Klausur Flashcards
1
Q
Vision
A
the vision is a view of the future, sets the stage for the firm´s strategy, focuses on key capabilities and offers a sense of direction
2
Q
Mission
A
the mission is a broadly defined but enduring (beständig) statement of purpose that identifies the scope (Umfang) of an organization´s operations and its offerings to the various stakeholders. It describes what you strive to do best every day.
3
Q
Strategy
A
= a plan of action designed to achieve a long-term or overall aim.
the strategy refers to top management´s plans to develop and sustain competitive advantage so that the organization´s mission is fulfilled
4
Q
Strategy:
competitive advantage
A
state whereby a firm´s successful strategies cannot be easily duplicated by its competitors. Maintaining a sustained competitive advantage over time can be challenging
5
Q
Strategic Management
A
a process that includes top management´s analysis of the environmental in which the organization operates prior to formulation a strategy, as well as the plan for implementation and control of the strategy
6
Q
Business model
A
it explains how the organization seeks to earn a profit by selling its goods / services
7
Q
5 characteristics of a successful strategy
A
- understand the competitive environment (industry life cycle)
- understand how resources translate into strengths and weaknesses.
- The strategy is consistent with the mission and goals of the organization.
- Plans for putting the strategy into action are designed before it is implemented.
- Possible future changes are evaluated before the strategy is adopted (looking for future trends to not loose track)
8
Q
IKEA - examples of vision & mission
A
Vision:
to create a better everyday life for the many people
Mission:
offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them
9
Q
Strategic management process
A
method by which managers conceive (konzipieren) and implement a strategy that can lead to a sustainable competitive advantage (on top of planning)
10
Q
Strategic planning process
A
systematic or emerged way of performing strategic planning in the organization through initial assessment, thorough analysis, strategy formulation, its implementation and evaluation.
11
Q
SMP
vision and mission
(how to start)
A
the company´s mission describes the business and how it wants to fulfill the vision. It informs organization´s stakeholders about the product, customers, markets, concern for public image and employees of the organization
12
Q
Strategy Formulation
and Tools to use
A
- Review the information from analysis
- Determine what resources the business currently has that can help reach the defined goals and objectives
- Identify any areas of which the business must seek external resources
- Prioritize issues by their importance to you scuess
- formulate strategy
Tools:
Scenario Planning
BCG - Matrix
Bowman Clock
13
Q
Strategy Implementation
A
- setting annual objectives
- revising policies to meet the objectives
- in case, changing organizational structure to meet new strategy
14
Q
Strategy Monitoring
and tools to use
A
- Internal and external factors review, measuring company´s performance
Tools:
Benchmarking
ROI
Gap Analysis
15
Q
Corporate-level strategy
A
strategy top management formulates for the overall corporation.
16
Q
how to come up with a corporate strategy
A
the strategic focus and ressources are attributed to each SBU!
Definition of a mission for each strategic business unit:
- what is the contribution of the SBU to the corporation (profit, innovation, services)
- what is the purpose of the corporation (which needs and demands are adressed?)
- definition of the required competencies (core competencies)
17
Q
3 Options of a Corporate Strategy (in general)
A
- compete in a single industry: allows a firm to specialize
- compete in related industries: allows a firm to develop synergy among the business units
- compete in unrelated industries: minimizes risk through diversification; but no clear focus
18
Q
3 Options of corporate strategies (performance)
A
- growth: increase in size internal or external
- stability: retain current size
- retrenchment: decrease in size
19
Q
Internal growth (corporate strategy)
A
expanding by internally increasing its size and sales
20
Q
External Growth (corporate strategy)
A
acquiring other companies!
unrelated diversification horizontal integration horizontal related integration vertical integration strategic alliances (joint venture)
21
Q
External Growth:
Merger
A
occurs when two or more firms, usually of roughly similar sizes, combine into one through an exchange of stock
22
Q
External Growth:
Acquisition
A
is a form of merger whereby one firm purchases another, often with a combination of cash and stock
23
Q
why diversify? (Corporate Strategy)
A
cost saving opportunities
capture strategic fit
spread business risk
leverage (einflussreicher) brand name
24
Q
what to consider when thinking about diversification?
