L1- Introduction & External Analysis Flashcards
porter’s definition of strategy
creation of a unique and valuable position
the assumptions behind porter’s definition of strategy
1) strategy is not just about ideas, it should involve implementation
2) activity fit is crucial, esp. for cost leadership
3) initially, positioning is vis-a-vis competitors. establishes through unique and valuable resources
volberda’s definition of strategy
integrated and coordinated commitments and actions designed to exploit core competencies & gain a competitive advantage
according to volberda, what are the two sources of building strategic advantage?
- acquiring a position and capturing valuable resources
- internally developing unique resources
define operational effectiveness
performing activities more eficiently than competitors.
methods to achieve operational effectiveness
outsoutcing to streamline operations
implementing business process reengineering and changing management
reducing number of defects
define strategic positioning
creating a unique and valuable position in the market
what are the three strategies of strategic positioning
variety based
needs based
access based
compare variety, and needs based
In summary, Variety-Based strategy caters broadly to different tastes, while Needs-Based strategy hones in on a specific group’s unique needs.
Variety-based specializes in producing specific types of products to cater to different customer preferences. The approach involves targeting a wide range of customers with varied preferences.
Needs-based aim to serves the unique needs of a specific customer group. The central concept is to understand and meet the needs of one segment.
what is the access based strategy under strategic positioning
access-based is targeting specific customer segments that can be reached through various channels.
define industrial organizational model
The Industrial Organizational Model, focused on external factors, analyzes the external environment surrounding a business or industry.
roadmap for industrial organizational model
identifying an attractive industry, formulating a strategy to develop acquired assets, and implementing the devised strategy.
what are the assumptions of the industrial organizational model
- resources are mobile
- rational decision-making
- firms strategies are similar in nature
which model does industrial organizational use to do analysis?
porter’s 5 forces
list porter’s 5 forces
- power of buyers
- power of suppliers
- degree of rivalry
- threat of new entrants
- threat of substitutes
define resource based view
an approach that analyzes the internal resources and capabilities of a firm to gain a competitive advantage.
assumptions of the resource based view
- firms are heterogenous, they’re all different in assets and capabailities
- resources are immobile
- rational decision making
what model does the resource based view use?
VRIN
what are two ways to identify opportunities and threats in the external environment?
- macro environment
- industry environment
identify critical dimensions of the macro environment by looking at….
- degree of uncertainty
- impact
degree of rivalry is high if the number of competitors is….
large
degree of rivalry is high when switching costs are…
low
degree of rivalry is high when industry growth is…
slow
degree of rivalry is high if exit barriers are…
high
supplier power is high if the concentration of suppliers is
HIGH -> concentration of suppliers is high means a few suppliers dominate the market.
supplier power is high if the possibility of “…” integration is “…”
supplier power is high if the possibility of forward integration is high.
forward integration is when a company decides to move forward in the supply chain by producing/ delivering products themselves.
this means they have higher bargaining power.
supplier power is high if the price/ quality ratio is (…)
supplier power is high if the p/q ratio is HIGH
If the P/Q ratio is high this means the price is bigger than the quality.
When the price is bigger than quality, this means the customer is willing to pay more to the supplier (can indicate uniqueness, or other factors)
buyer power is high if there is (…) product differentiation
low product differentiation.
when products are not unique, buyers can easily switch between companies which gives them more bargaining power.
threat of new entrants is high if time and cost entry is (…)
time and cost of entry is low
when low initial investments are required, its easier for new entrants to enter the market.
threat of new entrants is high if economies of scale is (…)
if economies of scale are low or absent
if there are no significant cost advantages for large competitors, smaller players can compete without a substantial cost disadvantage
threat of new entrants is high if technology prortection is….
tech protection is weak/ absent
when the market lacks strong intellectual property/ tech barriers, new entrants can easily adopt existing technology
threat of entrants is high if switching costs are
switching costs are low
if customers can easily switch, this means new firms can join
threat of substitutes is high if …
there are readiy available products that can satisfy the same need
the cost and performance of substitutes is competitive
there are no unique benefits that differentiate the product from substitutes
some warnigns about porter’s five forces
Always apply to the industry, not firm (all firms are considered =)
Firms are seen as homogenous entities
