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Strategic Management > Strategic Management > Flashcards

Strategic Management Flashcards

1
Q

What is a corporate strategy?

A
  • Corporate Strategy is like a map an organization draws to reach as specific goal in the future.
  • Long-term direction
  • never static as the environment and markets constantly change
  • -> requirement for strategic plans and adjustments to meet demands
  • -> only invest in components that add value to the customer
  • -> corporate decisions take time and need thorough analysis to factor in all scenarios available to develop a competitive advantage
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2
Q

What is the definition of strategy according to Chandler?

A
  • determination of the basic long-term goals and objectives of an enterprise,
  • adoption of course of action and
  • allocation of resources necessary to carry out these goals

Organisations starts to produce one product at one product line and as the demand for the product increases so does the company and its complexity

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3
Q

What is the definition of strategy according to Porter?

A

Creation of a unique and valuable position, involving different set of activities

  • Corporate strategy is not long-term view itself but the development of an competitive advantage over time
  • focus on developing and maintaining a competitive advantage
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4
Q

What is the definition of strategy according to Mintzberg?

A

Pattern in a stream of decisions

  • Starts when the vision is fully understood
  • as environment changes or extraordinary outputs arise the goals become unattainable and vision needs adjusting
  • more flexible and adaptable corporate strategy is better

–> necessary to keep a corporate strategy flexible and open to changes

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5
Q

What has to be taken into account when making strategic decisions?

A
  • long-term orientation of an organisation
  • purpose of the orga
  • attainment of a competitive advantage
  • adaptability to changes
  • expandability of resources and the efficiency of the orga
  • corporate philosophy
  • expectations of stakeholders
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6
Q

Who takes part in developing a strategy?

A
  1. Corporate level:
    - decisions regarding the overall purpose
    - development of the orga
    - vision, mission and purpose
    - analysis of the SBUs in terms of future growth potential
    - assign budgets to SBUs
  2. SBU Level
    - risks and opportunities in the business environment
    - strengths and weaknesses of the own resources
    - contribute competitive analysis to the strategic plan
  3. Product Level
    - situation analysis
    - Marketing strategy
    - business plans for respective products
  • -> All levels are involved in the strategic planning process (top to bottom)
  • -> Everyone needs to be familiar with the strategic plansing process
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7
Q

What is included in a solid strategic plan?

A

Long term process takes time to assemble all info required

  1. Strategic Position of the company in the market place
    - strengths and weaknesses
    - opportunities and threats present in the business environment
    - influences of the corporate strategy on the corporate culture and environment
    - whether existing resources can sufficiently support the strategic goals
    - whether the strategic plan fits the purpose (mission)
  2. Strategic capabilities
    - whether the portfolio of the BU fits well with the strategic objectives
    - whether BU are adequately positioned in the market place and support the strategy
    - international markets in which the orga aims to operate
    - what strategic alliances should be formed
    - whether the orga is active in the right areas of innovation
  3. The implementation
    - what process is necessary to develop a strategy
    - what strategy is a good fit for the orga and what is feasible
    - what corporate structure and systems are necessary to implement the strategic plan
    - how to best manage the implementation process
    - how to evaluate the strategy
    - who is responsible for the implementation process
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8
Q

What strategic capabilities are required in a strategic plan?

A
  1. Strategic capabilities
    - whether the portfolio of the BU fits well with the strategic objectives
    - whether BU are adequately positioned in the market place and support the strategy
    - international markets in which the orga aims to operate
    - what strategic alliances should be formed
    - whether the orga is active in the right areas of innovation
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9
Q

What needs to be analyze for the implementation planning of a strategic plan?

A
  1. The implementation
    - what process is necessary to develop a strategy
    - what strategy is a good fit for the orga and what is feasible
    - what corporate structure and systems are necessary to implement the strategic plan
    - how to best manage the implementation process
    - how to evaluate the strategy
    - who is responsible for the implementation process
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10
Q

What elements of the strategic position are important for a strategic plan?

A
  1. Strategic Position of the company in the market place
    - strengths and weaknesses
    - opportunities and threats present in the business environment
    - influences of the corporate strategy on the corporate culture and environment
    - whether existing resources can sufficiently support the strategic goals
    - whether the strategic plan fits the purpose (mission)
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11
Q

What factors influence the Marco-environment of an organisation?

A

The environment that influences the corporate strategy.

