M2 Chapter 7: Creating and Executing Competitive Strategy Flashcards
Strategic Management Process
- Create mission of the organization
- Evaluating strengths and weaknesses (internal)
- Analyzing opportunities and threats (external)
- Develop plans
- Executing plans
Strategy
large-scale action plan that sets the direction for an organization
Strategic management
process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals
Why is strategic management/planning important?
- Provide direction and momentum
- Encourage new ideas
- Develop a sustainable competitive advantage
Sustainable competitive advantage occurs when an organization can stay ahead in four areas:
- Being responsive to customers
- Innovation
- Quality
- Efficiency
Strategic positioning
attempt to achieve sustainable competitive advantage by
preserving what is distinctive about a company
▫“performing different activities from rivals,
or performing similar activities in different ways”
3 Main Competitive Strategies
1) Differentiation
2) Cost Leadership
3) Niche/Focus
What is an effective strategy?
- Creation of a unique and valuable position
- Requires trade-offs in competing
- Creating a “fit” among activities
- The “fit” between the environment and the organization
- Strategy and the three circles (Best at, passion, economic engine)
What are the three circles (by Jim Collins)?
- Best at
- Passion
- Economic Engine
Situation (SWOT) Analysis
(internal)
Strengths
Weaknesses
(external)
Opportunities
ThreatsProcess Analysis,
Value Chain Analysis
The internal activities in which a firm engages to create value for its customers. ie: sales marketing R and D Accounting Legal, etc.
Industry Analysis
Analyze Porter’s 5 Forces
- Creating framework to identify common threats organizations face
Portfolio Analysis
The BCG Matrix
BCG matrix
a means of evaluating strategic business units on the basis of
(1) their business growth rates and
(2) their share of the market.
Three Levels of Business strategy:
- Grand strategy (High level: basic direction, long-term goals.
- Corporate strategy (Determines the types of business in which the firm will compete.)
- Business level strategy (How the business unit competes within the industry)
Building a Foundation of Execution
- Know your people and business (right people on the bus)
- Insist on realism
- Set clear goals and priorities
- Follow through
- Reward the doers
- Expand the capabilities
- Know yourself
mission
The primary purpose for which the organization exists.
VRIO
Value (resource/capability meets needs of stakeholders)
Rarity (Very few competitors have same resource/capabilities)
Imitability (Competitors’ ability to imitate, etc., similar r and c)
Organization (use r and c to maximize ability to compete)
of resources and capabilities.
If R and C have all, they’re strengths!
Capabilities
Ways that a firm integrates its resources.
Ways to analyze strengths/weaknesses
VRIO
Value-Chain Analysis
Buyer Utility Map
A graphic representation of where an industry is currently focusing its efforts in providing value across the complete buyer experience.
Five Forces Framework
Analysis model that can be used to identify the many common threats faced by organizations in their competitive environment.
5 Threats in Five Forces Framework
1) Rivalry,
2) New entrants,
3) Substitutes,
4) Suppliers,
5) Buyers
Barriers to Entry
economies of scale,
capital requirements,
brand loyalty,
intellectual property protection
Diversification
Seeking to expand into related or unrelated industries.
Vertical integration
integration of new businesses that expand the range of value chain activities for the company
merger
when two or more organizations combine to become one.
acquisition
An action by which one company purchases and assimilates another company
strategic alliance
An agreement between two or more distinct companies in which they choose to share strategic resources or capabilities.
