Midterm Flashcards
Good solution (FEC)
definitions
FEC- feasible, effective, complete
F- firm has or can get the resources to implement it
E-achieves the immediate and overarching objectives
C-outlines all the key activities that must be executed
Porters 5 forces
Definition
Framework for analyzing the competitive forces within an industry that affect profitability
Porters 5 forces
Importance
Each force influences:
pricing power
market entry
competitive dynamics
What are the forces from Porters 5 forces
Industry competitors; rivalry among existing firms
New entrants
Bargaining power of buyers
Bargaining power of suppliers
Substitutes
Porters Generic Strategies
Definition
Framework that identifies 4 primary strategies for achieving competitive advantage
Porters Generic Strategies
Importance
To examine the forces within the company that affect profitability
What are the porters generic strats
low cost, broad target: Cost leadership(walmart)
Uniqueness,broad target: Differentiation(apple)
Narrow target, low cost: Cost focus(freedom mobile)
Uniqueness, narrow target: Differentiation focus(ferrari)
3 levels of recommendation for a complete solution (STO)
Strategic: what is the ‘big idea’ for answering key question
Tactical: what are the 2-3 main questions/actions needed to make the strategic recommendation a reality
Operational: What do we need to make, buy, borrow, acquire, to implement the tactical recommendation
Differentiation
Broad target
uniqueness
ex. apple
Cost leadership
Broad target
low cost
ex. walmart
Cost focus
narrow target
low cost
ex. freedom mobile
differentiation focus
narrow target
uniqueness
ex. ferrari
Key Success Factors
definition
critical areas that must be managed effectively to achieve organizational objectives and secure a competitive advantage
KSF
importance
They are essential for ensuring a business remains competitive within its industry
KSF
interconnections
KSF can influence one another, success in one area can lead to improved performance in another
EX. better employees, customer satisfaction
Why KSF
Guide strategic and daily actions
ensure success over time
ensure holistic thinking
KSF: Innovation
importance
environmental alignment/improvement
KSF: Innovation
actions
creativity (culture, rewards)
KSF: innovation
related KPI’s
new products
new approaches
cycle time
idea generation
KSF: Uniqueness
Importance
Competitive advantage
market advantage
KSF: uniqueness
related KPIs
strong
unique reputation
superior comparative advantage
KSF: Employees
importance
enables operation
KSF: employees
actions
employee commitment (loyal, productive)
KSF: employees
related KPIs
Turnover rate
Applications
Productivity
remmeber: (TAP)
KSF: products and services
importance
Revenue means
KSF: products and services
actions
value
reliable
KSF: products and services
related kpis
returns
defects
warranty claims
waste
KSF: financial performance
importance
good and improving profit
ROIs
KSF: financial performance
related kpis
profit
revenue
growth
return on investment
firm value
KSF: customers
importance
provide revenue
KSF: customers
actions
target
understand
KSF: customers
related kpis
market share
share of wallet
Churn
net promoter score
Churn
rate at which customers stop doing business with a company over a specific period. (want low)
main kpi for employees
employee commitment
main kpi for customers
customer satisfaction
Diamond E
definition
strategic framework for understanding the dynamics between a company’s environment and internal capabilities
identifies individual variables and how they are connected
Diamond E application questions
- Is our current strategy aligned with future opportunities and threats
- what new strategies are feasible and worthwhile?
- what are our strengths and how can we use them for competitive advantage given the environment
- what do we need to execute a strategy? can we get it? where are we inconsistent?
What are the parts of Diamond E
Management preferences
organization strategy environment
resources
Diamond E: organization
definition
Culture: who are we
Capability: what are we good at?
Structure: how do we divide work?
Diamond E: organization
questions
- what are we good at as an organization? capabilities gap?
- are we organized so that we can efficiently and effectively execute our strategy? are we organized around our most important success drivers?
- what do we value or not? ie innovation vs. stability
- what do we feel safe doing and spending our time on? is it safe to express new ideas? should i be spending time on my job only or does management support new initiatives?
Diamond E: management preferences
definition
Vision, mission, preferences, and biases
Diamond E: management preferences
questions
- what does management want? ambitions, objectives
- what are its priorities?
- how comfortable is it with risk?
- does it value or is it more comfortable with the same capabilities and strategies than others?
- does it value some capabilities or resources more than others?
Diamond E: resources
definition
Human, capital, financial
Diamond E: resources
questions
- do we have enough money to aquire needed resources or execute needed activities?
- do we have the production capacity o produce what is needed?
- can we change how or what we produce?
- what kind of talent do we have? what kind of talent do we need? do we have enough labour to execute?
Internal
what can we do?
internal consistency
good execution
external
what should we do
external alignment
rich strategy for environment
Diamond E: strategy/environment linkage
definition
asses forces at work and their implications
adjust internal or adjust strategy
Citing sources and APA formatting
objective
to give credit, show recency of data/information, and make it possible to see the original source
how do you cite something
No Big Deal TiPS
N-name
B-brackets around date
D-date
T-title
I-italisize
P-publisher
S-site
Key performance indicators
definition
quantifiable measures that determine a company’s performance in relation to its key success factors
Key Performance Indicators
importance
they assess productivity, efficiency, effectiveness in achieving objectives
Key performance indicators
interconnections
internal factors like employee performance and external like market conditions can affect KPIs
High KPIs can drive strategic decision making and operational movements leading to enhanced profitability
PEST
definition
Framework for analyzing the macro environmental factors affecting a business
PEST
importance
understanding these factors helps businesses anticipate changes in the market and adapt strategies accordingly
PEST
interconnections
shift in one factor can lead to changes in others
ex. economic downturns may lead to political instability
PEST: P
Political
Laws, Regulations, International trade laws, trade agreements
PEST: E
Economic
GDP, inflation, interest, employment, exchange
PEST: S
Social
Values, attitudes, demographics, customs, habits
PEST: T
Technological
Information technology, internet, materials, equipment
Porters 5 forces: competitors
threats
many competitors of equal size
low industry growth rate
capacity of competitors
exit barriers
Porters 5 forces: competitors
solutions
growth
acquisition of competitors
create/increase consumer switching costs
differentiation
porters 5 forces: new entrants
threats
economics of scale
capital requirements
cost advantages
porters 5 forces: new entrants
solutions
grow to achieve scale
control distribution network
lock in customers
porters 5 forces: suppliers
threats
few suppliers
low importance
high switching costs
porters 5 forces: suppliers
solutions
form strategic alliance
internal supply
long run: redesign product
porters 5 forces: buyers
threats
few buyers
standardized product
switching costs
threat of backward integration
porters 5 forces: buyers
solutions
form alliance with sellers
strong market differentiation
create information asymmetry
porters 5 forces: substitutes
threats
many good substitutes
low switching costs
high buyer propensity to substitute
porters 5 forces: substitutes
solutions
lock customers in
strong market/differentiation
whats the profitability framework
profits
revenue costs
volume price fixed variable
whats the case process
- identify the immediate issue, underlying issue, and big question
- identify objectives, applications and decision criteria
- apply models and frameworks
- develop and evaluate hypothesis
- propose good solution with implementation
- identify risks, mitigation and contingency strategies
- demonstrate impact