  • PESTEL analysis as a strategic and qualitative method helps to align the orga with its environment
  • not limited to the orga level - also possible for product level
  1. Political factors
    - analysis and forecast of political developments and trends
    - government standards, regulations, investment security, etc.
  2. Economic factor
    - analysis and forecast of economic developments and trends
    - GDP, income per capita, price situation, etc
  3. Social factors
    - analysis and forecast of social-cultural developments and trends
    - changes in values of the customers, preferences, specific needs, etc.
  4. Technological factors
    - analysis and forecast of technological developments and trends
    - process improvements, efficiency increases, etc.
  5. Ecological factors
    - analysis and forecast of ecological developments and trends
    - restrictions, pollutions, subsidies, etc.
  6. Legal factors
    - analysis and forecast of legal developments and trends
    - developments regionally, domestically, internationally, etc.
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12
Q

What factors influence the Micro-environment of an organisation?

A

Porters Five Forces Model

  • helps to analyse various strategies for the strategic planning process
  • helps with decision making regarding activities that influence forces in their micro-env
  • Build on assumptions:
    > markets attractiveness is defined by its structure
    > structure of the market in turn impacts the strategic behaviour of an orga in this market
    > market structure is defined by the competition; competitive strategy of an orga is decisive for its success

Market attractiveness of a business is identified by the five forces:
1. Buyers/customers: analysis of their buying power
2. Competitors: Analysis of the degree of rivalry amount existing competitors
3. New Market entrants: analysis of threats from new competitors
4. Substitutes: Analysis of threats from substitute products
5 Suppliers: Analysis of their negotiating power

–> the stronger the 5 forces the less attractive the market the harder it is to build and maintain a competitive advantage

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13
Q

When are the buyers in a strong position?

What consequences does it have?

A

• They buy large quantities.
• The producer has high fixed costs and little flexibility in lowering the price for the
product or service.
• The product is undifferentiated and can easily be replaced by substitute products.
• The switch to an alternative product is simple and inexpensive.
• The margins are relatively small.
• The customers could produce the product or service themselves.
• The product or service is not of high value to the customer.
• The customer knows the production cost of the product.
• A backward integration is possible for the customer. Backward integration means that the customer produces

Results/consequences:
> they can enforce lower prices
> one micro force to weaken the competitive advantage

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14
Q

When is competitive pressure high?

What consequences does it have?

A

• There are numerous companies of similar size in the market.
• The companies have similar strategies.
• The business sector shows little growth and therefore an increase in sales is only possible if business is taken away from a competitor.
• The products or services offered in the market are undifferentiated and therefore all
companies compete on price.
• The exit barriers for the organization to leave the business and switch to a different business are very high (e.g. highly specialized machines or personnel are required to produce the product or service).

Results/consequences:
> intensity of competition is very high
> high competitive pressure reflected in price competition leads to shrinking markings and profits for everyone

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15
Q

What are market entry barriers to protect agains new market entrants?
What are the results of new market entrants?

A
  • economies of scale (i.e. organizations need to be a certain size in order to be more efficient)
  • high initial costs and high fixed costs
  • cost advantages of existing organizations through experience effects or through employment of depreciated but still functioning machines and equipment
  • brand loyal customers
  • patents, licenses, etc. which protect the intellectual property of organizations
  • scarce resources (e.g. qualified human resources)
  • controlled resources by existing organizations
  • controlled distribution channels by existing organizations
  • close customer relationships through service or maintenance contracts
  • high switching costs for customers who want to change suppliers in the business

Results:
> Market elements: price, market share, price levels, customer base, etc. could change
> constant pressure to adjust and react to them

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16
Q

How can threats of substitute products be avoided?

What are the results?

A

Similar to the new market entrants.

  • the degree of customer loyalty
  • the intensity of the customer relationship
  • how high the switching costs are for the customer

Results:
> critical if cheaper and more efficient
> may take away large portions of sales volume

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17
Q

When are the suppliers in a strong position?

What consequences does it have?

A
  • The market is dominated by few large suppliers.
  • The product supplied is highly specialized or rare.
  • The company that buys from the supplier is small and insignificant to the supplier.
  • There are no substitutes for this specific input.
  • The switching costs to a new supplier are high.
  • A forward integration is feasible for the supplier, meaning that the supplier could buy the company to whom it supplies.

Consequences:
> increase of prices reduce profits
> provide necessary input and are essential to produce
> high pressure on margins / more difficult to be profitable

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18
Q

What are areas of the strategic plan Porters five forces analysis can help with?

