Section C Strategy Flashcards
What is a business strategy?
A plan which is developed and implemented by the management of a company to achieve their strategic goals/objectives.
International marketing/globalisation vs strategy developments
Markets are dynamic and change all the time, even more on the international level.
So the strategies need to recognize and adapt to changes
note the authors - Hamel &Prahalad
Changes in strategies vs globalization vs culture?
Globalisation means more stakeholders involved with differing cultures. Agreement on decisions about strategy changes becomes therefore harder.
Is the type of organisation relevant?
Yes, it should be considered what strategies will the company follow and find the most appropriate type and structure of organisation, considering all pros and cons, such as:
Flat vs tall
Sole trader vs company
atc.
3 types of objectives
Strategic (medium to long-term)
Tactical (medium to short-term)
Operational (day-to-day)
SMART objective to which a good strategy should lead?
Specific
Measurable
Achievable
Relevant
Time-specific
4 Stages of strategy development
- Assessment of where the business is
- Development of a plan (the strategy itself) where the business wants to arrive.
- Consideration of implementation of planned steps and their viability
- Periodic evaluation
Growth strategy based on SWOT
Combining strengths with opportunities - most positive short-term strategy, if there are no other big issues
Defensive strategy based on SWOT
When weaknesses and threats relate, quick defensive action needed to survive. The most negative short-term strategy
Re-orientation strategy based on SWOT
Long-term strategy, which aims to address weaknesses (implement changes) to benefit from existing/foreseeable opportunities
Defusing strategy based on SWOT
Neutral, medium, short term strategy, not meeting opportunities but minimizing existing/foreseeable threats is viewed as a most beneficial step.
What are the 4 growth strategies according to Ansoff?
- Market penetration
- Product development
- Market development
- Diversification
What are the limitations of Diversification strategy?
All related to product or market development strategies:
1. Low quality research
2. Low quality of R&D system
3. Loosing first mover advantage to competitors due to prolonged R&D time,
4. Loosing first mover advantage to competitors, because not patented (kept as a company secret) items/processes become common knowledge or known to the competitor
5. Lack of understanding local specifics of new markets
6. Lack of effective distribution channel
What are the 4 strategies to manage stakeholders under stakeholder mapping tool?
- Minimal effort (towards stakeholders with low interest and low power)
- Keep informed (the cheapest way to satisfy stakeholders with high interest but low power)
- Keep satisfied (stakeholders with power but no interest, so that they don’t become interested to participate in your decision making)
- Key Players
What are the limitation of stakeholder analysis/mapping?
- The analysis and prioritization may be very subjective, depending on the ethics of the decision maker
- Members of particular group may have shifted to more powerful group unnoticed (e.g. a pressure group like environmentalists became better present in the local government gaining more power) or neglected shareholder bought larger share.
What type of businesses may choose not to expand and why?
Businesses offering high-end products or service providers, because of:
*High dependence on owner’s/specific person’s highly specific skills and need of their direct and intensive involvement in production or service offering, such as a private clinic with a well-known doctor; a restaurant with a well-known chef, a popular stylist’s shop etc
*Need to stay close to customers, to understand their ever-changing wants and needs:
Growth strategy: internal vs external?
Internal growth is
1. slow
2. often Lacking finance (possible)
but
1. Less risky
2. and retaining control and focus
Growth strategy through integration directions?
Consider pros and cons of vertical or horizontal integrations, as well as of conglomerate
Growth strategy through going global
Consider the methods such as:
Joint venture
Strategic alliance
Direct or indirect export
Direct investment
Franchise
E-commerce
Growth strategy vs Economies of scale
- Technical - fixed costs better spread or less share of fixed costs vs variable costs
- Managerial - business can afford more managers with specialized skills, instead of a few doing everything
- Financial - risks are better managed
- Marketing - more resources available
- Purchasing - discounts available
Growth strategy vs diseconomies of scale
Diseconomies:
1. Technical - added capacity adds to new fixed costs which may not be good spread in the beginning. (using just small space in a new warehouse)
2. Managerial - over-specialized or overqualified
3. Financial - larger (end historically successful businesses may overestimate their powers or competences and make poor investments
4. Marketing - costlier mistakes
5. Purchasing - costlier funds than cost savings from larger stock (which may deteriorate btw)
Risk strategies?
May be considered based on these tools:
SWAT (e.g. strategies related to minimizing threats being part of risk strategies, such as diffusing and defensive strategies)
Ansoff (diversification being the most risky and penetration the least risky etc)
What we learned around Product strategies?
May be considered based on these tools:
*BCG matrix
*Extention strategies (related to : product redesign or extended use)
*Branding/brand development strategies:
1. Raising Brand awareness
2. Strengthening of brand loyalty
3. Maintenance of brand value
List of pricing strategies?
- Price cuts (permanent)
- Promotional Pricing/price promotion
- Skimming
- Penetration
- Cost-plus/mark-up
- Psychological/perceived value/99.9
- Loss leader
- Price discrimination (based on customers’ characteristics)
- Dynamic pricing (based on changing market conditions, like Bolt)
- Economy pricing
- Premium Pricing (based on quality)
- Bundle pricing (less cost in a bundle then separately)
- Complementary pricing (Paying small amount for main product and large amounts for details, like food in petting zoo
Choice of Pricing strategies?
*Popular at the introduction level:
1. Penetration if there is big competition
2. Price skimming if the product is unique/has no/less competition
*Popular at the introduction level:
1. Prices set to penetrate the market may now raise but
2. Skimming prices lowered
*Popular at maturity level (as many competitors attracted by your profits enter the market):
1. Competitive or
2. Promotional pricing,
*Popular at saturation level?
1.promotional pricing
2. complementary pricing
*Popular at declining stage?
Price cuts
*BMG strategies may be again used depending on product and its life-cycle:
1. Holding
2. Building
3. Harvesting
4. Divesting
*Extention strategy may be considered, finding new segments with new pricing strategy or through pricier or cheaper version of product (product redisign)
Distribution strategies?
*Number of intermediaries
*direct vs indirect export
other
*Limited/selected sales points is common for which stage of life-cycle?
Promotion strategies?
*Extended marketing (e.g. new segments)
*BElow vs above-the-line:
Below-the-line:
Direct marketing (direct mails)
Trade shows
Search engines SMM
Personal selling In person or on the phone
Public relations
Sales promotions (coupons; BOGOF; competitions etc)
*Importance of packaging:
1. Protection
2. Convenience to carry, use
3. Provision of information
4. Reduced risks
5. Promotional tool
Guerrilla or viral marketing?
Attention to:
Ethical issues
Brand image may be damaged
May be illegal (more an issue of guerrilla)
Branding/brand development strategies?
- Raising Brand awareness
- Strengthening of brand loyalty
- Maintenance of brand value
Types of extension strategies
- New markets (new regions; export)
- New markets (new segments)
- New uses
- New design or packaging
- New promotional strategies
Specific Promotion/Advertising strategies?
Guerrilla, virus
BCG product strategies, related to the level of further investment
- Holding
- Building
- Harvesting
- Divesting