A
first a diversification move must pass 3 tests:
industry attractiveness test
the cost-of-entry test
the better-off test
furthermore you need to consider:
level and degree of diversification
mode of diversification
number of relatedness (Bezogenheit)
25
Combination related-unrelated diversification strategies
dominant-business firms:
1 major core business with several small related or unrelated businesses
narrowly diversified firms:
diversification includes a few related or unrelated businesses
broadly diversified firms:
wide collection of either related or unrelated businesses or a mixture
multibusiness firms:
diversification portfolio includes several unrelated groups of related businesses
26
Related Diversification
there is a technological similarity between the industries, which means that the firm is able to leverage (hebeln) its technical know-how to gain some advantage
f.e. seek new products which have tech or marketing synergies with existing product lines appealing to new customers
27
Unrelated Diversification
= diversifying into businesses with no strategic fit and no synergies in value chain
companies pursuing unrelated diversification are often referred to as conglomerates
28
Horizontal integration
a firm that acquires other companies in the same line of business. Doing so allows a firm operating in a single industry to grow rapidly without moving into other industries
29
Horizontal related diversification
a firm requires a business outside its present scope of operation, but with similar or related core competencies
30
Vertical Integration
refers to merging (verschmelzen) various stages of activities in the distribution channel.
When a firm acquires its suppliers -> backward integration
When a firm acquiring its buyers -> forward integration
f.e. Mc Dondalds
31
Strategic Alliances
= partnerships
occur when two or more firms agree to share the costs, risks and benefit associated with pursuing new business opportunities
32
Stability Strategy
= attempting to maintain the present size and scope of operations. Attractive when:
1. industry growth is slow or non-existent
2. costs associated with growth do not exceed its benefits
3. growth may place great strains on quality and customer service
4. large, dominant firms may not want to risk prosecution for monopolistic practices
33
Retrenchment Strategies
= decrease in size.
when performance is disappointing.
is often accompanied by a reorganization process known as corporate restructuring
34
3 Forms of Retrenchment
Turnaround:
transform the corporation into a leaner, more effective firm and includes such actions as reducing the size of the workforce
Divestment:
selling one or more of a firm´s business units.
May be necessary when the industry is in decline
Liquidation:
strategy of last resort and terminates the business unit by selling its assets
35
Business Unit
an organizational entity with its own mission, set of competitors and industry
36
Generic Strategies
a simple categorization of competitive strategies available to businesses
37
Strategic Group
Businesses employing the same generic strategy
38
Business unit strategies
defines the strategic goals for the BU and how these goals will be realized:
which products, which markets, which time, which target groups
39
Functional Strategies
dictates what must be done within the various functions
all functional strategies must blend together to support the business strategy
different functions: marketing, finance, HR
40
Limitations of Porter´s Five Forces
1. does not consider partner firms
2. assumes that large firms cannot influence the industry structure
3. assumes industry factors, not firm resources, are primary profit drviers
4. Difficult to apply to firms operating in multiple countries
41
Market evaluation
market size
market growth
market profitability
price development
competitive rivalry
market segmentation
threats and risks
possibility of differentiation
trade structure
42
Analysis of the macroenvironment
macroenvironmental forces affect industries and individual firms wihin industries.
The focus at this stage of analysis is on the industry, not the firm!
certain forces may be more prominent in some industries than in others
43
PESTEL Analysis
Political and Legal
Political:
political factors include areas such as tax policy, labor, law, trade restrictions & tariffs
-> goods and services which the government provides or does not provide (education, health)
Legal:
factors include discrimination, antitrust, health, safety, employment, consumer protection laws
44
PESTEL Analysis
| Economic and Socio-cultural
Economic:
include economic growth, interest rates and inflation rate, purchasing power
Socia-cultural:
include the cultural aspects, educational level, population growth rate.
Trends in social factors affect the demand for a company´s products and how that company operates
45
PASTEL Analysis
| Technological and Environmental
Technological:
factors include technological aspects such as R&D, activity, automation, incentives
Environmental:
include ecological and environmental aspects such as weather, climate
46
What is an industry?
an industry is a group of companies that produce competing products or services.
