Module 8C Flashcards
what factors determine the place in the portfolio analysis?
- Internal factor: market share held by product or SBU
- External factor: growth rate of market for product of SBU
What are confrontation analyses?
Analyses that confront, compare and contrast internal vs external findings. These confrontations help you go from strategic analysis to formulating strategy. Most important ones: SWOT and portfolio analysis
What are the different possible outcomes for the portfolio analysis?
- Stars
- Question marks
- Cash cows
- Dogs
What are stars?
Products with high market share and high market growth rate. They require investments to maintain market shares
What are question marks?
Products with high market growth rate and low market share. There is an opportunity to gain clients but it requires investments
Wat are Cash cows?
These are products with high market share but low growth rate of market. There are low investments, high cash flows are available to invest elsewhere
What are dogs?
Products with low market share and growth rate of market. These should be divested or sold off. Do not invest in dogs
What is the goal of a SWOT analysis?
The goal of a SWOT analysis is to match the SW that should be exploited or compensated with each OT. This leads to a unique solution between organization (SW) and the environment (OT). This analysis only provides ‘rough ingredients’.
What is the idea of Porter’s generic strategies?
The ideas is that relative to the industry, companies with strong generic strategies are better positioned to deal with the five forces.
What are the two ways to get a competitive advantage?
- Cost leadership
- Differentiation
This can be done on a broad target (cost leadership or differentiation), or on a narrow target (cost focus or differentiation focus in a small segment of the market).
What is a cost leader?
This is the company that can produce for the lowest cost, but this doesn’t mean that they charge the lowest price
What is a differentiatior?
Company that produces more expensive, but different and valuable products in terms of product features and perceived value
Why does cost leadership protect against five forces?
- Rivalry: enough margin to engage
- New entrants: threaten with price war and economies of scale is a barrier
- Substitutes: ability to match price/performance ratio
- Buyer power: enough margin to deal
- Supplier power: less profitable competitors more afffected
Why does differentiation protect against the five forces?
- Rivalry: only layers on similar dimension and there is no price war
- Entrants: Switching costs and loyalty protects
- Substitutes: Switching costs and loyalty protects
- Buyer power: switching costs and loyalty + enough margin to deal
- Supplier power: less profitable companies are more affected
What is a focus strategy?
With this strategy companies try to attain a competitive advantage by focusing on a smaller segment within broader industry through experience or specialization.
What is a strategy statement?
Simple statement that can be used as a guide for making difficult choices
What are the components of a strategy statement?
- Strategic objective (should be quantifiable and timebound)
- Scope: description of product and target customers based on generic strategy
3: Competitive advantage through value proposition or internal alignment
What is value proposition?
Explanation of why your target customers should buy your product. This is based in the choice for a generic strategy
what is internal alignment?
Description of how activities, structures, resources etc. are aligned so you are only company able to deliver on value proposition.
What are organizational resources?
These are the key relationshipw in the operating systems
What is resource heterogeneity?
Each firm has different resources and some firms are more effective at using resources than others.
What is resource immobility?
Long lasting advantages of resources due to difficulty of copying/developing
What are dynamic capabilities?
These are abilities to recreate resources and capabilities to meet the changing environment’s needs in different way than competitors. These are primarily associated with less formal aspects of an organization
What are core competences?
Activities that provide a competitive edge. These give customer added value. It should be possible to extend them beyond the current application to create a sustainable advantage.