A
  • Analysis of the market attractiveness (static)
  • Analysis of the development of the market attractiveness (dynamic)
  • Analysis of the strategic possibilities
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19
Q

What are elements of the analysis of the market attractiveness (static)?

A

Analysis is possible because of porters five forces model.

  • decisions concerning entering or remaining in a specific market segment
  • analysis of the influence on individual orga and its competitors
  • positions in the market
  • resources and competences

> strategic decisions that influence the competitive structure

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20
Q

What are elements of the development of the market attractiveness (dynamic)?

A
  • PESTEL + Porters 5 can show development and changes
  • trend analysis to look at future attractiveness of the business
  • PESTEL-Elements significantly influence the distribution of power of the forces
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21
Q

What are elements of the analysis of the strategic possibilities?

A

Analysis intensity of different forces provide insights into opportunities to influence or use the forces to the orgas advantage

  • might lead to completely new strategic orientation which could influence position in the market
    OR
  • differentiate products or services
    OR
  • decisions to form strategic partnerships
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22
Q

What are strategic options to reduce the power of the suppliers?

A
  • from partnerships with companies that use the same supplier and buy larger quantities at lower prices
  • systems integration - streamline processes and make it cheaper for both companies at the same time build switching barriers
  • obtain knowledge regarding the production costs to use this info in negotiations
  • backwards integration (buy the supplier)
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23
Q

What are strategic options to reduce the power of buyers?

A
  • from partnerships with other suppliers to reduce the power of the customer(s)
  • systems integration - streamline processes; reduces costs for both sides and builds switching barriers
  • increase customer loyalty: customers buy more frequent at higher prices; and also lowering process costs
  • decision for purchase not based on price alone (brand, marketing, quality, etc.)
  • bypass influential distributors by selling directly to the customer
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24
Q

What are strategic options to reduce the threat of new market entrants?

A
  • weaken the threat by building a strong brand and loyal customers
  • patents, licences and intellectual property in general
  • increase barriers to enter (systems integration, image, etc.)
  • form alliances with complementary products and services to improve the customers choice of product
  • alliances with suppliers or distributors and build closer relationships
  • increase efficiency in producing the product or services at an advantagous cost/time
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25
Q

What are strategic options to reduce the threat from substitutes?

A
  • integrate systems with the customers and make it more difficult to switch
  • create industry standards to make it more difficult to enter the market
  • form alliances
  • market research and constant analysis on customer preferences
  • enter the substitute market with own product(s)
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26
Q

What are strategic options to reduce the pressure from existing competitors?

A
  • avoid price competition
  • differentiate products from competitors product
  • take over competitors
  • focus on specific market segment (niche marketing) to avoid head-to-head competition
  • communicate with competitors to establish better relationships and avoid fierce competition
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27
Q

Why should a company not rely on Porters Five Forces and the strategy it includes? What critical issues does it include?

A

Todays market is quite different and Porters 5 have limited applicability.

  • based on static and stable market structure - difficult to apply it to today’s dynamic markets with technological advancements and aggressive new market entries
  • best used to analyse simply structured markets - difficult to apply to complex businesses with intertwined structures and networks
  • model is also based on classic free market - the stronger the business is regulated the less effectively the model can be used to design strategies
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28
Q

What is a corporate identity?

A
  • Guiding philosophy defines values, and how the orga sees itself
  • internal orientation for employees
  • guidance for motivation and behaviour

–> shows what the orga stands for to the outside world

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29
Q

What is the mission of the organisation?

A
  • heart of the strategy
  • explains why the orga exists and provides clarity to its purpose
  • defines the orga to all who are directly and indirectly involved - stakeholders

Answers following questions:

  • Why do we exist?
  • What is our purpose?
  • Why are we different from others?
  • What do we want to achieve?
  • How do we achieve it?
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30
Q

What is a vision of an organisation?

How is it different to the mission?

A
  • future orientation
  • where the company aims to be
  • guiding philosophy and must reflect values
  • influenced by strengths and weaknesses
  • should inspire and unite everyone
  • should challenge resources

Answers the following questions:

  • What do we want to accomplish in the future?
  • Where do we see our orga in 5, 10, 15, 20 years?

Difference:
Mission is present-day oriented and looks at the purpose

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31
Q

What are values of an organisation?

A
  • Value statement = values and principles
  • guidelines for conducting business
  • should not be changed or adapted
  • basis for strategy
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32
Q

What are goals of the organisation?