Rivals often share critical success factors (CSFs); which are elements of the strategy that are promote (but not guarantee) success within a given industry
47
Market Share
market share represents the proportion of industry sales attributed to a particular rival
48
Identify Industry & Competitors
Consider the question "where would the firms customers go if the firm did not exist?
Draw a picture to illustrate firms inside and outside of the industry
provide market shares if possible
49
Mintzberg: 5 P´s
Each of the 5 Ps is a different approach to strategy.
Plan
Ploy
Pattern
Position
Perspective
50
Mintzberg
| Plan
Plan: strategy needs to be developed in advance and with purpose
51
Mintzberg
| Ploy
Ploy: strategy is a means of outsmarting the competition
52
Mintzberg
| Pattern
Pattern: we learn to appreciate that what was successful in the past can lead to success in the future
53
Mintzberg
| Position
Position: strategy is about how the organization relates to its competitive environment and what it can do to make its products unique in the marketplace
54
Mintzberg
| Perspective
Perspective: emphasizes the substantial influence that organizational culture and collective thinking can have on strategic decision making within a company
55
How does the Mintzberg´s model helps a company?
to think from a variety of viewpoints
to test initial ideas
to check for inconsistencies
56
The Miles and Snow Strategy Framework
Prospectors:
seek first mover advantages by introducing new products and services
Defenders:
seek stability and only compete in a predictable segment of the market
Analyzers:
represent a middle ground between prospectors and defenders and emphasize flexibility and second mover advantage
Reactors:
lack consistency and perform poorly
57
What shall answer a company´s strategy?
1. How does a company outperform its competitors and win in the market?
2. How can it perform well for a prolonged period of time and ensure lasting company survival?
58
Economies of Scale
| Sources of Cost Advantage
Spreading fixed costs over large volume
purchasing discounts
specialization of labor
specialized machines and technology
59
Economies of Scale
a proportionate saving in costs gained by an increased level of production.
cost advantages companies experience when production becomes efficient, as costs can be spread over a larger amount of goods. The companies benefit from their size of operations.
60
What are required factors to reach economies of scale?
Required factors to reach economies of scale can be division of labor, specialized technology, network economies of scale, purchaising disccounts and spreading fix costs over a large sales volume.
61
Economies of scope
means that the production of one good reduces the cost of producing another related good. Economies of scope occur when producing a wider variety of goods or services in parallel is more cost effective for a firm than producing less of a variety, or producing each good independently.
62
What are required factors to reach economies of scope?
shared tangible resources:
unit costs can be reduced, when tangible resources like production plants, transportation systems, etc. are utilized across a range of products
shared intangible resources:
f.e. HP with their inkjet technology
pooled negotiation power:
by combining their purchases, different strategic business units can benefit from bulk discounts
63
Experience (learning) curve
Each time the accumulated production quantity is doubled the cost per unit decrease by a certain (constant) percentage
64
Implications of the experience (learning) curve
profitability depends on experience curve effects, thus companies with higher market share can expect a higher return on investment
First mover advantage! In industries with high experience curve effects, first mover can gain market share quickly, create a cost advantage and prevent competitors from entering the industry by reducing prices along the experience curve
65
Strategic positioning
attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. It means performing different activities from rivals, or performing similar activities in different ways
66
For key principles of strategic positioning
1. operational effectiveness alone is not strategy
2. strategy is the creation of a unique and valuable position, involving a different set of activities
3. strategy requires you to make trade-offs in competing - to choose what NOT to do
4. strategy involves creating "fit" among a company´s activities
67
Operational Effectiveness
means performing activities better than rivals, lower production cost, and offer higher value to customers
68
Competitive Convergence
is the result of individual practices being copied.
| What was once a source of advantage has now become the industry standard.
69
Strategic positioning - the strategic fit
| explain the different types of fit
first order fit:
simple consistency between each activity and the overall strategy
Second order fit:
activities are reinforcing (Verstärkung)
Third order fit:
Optimization of effort
70
Business Model Canvas
is a strategic management and lean startup template for developing new or analyzing and documenting existing business models
71
9 key factors or "building blocks" of the business model
```
Key Activities
Key Resources
Partner Network - Value Proposition
Customer Segments
Channels
Customer Relationsship
Cost Structure
Revenue Streams
```
72
What is Scenario Planning?
is a foresight methodology which helps to make sense of an uncertain future.
