MBA Strategy Flashcards
What is the balanced scorecard tool?
Tool to help a company achieve its financial objectives by linking them to specific strategic objectives
e.g. x percent increase in annual sales
&
x percent market share
What are key success factors?
strategy elements, product and service attributes, operational approaches, resources, and competitive capabilities with the greatest impact on competitive success in the marketplace
What is competitive intelligence?
being informed about rivals’ strategies’, actions and announcements, their financial performance, their strengths and weakness etc. to avoid damage to sales and profits
What is a strategic group?
Cluster of industry rivals that have similar competitive approaches and market positions
Strategic group mapping is a technique for displaying different market or competitive positions that rival firms occupy in the industry
Reveals which companies are close competitors and distant competitors
e.g. y-axis of price/quality (low to high) & x-axis geographic coverage (few to many)
List some drivers of change
- changes in long term industry growth rate
- increasing globalization
- changes in who buys product and how they use it
- technological change
- emerging new internet capabilities and applications
- product and marketing innovation
- entry or exit of major firms
- diffusion of know-how across companies and countries
- improvements in efficiency in adjacent markets
- reductions in uncertainty and business risk
- regulatory influences and government policy changes
- changing societal concerns, attitudes and lifestyles
What are Michael Porter’s 5 Forces?
Competitive pressures from
- Supplier
- Buyer
- New Entrants
- Substitues
- Rivalry Among Competing Sellers
- Supplier bargaining power
- Buyer bargaining power
- Threat of entry of new rivals
- Substitute products
- Rivalry Among Competing Sellers (other firms in the industry)
What is the macro-environment?
broad environmental context in what a company’s industry is situated
e.g.
Demographics
Natural Environment
Political/Regulatory/Legal Factors
Technological Factors
Social Factors
Global Forces
General Economic Conditions
What is benchmarking?
comparing how different companies perform various value chain activities - learning how other companies perform activities and borrowing their “best practices”
What is a company’s value chain?
It identifies the primary activities that create customer value and the related support activities.
e.g. PRIMARY ACTIVITIES:
supply chain management
operations
distribution
sales and marketing
service
SUPPORT ACTIVITIES AND COSTS:
General Administration
HR Management
Product R&D, Technology and Systems Development
What are a company’s strengths and weaknesses?
A company’s strengths are its competitive assets.
Its weaknesses are shortcomings that constitute competitive liabilities.
What is a distinctive competence?
A competitively important activity that a company performs better than its rivals - it thus represents a competitively superior internal strength.
What is a core competence?
an activity that a company performs proficiently that is also central to its strategy and competitive success
What is a competence?
an activity that a company has learned to perform with proficiency - a capability in other words.
What is a dynamic capability?
capacity of a company to modify its existing resources and capabilities or create new ones
e.g. 3M upgrading its R&D continuously
Pfizer and its acquisition capabilities
4 tests of a resource’s competitive power?
Is the resource:
Valuable?Rare?
Hard to copy?
Not substitutable? (no good substitutes available)
What is a sustainable competitive advantage?
an advantage over market rivals that persists despite efforts of rivals to overcome it
is the advantage durable?
What is a resource bundle?
a linked and closely integrated set of competitive assetscentered around one or more cross-functional capabilities
What is the difference between a resource and a capability?
Resource: competitive asset that is owned or controlled by a companye.g. a brand is a resource (Cola-Cola or Kleenex)
Capability: capacity of a firm to perform some activity proficiently
e.g. Apple’s product innovation capability
Pepsi for its marketing and brand management capabilities
Tangible resources:
- physical resources
- financial resources
- technological assets
- organizational resources
Intangible resources:
- human assets and intellectual capital
- brands and reputational assets
- relationships (strategic alliances, joint ventures)
- company culture and incentive system
What are competitive assets?
a company’s resources and capabilities
What are functional strategies?
HR strategyFinance strategy
IT strategy
Sales, Marketing and Distribution
Production
Supply Chain
R&D, technology and product design
Define Broad Differentiation
offer unique product attributes that appeal to a wide range of buyers
offer something rivals can’t in terms of satisfaction (innovation or persuasive advertising)
e.g. Apple, Rolls-Royce, Ralph Lauren, Tiffany, Rolex, Prada
Avon, Mary Kay
Microsoft Office - hard to copy and difficult for users to switch away from
differentiating the company’s product offering from rivals’ with attributes that will appeal to a broad spectrum of buyers
differentiation is doomed if competitors are able to quickly copy most or all of the appealing attributes a company comes up with
Name the 5 generic competitive strategies
Low-Cost (overall or focused)
Differentiation (broad or focused)
Best-Cost
- Low-Cost Provider
- Focused Low-Cost Provider
- Broad Differentiation
- Focused Differentiation
- Best-Cost Provider
Overall low-cost
Focused low-cost
Broad differentiation
Focused differentiation
Best-Cost
- Low-Cost Provider (Overall Low-Cost Provider)
- Focused Low-Cost Provider (or Market Niche Low-Cost)
- Broad Differentiation
- Focused Differentiation (or Market Niche Differentiation)
- Best-Cost Provider
Define Best-Cost Provider
Middle ground between low-cost and differentiation advantage - targeting value conscious buyers looking for a very good product/service at an economical price.
giving customers more value for the money by offering upscale product attributes at a lower cost than rivals.
Hybrid strategy that blends elements of differentiation and low-cost strategies.
e.g. Toyota’s Lexus line - high quality like BMW/Mercedes, but more affordable
Define Focused (or market niche) Low-Cost Strategy
low cost aim serving buyers in target niche at a lower cost and price than rival competitors
concentrating on a narrow buyer segment and outcompeting rivals on costs, thus being in position to win buyer favor by means of a lower-priced product offering
e.g. Vizio low-cost TVs - built close relationship with a major Taiwanese manufacturer
