lecture 2

Question 1

Strategy

Answer 1

“stategy is about making choice; its about deliberately choosing to be different”

Question 2

Business strategy

Answer 2

An idea, a business concept, a plan

The search for a favourable competitive positioning

Question 3

Six principles of business strategies

Answer 3

1) Quest for competitive advantage

2) fit between the company (inside-out view) and the market (outside-in view)

3) Strategy is about being different and choosing what to do

4) strategy pursues the achievement of a desired long-term aspiration

5) consistency in behavior

6) multiple level and theme alignment

Question 4

Initial strategic situaion: selected key stakeholders of the company

4 things

Answer 4

1) identify relevant stakeholder groups

2) prioritizing stakeholders

3) capturing key stakeholder expectation

4) integrating stakeholder insights into the strategy

E.g. Tinder

1) customers
2) Customers
3) uni students want uni students (tinder uni (capturing expectation))
Panic Button
4) implement these things

Question 5

A strategic analysis framework covers different layers and areas for investigation to identify opportunities, threats, strengths and weaknesses

Answer 5

Company (strength and weakness internal)
Competitive arena (suppliers competitors etc)

Industry (supplier bargaining power, potential entrants etc.)

Macro enivironment (socioculturalm ecological, legal etc.)

Question 6

Macro environment: Factor radar with strategy relevance and timeline

Answer 6

The framework helps to identify braod macroenvironmental factors that may have an impact on a firms future profits

Political(zero emissions, new free trade zones), economic (intensified eco-competition), sociocultural (new societal values and lifestyles), technological (industry 4.0), ecological(intensified climate change) and legal (compulsory sustainability reporting standards).

Question 7

Defining the relevant market (industry boundaries) is an essential first step for analyzing competitive forces

Answer 7

Box in a box; entire market scope and relevant market

How should a company that launches an unalcoholic beer define its industry: beer? soft drink? isotonic drink market?

According to the figure a market should be defined by a few criteria

BMW: criteria 1: car its self (large small etc9

criterea 2: type of transportation (train, bus)

criteria 3: customer group (are my customers private or commercial etc)

Question 8

Industry: the porter five forces model of industry profitability

Answer 8

The nature of competition in an industry (relevant market) and its profit potential can be analyzed with the porter five forces model

Intensity of rivalry among existing competitors consists of:

Threat of new entrants
(takes a lot to enter inudstry,)

Bargaining power of buyers
(few buyers many suppliers)

Threat of substitute products or services ( difficulty of switching etc)

Bargaining power of suppliers
(lost of buyers they control price)

Question 9

Competitive arena (how to identify competitors)

Answer 9

Ask (ask potential customers, eg talk to dog owners and ask what they do to take care of their dog when they are out or on vacation)

Search for them (e.g. search dog sitting, see whos buying ads etc.)

Question 10

Competitive arena (competitors)

Answer 10

various elements need to be considered for gaining insights about how different direct or indirect competitors may impact a firms performance

Competitor action or response exists from:

Size, growth and profitability
Image and positioning
Objectives and commitment
Current and past strategies
Leaders, culture and structure
Cost structure
Exit barriers
Strengths and weaknesses

Question 11

Size growth and profitability (competitors)

Answer 11

often measured by market share (indicates how much sales you generate compared to competitors)
–> does not lead to higher profits

Question 12

Competitive arena: relevance of market share

Answer 12

meta analysis on the market share - financial performance relationship

863 elasticities (i.e. % change in financial performance of a 1% change in market share) from studies

Studies were published between 1972 and 2017, come from six different continents and deal with a wide range of manufacturing and service industries

meta-analysis aims at identifying the average elasticity as well as the moderating effect of var study characteristics (e.g. industry, region, timer period) on the relationships

1% increase in market share does not indicate profit

However, an increase in customer related assets increase, financial performance increases

Additionally brand related assets (brand image etc.) lead to higher financial performance

Question 13

Reasons for low performance relevance of market share

Answer 13

global reasons (digitalization, globalization)

Customer specific reasons (loss of exclusivity, negative network effects)

Firm specific reasons (slow processes, excessive competitor orientation, motivation prolbems for the market leaders)

Question 14

Customer segmentation (competitive arena)

Answer 14

strategically addressing the relevant market may require a segmentation into distinct and homogeneous submarkets based on various criteria:

Socie demographic (i.e. age, gender, merital status)

Geographic (place of residence)

Psychographic (e.g. lifestyles, personal characteristics)

Behavioral (e.g. price sensitivity, actual buying and consumption)

Question 15

Competitive arena: a life without research on customer needs

Answer 15

The formulation of specific market strategies requires a comprehensive understanding of customer needs, wants, demands, and requirements

Question 16

Competitive arena: sources of customer heterogeneity

Answer 16

Identifying and exploiting customer heterogeneity is key to developing effective marketing strategies

Source: individual differences,
Life experience, functional needs, self-identify/image, marketing activities

Question 17

Internal strategy: stengths and weaknesses profile

Answer 17

The analysis of a firms resources and capabilities can be facilitated and visualized with a chekclist based strengths and weaknesses profile

Left column: Success factors, then they are weighted, and evaluated

DO this for both companies and focal areas are where you have significant advantage or disadvantage

Question 18

S7 model for internal strategy

Answer 18

Identify strengths and weaknesses with the 7s model emphasizes hard and soft factors that drive a firms performance and their interrelation

Structure, strategy, systems, shared values, skills, style and staff all interconnected

Question 19

Internal strategy (value chain model)

Answer 19

the value chain model helps to identify strengths and weaknesses by analyzing value addint activities within and across afirms value chains

set of activities that create value, begins with raw materials from suppliers and ends with distribution. Identify primary and secondary activities across the entire value chain

Question 20

overview of the stages of a market research project

Answer 20

1) Problem definition: translate the managerial question into a research question

2) Project design: selection and design of relevant data collection and analysis methods for solving the identified problems

3) Data collection: establish the target population, source of data and sampling procedure

4) Analysis and interpretation: Process the data to generate valuable information via statistical inference and visualization

5) Decision and actions: Use the information to develop actionable recommendations

Question 21

Some first insights into the project design (2nd step of research project)

Answer 21

project appraoch –>

1) Exploratory research
Generate general insights into a problem, identify decision options, identify relevant varialbes, (collect qualitative survey or ad hoc survey)

2) Descriptive research
Precise description of a phenomenon/state (univariate analysis)
3) Causal research
Identify and quantify (multivariate analysis) (e.g. what are the drivers of the purchase process and how strong are they) (ad hoc survey, panel or experiment)