The focus is on making better decisions
73
Why do scenario planning?
Decisions taken today will have effects years into the future.
It is increasingly difficult to discern trends and realities, and to make well-informed decisions today
The future is not pre-determined or predictable
It makes to sense to look for ways to understand the future to deal with uncertainty
74
4 Types of Future
Possible - "might" happen
Plausible - "could" happen
Probable - "likely to" happen
Preferable - "want to" happen
75
What is Foresight?
Foresight is a way of thinking that enhances our understanding of our current and plausible future
76
What are Scenarios?
Scenarios are possible views of the world, described in narrative form (stories) that provide a context in which managers can make decisions
By seeing a range of possible worlds, decisions will be better informed and a strategy based on this knowledge and insight will be more likely to suceed
Scenarios do not predict the future, but they do illuminate the drivers of change: understanding them can only help managers to take greater control of their situation
77
Why make Scenarios?
A creative and shared process that allows time for reflection about the organisation and its future
Combining both the past and the future makes thinking about strategy stronger and promotes responsiveness, flexibility, competitive advantage
Scenarios allow a shared view of the future to be developed and
provide the opportunity for an organisation to consider how it wants to position itself in that future
78
Uncertainty?
Low:
we are reasonably certain that it will play out or continue in ways that are fairly well understood
High:
we have no clear idea which of a number of plausible ways things might go
Moderate: somewhere in between
79
Developing the Scenarios
Scenarios must be internally consistent and plausible: they have to make sense to the people creating them, and to the people in the organisation who will read them
80
Strategic Implications for Scenario Planning
Expanding understanding of what options might be available in the long term:
shifts frame of reference 10-20 years out
examining implications for the services provided by your unit in each of the scenario worlds
looking to see what your unit would need to do to stay viable (lebensfähig)
81
Uses for Scenarios?
A common language for "strategic conversations" and ongoing future-oriented discussions
Risk Assessment: specific decision
Strategy Evaluation: existing strategy
Strategy: Development: new strategy
82
How to go form a scenario to a strategy?
Scenarios provide "clues" about what might be important drivers of change in the future, and how those drivers might interact and affect the organisation.
Aim is to identify strategies that are robust across all scenarios.
Also to identify "early warning indicators" that events in the scenarios are happening and how we will respond to them?
83
Scenario Approaches to strategy?
Robust:
perform well over the full range of scenarios considered -> Blue Chip
Flexible:
Keep options open and/or wait for as long as possible before committing -> Hedging
Multiple Coverage:
pursue multiple strategies simultaneously until future becomes clear -> Scattergun
Gambling:
Select one strategy which works very well, but in only one or two scenarios -> Bet the Farm
84
What are "Wild Cards"?
= low-probability, very high-impact events that are:
wide in scope and directly affect the human condition
potentially disruptive (negatively and/or positively)
intrinsically beyond the control of any single institution, group of individual
rapidly moving
f.e.: asteriod impact, stock market collapse, terrorist attack
85
When do buyers have bargaining power?
1. buyers are concentrated or each one purchases a significant percentage of total industry sales.
2. The product that the buyers purchase represent a significant percentage of the buyers costs.
3. The product are standard or undifferentiated.
4. Buyers have few switching costs.
5. Buyers earn low profits, creating pressure for them to reduce their purchaising costs.
6. Buyers have the ability to become their own suppliers.
7. Buyers have complete information
86
When do suppliers have bargaining power?
1. the supplying industry is dominated by one or a few companies.
2. there are few or no substitute products.
3. The buying industry is not a major customer of the suppliers.
4. Suppliers are capable of becoming their own customers
5. Suppliers products are differentiated or have built-in switching costs, reducing the ability of buyers to play one supplier against another
87
Blue Ocean Strategy
| red vs. blue ocean?
red ocean - a lot of competitors:
- compete in existing marketplace
- make cost-value trade-off
- beat the competition
- exploit (ausnutzen) existing demand
- align the whole system of company´s activities with its strategic choices of differentiation OR low cost
blue ocean - no competition:
- create uncontested (unbestritten) market space
- make the competition irrelevant
- break the value-cost trade-off
- align the whole company´s system with its strategic choices in pursuit of differentiation AND low cost
