four reaction profiles according to Phillip Kotler?

A
  1. Laidback
  2. Tiger
  3. Selective
  4. Stochastic
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36
Q

Define a laidback reaction profile

A

No response to competitor moves

37
Q

Define a tiger reaction profile

A

Responds aggressively to all competitor moves

38
Q

Define a selective reaction profile

A

Reacts to some threat in some markets but not to others

39
Q

Define a stochastic reaction profile

A

Difficult to predict when or how they will react

40
Q

What is the purpose of a resource audit?

A

To analyse the tangible and intangible resources available to the business

41
Q

What can the 9Ms model be used for?

A

To identify the resources that are available to the business and those resources may need to be addressed to achieve CSFs

42
Q

What are the 9Ms?

A
  1. Men
  2. Machines
  3. Money
  4. Materials
  5. Markets
  6. Management
  7. Methods
  8. Management Information Systems
  9. Make-up
43
Q

What is value chain analysis used for?

A

To analyse the sequence of business activities that add value to the products or services produced by a company

44
Q

How is value measured?

A

By the difference between the cost of the activities and sales revenue created by sales to customers

45
Q

What are the primary activities in value chain analysis?

A
  1. Inbound logistics
  2. Operations
  3. Outbound logistics
  4. Marketing and sales
  5. Service
46
Q

Define primary activities in value chain analysis

A

Those that create value and are directly concerned with providing the product or service

47
Q

Define support activities in value chain analysis

A

Activities that do not create value by themselves but enable the primary activities to take place with maximum efficiency

48
Q

What are the support activities in value chain analysis?

A
  1. Procurement
  2. Technology development
  3. Human resource management
  4. Infrastructure
49
Q

Define inbound logistics

A

Operations concerned with receiving, storing, and distributing the inputs to the product

50
Q

Define outbound logistics

A

Relate to collecting, storing, and distributing the final product

51
Q

Define marketing and sales

A

Involves informing customers about the product, persuading them to buy it, and enabling them to do so

52
Q

Define procurement

A

Refers to the processes for acquiring the various resource inputs to the primary activities; not the resources themselves

53
Q

Define technology development

A

Considers all value activities have a technological content

54
Q

Define human resource management

A

Involves recruiting, managing, training, developing, and rewarding people within the organisation

55
Q

Define infrastructure

A

Considers how the business is organised

56
Q

Define the product life cycle

A

The application of life cycle theory to product or services

57
Q

What are the stages of the product life cycle?

A
  1. Development
  2. Introduction
  3. Growth
  4. Maturity
  5. Decline
58
Q

Define the development stage of the product life cycle

A

Will require heavy investment in research and development and initial marketing

59
Q

Define the introduction stage of the product life cycle

A

Will have low levels of revenue but high marketing costs

60
Q

Define the growth stage of the product life cycle

A

Economies of scale will start to emerge through mass production

61
Q

Define the maturity stage of the product life cycle

A

Critical mass should be achieved leading to cost efficiencies

62
Q

Define the decline stage of the product life cycle

A

Heavy price discounting may be used to utilise spare capacity

63
Q

What is the BCG matrix used for?

A

To analyse the balance of a business’s product portfolio based on a combination of both market growth and market share

64
Q

Define the problem child position of the BCG matrix

A
  1. High market growth
  2. Low market share
  3. The business must decide whether to harvest or build by injecting further finance resulting in negative cash flow
65
Q

Define the star position of the BCG matrix

A
  1. High market growth
  2. High market share
  3. Market share is high but is under constant threat from new entrants requiring the business to continue to build often resulting in a cash neutral position
66
Q

Define the cash cow position of the BCG matrix

A
  1. Low market growth
  2. High market share
  3. Reduced threat from new entrants makes it easier for the business to hold their position or just harvest, resulting in positive cash flow
67
Q

Define the dog position of the BCG matrix

A
  1. Low market growth
  2. Low market share
  3. The business now must decide whether to divest or may hold the position in the short term if modest positive cash flows are being made
68
Q

What is the SWOT analysis technique used for?

A

To perform a corporate appraisal to evaluate the strategic position of the organisation

69
Q

What is stakeholder mapping used for?

A

To analyse or prioritise a business’s stakeholders

70
Q

What is Mendelow’s power-interest stakeholder matrix used for?

A

To analyse stakeholders and identify an appropriate response

71
Q

What are Mendelow’s four types of stakeholder?

A
  1. Minimal effort can be directed
  2. Keep informed
  3. Keep satisfied
  4. Key players need participation
72
Q

What are the features of a ‘minimal effort can be directed’ stakeholder?

A
  1. Low level of interest

2. Low power

73
Q

What are the features of a ‘keep informed’ stakeholder?

A
  1. High level of interest

2. Low power

74
Q

What are the features of a ‘keep satisfied’ stakeholder?

A
  1. Low level of interest

2. High power

75
Q

What are the features of a ‘key players need participation’ stakeholder?

A
  1. High level of interest

2. High power

76
Q

What are Porter’s generic strategies used for?

A

To enable the business to decide how to compete

77
Q

What does Porter argue in his generic strategies?

A
  1. A sustainable competitive advantage can be achieved by finding a position that competitors find hard to replicate
  2. Organisations need to ask: should the strategy be one of differentiation or cost leadership?
  3. Organisations need to ask: should the scope be wide or narrow?
78
Q

What are the generic strategies outlined by Porter?

A
  1. Cost leadership
  2. Differentiation
  3. Cost focus
  4. Differentiation focus
79
Q

What are the features of cost leadership?

A
  1. Competitive scope: broad target

2. Basis of competition: lower cost

80
Q

What are the features of differentiation?

A
  1. Competitive scope: broad target

2. Basis of competition: differentiation

81
Q

What are the features of cost focus?

A
  1. Competitive scope: narrow target

2. Basis of competition: lower cost

82
Q

What are the features of differentiation focus?

A
  1. Competitive scope: narrow target

2. Basis of competition: differentiation

83
Q

How can cost leadership be achieved?

A
  1. Economies of scale
  2. Seek cheaper sources of supply
  3. Reduced labour cost
84
Q

How can differentiation be achieved?

A
  1. Strong branding
  2. Product innovation
  3. Quality
  4. Product performance
85
Q

What can Ansoff’s matrix be used for?

A

To analyse growth by considering opportunities to sell more existing products and develop new products, as well as to build market share in existing and new markets.

86
Q

What are the four sections of Ansoff’s matrix?

A
  1. Market penetration
  2. Product development
  3. Market development
  4. Diversification
87
Q

What are tests that should be applied to strategic options before a strategy is chosen, according to Johnson, Scholes, and Whittington?

A
  1. Suitability
  2. Acceptability
  3. Feasibility
88
Q

What are the functional strategies of business?

A
  1. Marketing
  2. Finance
  3. Operations
  4. Human resource management

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