How are they structured?

A
  • Group level: Corporate Goals
  • SBU level: Department Goals (Functional goals + SBU goals)
  • Product level: Marketing Mix (product, price, communication, sales-policy-goals)

Corporate Goals:

  • specific and attainable
  • developed around criteria: market position goals; profit goals; financial goals; social goals; power and prestige goals

SBU Goals:

  • Corporate goals are translate to SBU level
  • specific goals for each SBU
  • responsible for profits/losses

Functional goals:
- human resource goals, financial goals, production goals

Marketing goals:

  • specific to actions or measures
  • short-term oriented
  • guide individual marketing activities

–> all goals should be integrated in a strategic plan (conflicting goals should be eliminated and form complementary goals)

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33
Q

What is positioning and why is it important for a company?

How can the position be analysed?

A
  • Depends on the market itself and competition
  • market changes (e.g. technology) affect the position
  • fast adoption to changes to achieve better position
  • positioning maps with key competitors on a chart
  • axis with customer preferences (quality, price, etc.)
  • generated through a target group preference analysis
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34
Q

What can a company do to improve the market position?
What is the basis for the position of a company?

Why is it important?

A
  • develop a positioning strategy to build a reputation in the market
  • positioning map to visualise the position vs competitors
  • actively manage reputation and image
  • formulate a clear positioning strategy to achieve competitive advantage

position is based on:

  • customer experience
  • customer preferences
  • communication strategy

Important because:

  • Companies with a clear market position have a competitive advantages and are more successful then others
  • invest financial resources into core business to improve value to customer
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35
Q

What is a positioning strategy?

What are the requirements?

A
  • Goal: Building a reputation or image in the market
  • structured and company-controlled approach
  • analysis of strengths and weaknesses and anticipation of trends an changes
  • Information gathered internally and externally
  • current or desired position should be communicated via positioning statement

Requirements:
- positioning statement should be clear, understandable, unique, reflect customer needs, realistic and differentiated

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36
Q

What are sources for quantity market and customer data?

A

Internal sources:

  • employees with market or customer data
  • sales info
  • distributors

External sources:

  • umbrella orgas
  • government
  • business statistics
  • industry experts
  • annual reports of competitors
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37
Q

What figures are typically used for a market analysis?

A
  • market volume (market size, monetary size)
  • market potential (maximum size incl. all segments)
  • market growth (annual growth in %)
  • market share of the main competitors (monetary or volume)
  • degree of concentration of the competition (% sales of the largest 10)
  • average return on sales in specific business (from annual reports of competitors)
  • size of the main customer segment (i.e. private/business customers)
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38
Q

What is market segmentation?

What are typical segments?

A
  • market segment consists of customers that have similar needs or preferences
  • can be both b2b or b2c

typical segments:

  • personal characteristics / business characteristics
  • purchasing situation / usage
  • user preference
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39
Q

What are market segments for the consumer market?

A

Personal characteristics:

  • age and gender
  • income
  • size of household
  • stage in life
  • place of residence
  • lifestyle

Purchasing situation:

  • purchasing volume
  • purchasing behaviour
  • loyalty
  • purpose of use
  • value of the product
  • product choice criteria

User preference:

  • brand preference
  • price preference
  • desired properties
  • quality
  • comparability
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40
Q

What are market segments in a B2B-market?

A

Personal characteristics:

  • industry
  • location
  • size
  • management
  • technology
  • profitability

Purchasing situation:

  • purchasing volume
  • purchasing process
  • purchasing frequency
  • purpose of use
  • value of the product
  • product choice criteria
  • distribution channel

User preference:

  • brand preference
  • desired properties
  • quality
  • service
  • product requirements
  • service requirements
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41
Q

How can the capabilities of an organisation be analysed?

A

SWOT analysis

  • strengths, weaknesses internally
  • opportunities and threats externally in the business environment
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42
Q

What are internal resources to analyse a companies capabilities?
Why is that important?

A

Part of SWOT analysis

Internal resources are:

  • Physical resources: machines, equipment, buildings, raw materials –> determine the efficiency, productivity and flexibility
  • Financial resources: balance sheet, cash flow, financial support –> determine financial management and financial support
  • Human resources: employees, partners, managers –> determine if orga has the right people, if training is required, how motivated the employees are

Important because:
- understanding capabilities = identification what strategic possibilities are available and compatible for the orga

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43
Q

What are opportunities and threats to analyse a companies capabilities?
Why is that important?

