Lesson 10-12 Flashcards
What is the definition of strategy making & strategy process:
are activities that determine the formation of strategies on the business, corporate and/or network level(s).
- They are exercised along the continuum from “ad hoc problem solving” to “fully patterned, repeatable and reliable” practices/ routines.
- We know from academic research that strategy processes have an impact on performance differences across firms. Thus, they matter!
- Put differently, while strategy content deals with the “what” of strategy, strategy process deals with the “how” of strategy.
Important note!
The strategy process consists of two sequential phases:
1) Formulation
2) Implementation of strategies
The question was the answer :)
Strategic Planning: Mention the 7 steps of strategic planning.
Mention some of the benefits and drawbacks of strategic planning.
Benefits
☺ Systematic search for information
☺ Comprehensive analysis of firm and environment
☺ Rational process based on evidence and facts
☺ Improves communication and offers corporate wide set of tools and methods
☺ Coordinates and controls activities toward common goals
☺ Creates a common sense of direction
Drawbacks
☹ Involvement of just a limited amount of people (top management, board, heads), while neglecting lower management levels
☹ Separates thinking from acting (smart people think, the others should act accordingly)
☹ Problem of commitment (implement plans of someone else)
☹ Problem of detachment (strategies are not sufficiently linked to on-going business operations – ivory tower)
☹ Strategic planning favors analysis over synthesis
☹ Often very bureaucratic – more strategic programming and budgeting than serious discussions about strategy
☹ Slow to react, as it is a yearly process following a predefined timetable
What are some of the basic characteristics of strategy making?
- The basis of strategy-making may not always be the formulation and implementation of strategic plans.
- Identifying strategic issues and creating strategic initiatives are at the center of strategymaking in some firms.
- The role of top management is the design and management of the context for strategy making.
- Top management designs the context, and managers at lower levels identify issues and propose strategic initiatives.
- Top management selects initiatives, allocates resources and reviews progress.
- Continuous strategy-making may be more appropriate for firms in industries facing dynamic and uncertain competitive environments, where responsiveness in „real time“ (versus periodic response) is important.
Explain the guided evolution of strategy
- Guided evolution follows another sequence of stages, called Variation, Selection and Retention.
- It assumes that new strategic initiatives can generate everywhere in the organization.
- These initiatives have to prove themselves both in the external market place (clients, competitors) as well as in the internal market place (resources, management attention, people).
- Top Management is now not longer the mastermind of strategy content and process, but has to set an appropriate context into which evolutionary process can unfold – it guides the evolution of strategic initiatives along their life-span (including deciding upon them, and stopping them).
- Definition: A strategic initiative is a coordinated undertaking (formal or informal) to develop or renew the capabilities associated with competitive advantage.
WHAT ARE STRATEGIC INITIATIVES?
- The content of initiatives may include new products, process improvements, new business ventures, etc.
- Initiatives may be formal (induced by top management) or informal (autonomous activity at middle and lower levels).
- Initiatives are the principal means („learning laboratories“) by which organizations learn to do new things (change existing or develop new capabilities).
Mention the 4 knowledge flows in the MNC.
Home replication
Localization
Global Standards
Transnational
What is a subsidary initiative?
The proactive and deliberate pursuit of a new business opportunity by a subsidiary company, undertaken with a view to expand the subsidiary´ s scope of responsibility in a manner consistent with the MNC s strategic goals.
What is the definition of a business model?
Whenever a business enterprise is established, it either explicitly or implicitly employs a particular business model that describes the design or architecture of the value creation, delivery, and capture mechanisms it employs.
The essence of a business model is in defining the manner by which the enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit.
It thus reflects management’s hypothesis about what customers want, how they want it, and how the enterprise can organize to best meet those needs, get paid for doing so, and make a profit.
Here is an example of how a company can compare itself with competetion and how their business model can be visualized.
NO ANSWER.
What are Business Model, Strategy and Tactics distinghuised?
