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Introduction to Business Strategy Flashcards

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
What increases competitive rivalry?
1. A large number of rivals 2. High fixed costs 3. Low industry growth 4. Low switching costs 5. High exit barriers
26
What increases the power of customers?
1. Small numbers of large customers 2. Large numbers of competitors 3. Low levels of product differentiation 4. Low switching costs
27
What increases the power of suppliers?
1. Small numbers of large suppliers 2. Suppliers products are differentiated 3. The supplier has other buyers they can sell to
28
What increases the threat of substitutes?
1. Price of substitute is low 2. Low switching costs 3. The relative performance of substitute is comparable
29
What is a competitor analysis used for?
To analyse the competitive rivalry within the industry
30
What are the four types of competitor according to Philip Kotler?
1. Brand 2. Industry 3. Generic 4. Form
31
Define a brand competitor
Similar sized firms with similar products
32
Define an industry competitor
Similar products but different markets or distribution methods
33
Define a generic competitor
Different products but compete for the same disposable income
34
Define a form competitor
Distinctly different products that satisfy the same need
35
What are the four reaction profiles according to Phillip Kotler?
1. Laidback 2. Tiger 3. Selective 4. Stochastic
36
Define a laidback reaction profile
No response to competitor moves
37
Define a tiger reaction profile
Responds aggressively to all competitor moves
38
Define a selective reaction profile
Reacts to some threat in some markets but not to others
39
Define a stochastic reaction profile
Difficult to predict when or how they will react
40
What is the purpose of a resource audit?
To analyse the tangible and intangible resources available to the business
41
What can the 9Ms model be used for?
To identify the resources that are available to the business and those resources may need to be addressed to achieve CSFs
42
What are the 9Ms?
1. Men 2. Machines 3. Money 4. Materials 5. Markets 6. Management 7. Methods 8. Management Information Systems 9. Make-up
43
What is value chain analysis used for?
To analyse the sequence of business activities that add value to the products or services produced by a company
44
How is value measured?
By the difference between the cost of the activities and sales revenue created by sales to customers
45
What are the primary activities in value chain analysis?
1. Inbound logistics 2. Operations 3. Outbound logistics 4. Marketing and sales 5. Service
46
Define primary activities in value chain analysis
Those that create value and are directly concerned with providing the product or service
47
Define support activities in value chain analysis
Activities that do not create value by themselves but enable the primary activities to take place with maximum efficiency
48
What are the support activities in value chain analysis?
1. Procurement 2. Technology development 3. Human resource management 4. Infrastructure
49
Define inbound logistics
Operations concerned with receiving, storing, and distributing the inputs to the product
50
Define outbound logistics
Relate to collecting, storing, and distributing the final product
51
Define marketing and sales
Involves informing customers about the product, persuading them to buy it, and enabling them to do so
52
Define procurement
Refers to the processes for acquiring the various resource inputs to the primary activities; not the resources themselves
53
Define technology development
Considers all value activities have a technological content
54
Define human resource management
Involves recruiting, managing, training, developing, and rewarding people within the organisation
55
Define infrastructure
Considers how the business is organised
56
Define the product life cycle
The application of life cycle theory to product or services
57
What are the stages of the product life cycle?
1. Development 2. Introduction 3. Growth 4. Maturity 5. Decline
58
Define the development stage of the product life cycle
Will require heavy investment in research and development and initial marketing
59
Define the introduction stage of the product life cycle
Will have low levels of revenue but high marketing costs
60
Define the growth stage of the product life cycle
Economies of scale will start to emerge through mass production
61
Define the maturity stage of the product life cycle
Critical mass should be achieved leading to cost efficiencies
62
Define the decline stage of the product life cycle
Heavy price discounting may be used to utilise spare capacity
63
What is the BCG matrix used for?
To analyse the balance of a business's product portfolio based on a combination of both market growth and market share
64
Define the problem child position of the BCG matrix
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
Define the star position of the BCG matrix
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
Define the cash cow position of the BCG matrix
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
Define the dog position of the BCG matrix
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
What is the SWOT analysis technique used for?
To perform a corporate appraisal to evaluate the strategic position of the organisation
69
What is stakeholder mapping used for?
To analyse or prioritise a business's stakeholders
70
What is Mendelow's power-interest stakeholder matrix used for?
To analyse stakeholders and identify an appropriate response
71
What are Mendelow's four types of stakeholder?
1. Minimal effort can be directed 2. Keep informed 3. Keep satisfied 4. Key players need participation
72
What are the features of a 'minimal effort can be directed' stakeholder?
1. Low level of interest | 2. Low power
73
What are the features of a 'keep informed' stakeholder?
1. High level of interest | 2. Low power
74
What are the features of a 'keep satisfied' stakeholder?
1. Low level of interest | 2. High power
75
What are the features of a 'key players need participation' stakeholder?
1. High level of interest | 2. High power
76
What are Porter's generic strategies used for?
To enable the business to decide how to compete
77
What does Porter argue in his generic strategies?
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
What are the generic strategies outlined by Porter?
1. Cost leadership 2. Differentiation 3. Cost focus 4. Differentiation focus
79
What are the features of cost leadership?
1. Competitive scope: broad target | 2. Basis of competition: lower cost
80
What are the features of differentiation?
1. Competitive scope: broad target | 2. Basis of competition: differentiation
81
What are the features of cost focus?
1. Competitive scope: narrow target | 2. Basis of competition: lower cost
82
What are the features of differentiation focus?
1. Competitive scope: narrow target | 2. Basis of competition: differentiation
83
How can cost leadership be achieved?
1. Economies of scale 2. Seek cheaper sources of supply 3. Reduced labour cost
84
How can differentiation be achieved?
1. Strong branding 2. Product innovation 3. Quality 4. Product performance
85
What can Ansoff's matrix be used for?
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
What are the four sections of Ansoff's matrix?
1. Market penetration 2. Product development 3. Market development 4. Diversification
87
What are tests that should be applied to strategic options before a strategy is chosen, according to Johnson, Scholes, and Whittington?
1. Suitability 2. Acceptability 3. Feasibility
88
What are the functional strategies of business?
1. Marketing 2. Finance 3. Operations 4. Human resource management

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