A

Part of SWOT analysis

  • influence strategic decisions
  • trends in market
  • supported by PESTEL and Porters 5

Answers key questions:

  • What important trends does the company need to follow to continues existing in the market?
  • What are the biggest risks? How can the company minimise these risks?
  • Who are the main competitors? What do the existing competitors do? Are there potential new market entrants or substitutes?
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44
Q

How is a SWOT-Analysis performed?

What are the goals of it?

A
  • carried out by brainstorming session
  • members of difference departments
  • idea generation into specific topics
  • prioritisation of topics (for mgmt to know what to do first)

Goals:

  • Identifying capabilities of the orga by focusing on strengths, weaknesses, opportunities and threats
  • helps to identify core competences to establish competitive advantage
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45
Q

What are disadvantages of a SWOT analysis?

A
  • long list of topics as a result of brainstroming
  • difficult to set priorities (different departments involved)
  • departments view strengths and weaknesses differently
  • department could hide their own shortfalls
  • addressing department shortfalls should be done before SWOT
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46
Q

What are core competencies?

What are options for a company with core competencies?

A
  • capability of an orga that is unique or superior to the competition
  • competitive advantage
  • essential for effective strategic planning
  • company needs to know core competenties
  • possible to gain insights via SWOT

Options:
1 increase value of product or service to customer
2 differentiate the orga from competitors
3 orga can be expanded into the future

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47
Q

What is benchmarking?

What different types of benchmarking are available? List them briefly.

A

Benchmarking = comparison between companies

  • specific comparison as reference to optimise performance
  • help to understand itself
  • identify superior methods and practices
  • allows adoption of processes

Four types:

  • internal benchmarking
  • competitive benchmarking
  • functional benchmarking
  • generic (best practise) benchmarking
48
Q

What is an internal benchmarking?

What are pros/cons?

A
  • Performed within the orga
  • comparing similar units with one another

+ straightforward process
+ similar units and data
- managers might feel mgmt practices are compared
- lack of acceptance of employees

option of corporate benchmarking:

  • not limited to same business
  • extends to entire orga
  • quantitive comparison
  • more difficult since data and structures are not the same
49
Q

What is a competitive benchmarking?

What are pros/cons?

A
  • competitors in same industry and service similar markets
  • figures and indicators are compared

Pros/cons:
+ clear picture of position in market

  • difficult to do since info could be limited
  • needs much preparation work
  • requires open communication between competitors in order to be effective
  • give and take equal amount of info is difficult
  • no trend/innovation analysis
50
Q

What is a functional benchmarking?

What are pros/cons?

A
  • companies compare organisational functions (e.g. logistics with online shop)

+ allows for learning, innovation, new ideas and suggestions

  • time intensive to do
  • data not comparable
51
Q

What is a generic or best practise benchmarking?

A
  • analysis beyond functional areas
  • comparison with unrelated companies in unrelated industries

value chain analysis is a prerequisite:

  • which steps in the value chain add value to the customer
  • analysis process that connects effectiveness (what creates value from the perspective of the customer) and efficiency (where can processes that waste resource be eliminated)
52
Q

What are steps in standard benchmarking process?

A
  1. Goal-setting/preparation phase
    a. definition of the problem and internal analysis
    b. selecting the benchmarking partners and appointing the benchmarking team
  2. Comparison phase (quantitative benchmarking)
    a. definition of the figures and numbers and indicators to be investigated
    b. data generation
    c. data analysis
    d. ranking
    e. selection of ‘best performers’
  3. Analysis phase (qualitative benchmarking)
    a. analysis of the best processes and strategies
    b. deduction of the ‘best practices’
  4. Improvement and implementation phase
    a. definition of the improvement measures
    b. implementation of the improvement measures
    c. controlling progress and results
53
Q

What are important elements of benchmarking to consider?

A
  • features and processes important to the customer are accurately identified
  • selecting the most relevant competitors
  • benchmarking should not be done against poor performing competitors
54
Q

What is a SBU?

What are the characteristics?

A

Strategic Business Unit

  • provides products or services in a specific business or market
  • small companies = one BU; larger corporations = several BUs
  • make strategic decision on their own to meet corporate goals
  • evaluated on sales and profit and losses generated
55
Q

What strategies can an SBU employ?

A
  1. Generic Strategy
    - strategy regularly employed by the orga
  2. Interactive Strategy
    - direct response to market or competitive environment
    - influences the market itself
    - necessitates high flexibility and reaction to changes
56
Q

What are options for a generic strategy of SBUs?