- Business Model refers to the logic of the firm, the way it operates and how it creates value for its stakeholders
- Strategy refers to the choice of business model through which the firm will compete in the marketplace;
- Tactics refers to the residual choices open to a firm by virtue of the business model it chooses to employ.
Explain the business model of Ryan Air.
Choice
Secondary airports
Lowest ticket prices
Low commissions to travel agents
Standardized fleet of 737s Single-class
High-powered incentives
No meals
Nothing free
Spartan headquarters
No unions
Consequence
Low airport fees
Large volume
Low cost
Bargaining power with suppliers
Economies of scale
Attracts combative team
Faster turnaround
Additional revenue
Low fixed cost
Flexibility in rostering staff
Explain business models in international firms - how are they different?
Multinational enterprises create and capture value through appropriate business models that fit both distinctive capabilities and dynamic markets.
The key elements of a global business model include propositions for adding customer value and capturing a share of that value, methods to control, deploy, and utilize critical resources, and integrated processes that deliver value to target global customers.
Global markets add layers of complication, as the MNE needs both a global umbrella business model and a local business model for each product and international host market.
Mention the parameters of a business model of a MNC. Do not know this by heart, but read and understand each of the points of the business model.
What is the definition of a supply chain?
What is the definition of supply chain management?
- Supply chains are sets of interdependent organizations involved in the process of making a product or service available for use or consumption.
- Supply chain management is defined as “the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long term performance of the individual companies and the supply chain as a whole” (Mentzer et al., 2001).
Name the 7Rs of Supply Chains
Right product/service in
Right quantity in
Right condition at the
Right time and
Right place for the
Right customer at
Right cost
Mention some of the functions of a Supply Chain?
- Primary function: to provide a link between production and consumption by filling discontinuities which are usually caused by: geographical separation, time, information, ownership, sorting.
- Production: a physical transformation of matter into a product
- Sorting (Alderson, 1954): sorting out, accumulation, allocation, assorting.
- Transportation/warehousing: providing place utility
- Supply chains can increase consumer satisfaction through improving efficiency and thereby reducing cost, and also by reducing uncertainty through the routinisation of transactions.
Explain the difference between Single Company thinking and supply / value chain thinking
What is the definition of Globalization?
Globalization
is defined as the increasing integration and interdependence of economies, national institutions, firms and individuals around the world.
The concept was first recognized during the oil price shock of the 1970s and took on increased importance following the terrorist attacks in New York in 2001 and the subprime financial crisis which would follow in 2007 - 08.
Mention some regional free trade zones
Name the 4 different industrial structures
Subsistence Economies: the majority of people engage in simple agriculture. They consume most of their output and barter the rest for simple goods/services. They offer few market opportunities.
Raw Material Exporting/Factor-driven Economies: are rich in one or more natural resources but poor in other ways. Much of their revenue comes from exporting these resources. Examples: Chile (tin & copper), Congo (coffee)
Emerging/Efficiency-driven Economies: fast growth in manufacturing results in rapid overall economic growth. Examples: the BRICS : Brazil, Russia, India, China, & South Africa
Industrialized/Innovation-driven Economies: are major exporters of manufactured goods, services and investment funds. Examples: Germany, Japan and UK.
What are some of the reasons for joining global value chains?
Saturated domestic markets
Small domestic markets
Growth imperatives
Low growth domestic markets
Competitive forces
Access to resources
The provision of incentives
Technology upgrading
Expertise.
What are the risks about going abroad (value chain perspective)?
Lack of knowledge of foreign culture
Lack of understanding of foreign needs
Lack of understanding of foreign regulations
Lack of managers with international expertise
Changes in the country environment
Sociopolitical uncertainty
Economic uncertainty
Supply chain complexity and disruptions
What are some of the important decisions involved in choosing a supply chain structure?
