Session 8 Flashcards
Strategy formulation
concerned with developing a corporation’s mission, objectives, strategies, and policies
Situation analysis
process of finding a strategic fit between external opportunities and
internal strengths
Key elements to strategic analysis
-EXTERNAL
-INTERNAL
SWOT
strengths, weaknesses,
opportunities, and threats
Internal analysis
-strengths
-weaknesses
external analysis
-opportunities
-threats
Mission Statement
must enable a common thread to highlight and focus the energy of everyone in the organization in the direction
that the top management team believes is best
5 elements of a mission statement
-short
-design must be simple
-provide direction
-what the company does and
what it does not do
-be measurable
Business strategy
focuses on improving the competitive position of a company’s
Strategic Choices
-corporate level choices (diversification and internationalisation)
-business unit level choices (market and pricing choices)
-functional level choices (marketing, finance)
competitive strategies
-cost strategy
-differentiation strategy
-focus strategy
Cost-leadership strategy
The lowest-cost organisation in a domain of activity.
Four key cost drivers:
-Lower input costs.
-Economies of scale.
-Experience.
-Product process and design.
Differentiation strategy
Uniqueness along some dimension that is sufficiently valued by customers to allow a
price premium.
Two key issues:
-The strategic customer on whose needs the differentiation is based.
-Key competitors – who are the rivals and who may become a rival.
Focus strategy
Targets a narrow segment of domain of an activity and tailors its products or services
to the needs of that specific segment to the exclusion of others.
Two types of focus strategy:
-cost-focus strategy
-differentiation focus strategy
Issues in Competitive Strategies
Stuck in the middle
* when a company has no competitive advantage and is doomed to below-
average performance