A

Generic strategy

  • most often deployed by company
  • systemised to lead to competitive advantage in market
  • according to strategic goal and advantage
  1. cost leadership (being cheap)
    - provide lowest prices to customers
    - Options to achieve that: lower purchasing costs; economies of scale; experience
    - example: Lidl
  2. differentiation (being different)
    - focus on something unique and of value to the customer
    - customer must be willing to pay higher prices for that
    + advantage: unique position in market; higher margins due to higher prices
    - disadvantage: risk of copycats; high investment costs to build brand and image; risk of loss of position
    - Example: Southwest Airlines (focus on stellar service)
  3. focus (being better)
    - attention towards smaller market segment
    - offer product or service specifically designed to customer
    - concentrate fully on its customers and charge higher prices
    + Pro: higher prices; dominant segment
    - Con: growth limitation; market fluctuations is hitting sales directly
57
Q

What are options for an interactive strategy of SBUs?

A
  • Requirement to react and adapt quickly
  • highly competitive markets
  • competition on PRICE and QUALITY
  • adjustment in one of one company results in market changes for everyone

Hypercompetition:

  • fierce competition
  • competitive advantages are created and destroyed at fast pace
  • companies cannot defend competitive edge for long
  • competition on price and quality
  • to be successful: flexible, fast, adaptable and prepared to take risks
  • to fail: companies holding on to what worked in the past

Strategic alliances:

  • reduce number of competitors by forming partnerships
  • combine strengths and develop competitive advantage

Requirements:

  • Fundamental fit of the organisation (forming partnership = competitive advantage)
  • Strategic fit (strategic goals of both are similar)
  • Cultural fit (corporate cultures can be united without friction)
  • upstream alliances (towards suppliers) - e.g. common R&D projects
  • downstream alliances (towards customers/distributors) - e.g. payment
58
Q

What would be a good option for an SBU when competition is fierce?

A

Form Strategic alliances:

  • reduce number of competitors by forming partnerships
  • combine strengths and develop competitive advantage

Requirements:

  • Fundamental fit of the organisation (forming partnership = competitive advantage)
  • Strategic fit (strategic goals of both are similar)
  • Cultural fit (corporate cultures can be united without friction)
  • upstream alliances (towards suppliers) - e.g. common R&D projects
  • downstream alliances (towards customers/distributors) - e.g. paymentF
59
Q

What capabilities are required for an SBU in a hyper competitive environment?

A
  • Requirement to react and adapt quickly
  • competition on PRICE and QUALITY
  • adjustment in one of one company results in market changes for everyone
  • competitive advantages are created and destroyed at fast pace
  • to be successful: flexible, fast, adaptable and prepared to take risks
  • to fail: companies holding on to what worked in the past
60
Q

What are requirements to form an alliance?

A

Analysis of:

  • Fundamental fit of the organisation (forming partnership = competitive advantage)
  • Strategic fit (strategic goals of both are similar)
  • Cultural fit (corporate cultures can be united without friction)
61
Q

What is a PLC?

What is the goal and purpose?

A

Product Life Cycle

  • analysis of strategic options for SBUs
  • assumes similar phases of products are living beings
  • important concept to provide info about the competitive dynamics of a product
  • helps to make decisions on:
    1 prices
    2 product portfolio
    3 markets
    4 technology
    5 capacity
    6 marketing and promotional measures

Phases:

  1. development
  2. growth
  3. mature
  4. decline
    - each phase has opportunities and threats regarding the marketing strategy
62
Q

What are the characteristics of the development phase within the PLC?
What are marketing strategies?

A
  • product or service is launched and enters a market
  • dev phase can take a long time and shows low growth
  • high marketing costs to launch, establish and distribute that eat up profit
  • low competition

Marketing strategy:

  • well-defined marketing plan
  • marketing mix elements to achieve clear position in the market
63
Q

What are the characteristics of the growth phase within the PLC?
What are marketing strategies?

A
  • successful introduction into market
  • sales increase with demand
  • number of competitors increase as market grows
  • increased sales reduce production cost (economies of scale)

Marketing strategies:

  • marketing and promo expenditures to keep product interesting
  • push competition away
64
Q

What are the characteristics of the maturity phase within the PLC?
What are marketing strategies?