The length of the supply chains
Intensity at various levels
The types of intermediaries involved
Sales expectations
Inventory maintenance
Attitudes
Competitive products handled
What are some of the considerations when selecting the supply chain?
Cost efficiency vs consumer satisfaction
• Supply chain control (signifies) the ability of one member of a supply chain for a given product to stipulate marketing policies to other members.
• The trade-off between cost versus control.
• Undifferentiated, differentiated, concentrated strategies.
The Supply Chain Strategy is Derived from the corporate strategy and the marketing strategy. What are the steps for designing the supply chain strategy?
- Defining customer service levels
- • Supply chain objectives and steps
- • Set of activities
- • The supply chain organization
- • Key performance indicators
- • Critical success factors
FYI about formulating the supply chain policy:
• Decisions will be influenced by current relationships and commitments • ‘Push’ or ‘Pull’? • One strategic decision is whether to pull the product through the supply chain by concentrating on final purchasers or whether to push it through by gaining the cooperation of middlemen (Luck and Ferrell, 1979, pp 188). • Consumer or industrial product?
Surviving and thriving in volatile markets:
What is supply chain resilience?
Resilience is commonly viewed as the ability to become strong or successful after a downfall, while agility simply denotes the ability of dexterous nimbleness. Neither resilience nor agility alone may be the most effective option to both survive and thrive in the face of unprecedented complexity and unpredictability, as resilience often underpins survival devoid of thriving (e.g., Bullough, Renko, and Myatt 2014; Paton 2006), and agility may lead to short-term thriving at the expense of long-term survival (e.g., Doz, and Kosonen 2008). Capabilities of entrepreneurial firms operating in turbulent, trying, sometimes distressing conditions are important to understand (Miller, and Le Breton-Miller 2017).
Mention some of the roles an expatriate can posess?
• Strategists • Monitor • Ambassador • Daily manager • Trainer
What are the factors in expatriate selection?
CHQ preferences
- *Subsidiary preferences**
(e. g. local knowledge, language skills, cultural sensitivity) - *Individual preferences**
(e. g. career progression, remuneration packages, spouse and family)
(e.g. functional skills, knowledge of the company, loyalty, trust)
Mention the MNC management practices
Mention the actors of corporate governance
Board of directors - Owners - Managers
Mention the difference between CONCENTRATED VERSUS DIFFUSED OWNERSHIP
Concentrated Ownership and Control
Founders start up firms and completely own and control these firms on an individual or family basis
Diffused Ownership
Publicly traded corporations owned by numerous small shareholders but none with a dominant level of control
Separation of ownership and control
The typical image of large US/UK corporations
Briefly explain the key concept of State ownership and the history
Until the late 1980s
Extensive state ownership throughout communist countries in the Soviet Union and in China
In many developed economies, state ownership is also high in France, Italy, and Great Britain
Since the 1980s
State-owned enterprises (SOEs) have failed to deliver satisfactory performance due to an incentive problem
Privatization has reduced the SOE share of the global GDP from over 10% in 1979 to under 5% today
Mention internal and external governance mechanisms
Mention the common mechanisms of coordination (formal and informal)?
Explain the agency perpspective on HQ-subsidary relations
What is the definition of strategic leadership?
“Strategic leadership focuses on the executives who have overall responsibility for an organization—their characteristics, what they do, how they do it, and particularly, how they affect organizational outcomes. The parties who are the subjects of strategic leadership research can be individuals (e.g., CEOs or division general managers), groups (top management teams), or other governance bodies (e.g., boards of directors).”
Explain the concept of Board of Directors
Key features of the board
- Board Composition: Otherwise known as the insider/outsider mix
- Leadership Structure: Involves whether the board is led by a separate chairman or by the CEO who doubles as a chairman—a situation known as CEO duality
- Board Interlocks: When one person affiliated with one firm sits on the board of another firm
- The role of Boards of Directors: (1) control, (2) service, and (3) resource acquisition functions
- Directing strategically: Directors must strategically prioritize
