Lecture 3 - CH 3.4 and Slides

Question 1

What is meant by “Strategic Groups”?

Answer 1

Strategic groups are organizations within the same industry or sector with similar strategic characteristics, following similar strategies, or competing on similar bases.

Question 2

Strategic Groups can be divided into 2 major categories, which ones?

Answer 2

1) first, the SCOPE of an ORGANIZATIONS ACTIVITIES (such as product range, geographical coverage and range of distribution channels used)
2) second, the RESOURCE COMMITMENT (such as brands, marketing spend and extent of vertical integration).

According to the slides: we should try to find the 2 most important differences related to this.

Question 3

What characteristics are most interesting?

Answer 3

typically important are those characteristics that separate high performers from low performers

Question 4

This Strategic Group concept is useful in at least three ways, which ones?

Answer 4

1) Understanding competition - Managers can focus on their direct competitors within their particular strategic group, rather than the whole industry as rivalry often is strongest between these.
2) Analysis of strategic opportunities - Strategic group maps can identify the most attractive ‘strategic spaces’ within an industry.
3) Analysis of mobility barriers - Of course, moving across the strategic group map to take advantage of opportunities is not costless…Strategic groups are therefore characterized by ‘mobility barriers’, obstacles to movement from one strategic group to another.

Question 5

What do Porter’s 5 forces underline?

Answer 5

Reducing industry rivalry involves competitors finding differentiated positions in the marketplace.

Question 6

What is a Strategy Canvas?

Answer 6

1) A strategy canvas compares competitors
2) according to their performance on key success factors
3) in order to establish the extent of differentiation.

Question 7

What is meant by Blue Oceans?

Answer 7

1) Blue Oceans are new market spaces where competition is minimized.
2) They are strategic gaps in the marketplace

Question 8

What is meant by Red Oceans?

Answer 8

where industries are already WELL DEFINED and RIVALRY is INTENSE. Are associated with bloody competition and ‘red ink’, in other words, financial losses.

Question 9

What are the 2 critical principles of Blue Ocean thinking?

Answer 9

1) Focus - As in focusing on just a few factors or elements of the company to really achieve something great in which the others aren’t high performing at.
2) Divergence - This creates a divergent value curve, when compared with others, thus causing a strategic gap or Blue Ocean to appear.

Question 10

Which method addresses which layer?

PESTEL
5 FORCES
STRATEGIC GROUPS
BLUE OCEAN

Answer 10

PESTEL - macro-enviroment
5 FORCES - Industry or Sector
STRATEGIC GROUPS - Competitors
BLUE OCEAN - Markets

Question 11

In terms of “Frenemies”, there are 2 directions and what is meant by them?

Answer 11

1) They can become direct competitors (total convergence) —> New entrants & Rivalry
2) They can keep their industry focus (Limited convergence) – > Substitutes: that can lead to profits/revenues being stolen.

Question 12

From the Blue Ocean Thinking, there are 4 keys that help us to proceed in our thinking, which ones?

Answer 12

1. ELIMINATE - what products or services should we remove?
2. RAISE - what should we improve?
3. REDUCE - In terms of products and services offered, what should we narrow down?
4. CREATE - What new products or services can we offer?