A
  • established product in market
  • growth curve flattens
  • max profitability reached - fight for market share

Marketing strategy:

  • extend the phase as long as possible by new marketing measures- RELAUNCH
  • relaunch helps stabilise the slow growth
  • relaunch according to changed preferences
  • keep product interesting by modifying it
  • modifying to attract and enter new markets (internationalisation)
  • develop and enter new markets to prolong this phase
65
Q

What are the characteristics of the decline phase within the PLC?
What are marketing strategies?

A
  • sales decline
  • product considered outdated
  • customer preferences changed

Marketing activities:
- monitor cost, sales and profit margins
either:
1 take product off the market
2 drive down costs of production to increase profit margin and keep it on market
3 introduce succeeding product to replace the old one once it is off the market

66
Q

What are areas to consider when formulation a corporate strategy?

A
  • planning strategy does not result in only one strategic decision
  • alternatives and scenarios are created
  • history of the orga, culture and management are elements to be considered

Areas that need to be included in the strategic planning process:

1 Customer-Oriented Strategy

  • marketing strategy must be focused on customer orientation
  • how does the orga deal with customers
  • which markets should the company target: all (coca-cola); segment (schweppes)

2 Competitive Strategy

  • competition plays major role
  • plan how to deal with them
  • options:
  • challenge competitors for market share by targeting their customers
  • cooperation strategy to avoid price competition
  • avoid competition by choosing alternative segment

3 Distribution Strategy

  • distributers and trading company play a role
  • market dominated by large orgas with high market power (purchasing prices or influence on suppliers)
  • influence on packaging, etc.

4 Stakeholder Strategy

  • enormous influence over customer and environment
  • managing stakeholders is critical to corporate strategy
  • Options:
    • open confrontation (risk of media exposure or negative reputation)
    • corporative strategy: involve critical ones and integrate them into decisions
    • chose environment with less stakeholders (b2b markets)
67
Q

What strategic diversification options are available to a corporation?

A
  • market penetration
  • developing new product or services
  • developing new markets
  • diversification
68
Q

What is diversification?

What options are there? Explain them in detail.

A

Expanding the product or services into new markets or sectors

1 market penetration

  • increase market share by relying on current resources and capabilities
  • increase power in market (over distributors or suppliers)
  • lowering costs and increasing profit margins (economies of scale)
  • risk that competitive pressure increases (battle over price)
  • legal restrictions (monopoly)

2 developing new product or services

  • expand by offering modified or new product or services to existing markets
  • increase sales by acquiring new customers
  • get existing customers to buy more

3 developing new markets

  • offer existing product in new markets
  • expand usage or current product
  • sell existing product with modified attributes (design, packaging) in new markets
  • new distribution network to reach target market
  • large commitment required

4 diversification

  • strategy of entering new market with new products
  • complete changes in company strategy are rarely successful
  • highly risky but offers many opportunities:
    • increase efficiency
    • utilize management competencies
    • increase market power
69
Q

What are main reasons for a diversification strategy?

A

Diversification:

  • strategy of entering new market with new products
  • complete changes in company strategy are rarely successful
  • highly risky but offers many opportunities:

Main reasons:
1 increase efficiency:
- expand existing resources and capabilities into new markets, products and services
- current capabilities to expand result = network effect
- under- or unused resources can be utilised
- networking effect leads to cost savings and other beneficial effects through synergy
- synergy = beneficial effect of bundling activities to increase efficiency

2 utilize management competencies

  • competencies of management team to develop new markets, products and services
  • experiment with building and maintaining brands

3 increase market power

  • offset financially weak divisions with profitable ones
  • less financial support required
  • competitive advantage through diversification
  • threaten financially weaker competitors (undercut)
  • government regulations possible
70
Q

What is outsourcing?

What are pros/cons?

A
  • strategy where company decides to have an outside organisation perform an activity previously performed by itself for a fee
\+ cost reduction
\+ well-educated staff
\+ wage level of some countries
\+ economic and political conditions
\+ infrastructure
\+ intellectual property protection
  • compromise quality
  • loss of market position
  • requirement to build relationships
  • price pressure should be avoided (lack of innovation)
71
Q

What is the product portfolio analysis?

What is the purpose of it?

A
  • Portfolio analysis = planning tool
  • enable and make recommendation
  • how to allocate resources (financial, Human Resources)
  • goal of deciding the optimal combination of products
  • reduce risk of diversification
  • assure long-term sources of revenue
  • info about environment and corporate resources to evaluate success of products
  • which product or business is the most promising and valuable to invest in
  • direction for investment and budget decisions (preliminary step for strategic plan)
72
Q

What are the input elements of the product portfolio analysis using the BCG matrix?

