Lecture 2 summaries Flashcards
Foundation of formulating a strategy
identifying and understanding relevant organizational, economc and societal stakeholders is the foundation of formulating a strategy. THe goal is to develop a good understanding of where companies strategically stand today and where they want to stand in the future, and the key principle of a strategy is to match a companys resources with demands of certain stakeholders
stakeholders
are individuals groups or institutions that have an interest in the company and can affect or are affected by its decisions and activities.
strategic analysis framework
covers different layers and areas for the investigation to identify opportunities, threats, strengths and weaknesses.
E.g. company (resoures, capabilities, core competencies)
Competitive arena (supppliers, strat groups etc.)
Industry (supp bargaining power, threat of substitutes etc.)
Macro environment (legal, tech, economic)
Porters five forces model
perter developed a highly influential framework that helps firms understand the underlying forces that shape the attractiveness of an industry. Basically, this model is used to identify the profitability of an industry:
Threat of new entrants
Threat of substitute products or services
Bargaining power of suppliers
Bargaining power of buyers
Intensity of rivalry among existing competitors
Various elements need to be considered for gaining insights into how different direct or indirect competitors may impact a firms performance. Basically, there are 8 elements that we can identify to evaluate compatitors
1) Size, growth and profitability
2) Image and positioning to understand the strengths and weaknesses of competitors, e.g. it is helpful to look at their brand perception
3) Objectives and commitment
4) Current and past strategies of competitors
5) Leaders, culture and structure
6) Cost structure
7) Exit barriers
8) strengths and weaknesses of my competition
Customer segmentation
refers to strategically addressing the relevant market into distinct and homogeneous submarkets based on various criteria. these criteria include:
Socio-demographic (e.g. age, gender, marital status, income, education)
Geographic (e.g. place of residence, micro-geographic areas within a city)
Psychographic (e.g. lifestyles, personality characteristics, attitudes, preferences)
Behavioural (e.g. price sensitivity, actual buying, and consumption patterns)
The analysis of a firms resources and capabilities can be facilitated and visualized with a
checklised based strangths and weaknesses profile
Another method for internal strategic analysis is the so called 7S model. it differes from the previous model because it also addresses soft factors. This model holds that 7 internal factors fo an organization are the core pillars for success. Identifying strengths and weaknesses with the 7-S model emphasizes hard and soft factors that drive a firms performance and their interrelation.
Structure
systems
style
staff
skills
strategy
shared value
The value chain model
helps to identify strengths and weaknesses by analysing value-adding activities with and across a firms value chains.
Market research
is any effort to get information about target markets, competitors, or customers. It is a key factor in maintaining competitive advantage. We formulat strategies to generate or maintain competitive advantage. market research provides important information to identify and analyse markets in general
A market research rpoject recognizes the following looping stages
problem definition (translate the managerial question into a research question)
Project design (selection and design of relevant data collection and analysis methods for solving the identified problems
Data collection (establish the taget population, source of data, and sampling procedure
Analysis and interpretation: process the data to generate valuable information via statistical inference and visualization
Decision and actions: use the information to develop actionable recommendations
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Problem definition means that
a manager has a management related problem that must be transformed into a market research problem. project design means tha a manager wants toidentify data collection procedures. In this case, we want to know how to get data and what kind of method we should use.
When it comes to data collecting, we first need to consider
the type of data collection. There is a difference between primary and secondary data and reserach.
Primary data is
data that you collected yourself or for you by third parties, but you set up the market reserach project
Secondary data is
such that it has been collected already for other purposes even e.g. income distribution
We also have to select the data analysis method
we can distinuish between univariate and multivariate approaches
Multivariate vs univariate approaches
Univariate Approach
The univariate approach focuses on analyzing a single variable. It is the simplest form of data analysis and is used to describe the distribution and characteristics of that variable. Common univariate analyses include:
Descriptive Statistics: Measures such as mean, median, mode, standard deviation, range, and variance. These provide a summary of the central tendency and spread of the data.
Frequency Distribution: A table or graph that shows how often each value or range of values occurs.
Visualization: Graphical representations such as histograms, bar charts, and box plots to visualize the distribution of the data.
Multivariate Approach
The multivariate approach involves the analysis of more than one variable simultaneously. It examines the relationships and interactions between multiple variables to understand more complex phenomena. Multivariate analysis is more sophisticated and includes a variety of techniques:
Multiple Regression: Used to understand the relationship between one dependent variable and two or more independent variables. It helps in predicting the dependent variable based on the values of the independent variables.
Multivariate Analysis of Variance (MANOVA): Extends ANOVA by examining the differences in multiple dependent variables across groups.
Principal Component Analysis (PCA): Reduces the dimensionality of the data by transforming variables into a smaller number of uncorrelated components while retaining most of the variance.
Factor Analysis: Identifies underlying relationships between variables by grouping them into factors.
Cluster Analysis: Groups observations into clusters based on the similarities among them.
Discriminant Analysis: Classifies observations into predefined groups based on predictor variables.
Example: Studying the impact of advertising expenditure, product price, and distribution channels on sales performance. Multiple regression analysis could be used to predict sales based on these variables.
7S model
a framework for analyzing and improving organizational effectiveness. It focuses on seven interdependent elements within an organization that need to be aligned for successful performance. These elements are divided into “hard” and “soft” categories:
Hard Elements:
Strategy: The plan devised to maintain and build competitive advantage over the competition.
Structure: The way the organization is structured and who reports to whom.
Systems: The daily activities and procedures that staff use to get the job done.
Soft Elements:
Shared Values: Core values that are widely shared in the organization and serve as its guiding principles.
Skills: The capabilities and competencies that exist within the company.
Style: The leadership approach of top management and the overall operating style of the organization.
Staff: The employees and their general capabilities.
Interdependence
All elements are interconnected, meaning a change in one element will likely affect the others. For example, a change in strategy (hard element) might require a change in skills (soft element) or systems (hard element).
Purpose
The model helps organizations:
Ensure all elements are aligned and support each other.
Diagnose issues and plan improvements.
Implement strategies effectively.
In summary, the 7S Model provides a comprehensive way to understand and manage the complexities of an organization by examining how well these seven elements are aligned and how they interact.