A
  • position of businesses in relation to their market share and growth potential

1 relative market share

  • internal indicator of competitiveness
  • compare companies’ own market share to main competitors
  • idea: larger companies benefit from economies of scale

2 growth potential = external indicator

  • attractiveness of the market
  • derived from PLC model of markets

3 revenue contribution
- size in euro or dollar as circle

73
Q

What are possible product strategies derived from the BCG matrix?

A

Stars

  • high growth + high market share
  • established products in an attractive market
  • require high investment costs for marketing and promo
  • provide high earnings
  • strengthen and secure their competitive advantage
  • provide financial leverage for future (stars will become cash cows)

Question marks

  • high growth + small market share
  • large financial commitment required
  • high risk of failure
  • take off question marks with little chance of success
  • financial means to invest come from cash cows

cash cows

  • low growth + high market share
  • financial investments quite low
  • revenue situation is good
  • cash surplus from these products or services
  • several cash cows to finance starts and question marks

poor dogs

  • low growth + low market share
  • take off the market
  • revenue is balanced or negative
74
Q

What are pros/cons of the BCG matrix?

A

+ picture of the product portfolio or entire business portfolio
+ facilitate planning decisions
+ great deal of info in simple matrix
+ good overview of current product portfolio to make investment decisions

  • only considers relative market share and market growth potential (market trends are missing) –> potential to falsely influence decision
  • composite effect are neglected (connections between products)
  • focus on existing products = no info about new products or market trends
  • standardised strategies = very simplistic recommendation for strategy
75
Q

What are the input elements of the product portfolio analysis using the GE-McKinsey matrix?

A

1 market attractiveness

  • external factor is not limited to growth potential of the market
  • includes many factors: market volume, profitability, intensity of competition

2 competitive strengths

  • relative competitive strength over the competition
  • factor: product quality, image, financial strength
76
Q

What are pros/cons of the GE-McKinsey matrix?

A

+ great deal of complexity into clear comprehensive overview
+ facilitate strategic decisions regarding investments

  • great deal of complexity = many products in middle segment = requiring additional info = does not allow for immediate strategy deacon
  • concentration of info leads to a loss of individual data that might be important
  • trends and future developments neglected = strong impact on attractiveness
  • failure to account for composite effects
77
Q

Why do companies go global?

A
  • trade agreements: increasing ta = easier business across regions
  • unification: free trade zones = lower costs, standardisation, property rules
  • economies of scale: one product in many markets (modifications)
  • infrastructure: container shipment; cost efficiency; speed
  • local differences: wages, production costs, tax advantages
  • world growing closer together: internet and communication
  • standardisation: uniform quality, centralisation, cost savings, efficiency
  • global marketing: global brands, standardisation, think global act local
78
Q

What are risk for international companies?

A
  • must think globally and act locally
  • establish global brands
  • global-local dilemma: what to standardise; what to localize

Dependencies:
- interlinked to markets and more affected by fluctuations in remote regions

Global competition

  • pressure from international companies
  • larger financial resources
  • strong diversification
79
Q

What are factors that contribute to a decision about which country to invest in?

A

0 General factors:

  • Marco + micro environment
  • research international environment to make informed strategic decisions

1 political situation

  • investment situation
  • political stability
  • change of political environment
  • outweigh risk vs chances of success

2 legal situation

  • differences in legal systems
  • well informed about legal framework
  • understand risk involved

3 economic situation

  • financial benefits of investment
  • GDP
  • per capita income
  • outlook for the future (restrictions, payment, practices, taxation, etc.)

4 social situation

  • number of inhabitants
  • cultural and social aspects
  • demographics
80
Q

What are factors that lead to a competitive advantage for International companies?

A

Internationally successful companies often benefit from local competitive advantages they occur as regional factors

1 local factors

  • some regions are well equipped to produce a specific product or service
  • ready access to raw materials or
  • desired resources such as knowhow or Human Resources
  • e.g. Banking in Switzerland (3 languages, bank secrecy law, etc.)

2 local demand

  • certain products or services often favour the establishment of specific business in the area
  • part of the demand is already satisfied locally (advantage)
  • location advantage crease competitive edge for local industry
  • e.g. Benz: local car industry in south Germany

3 supporting industry

  • development of industry in a specific region often leads to establishment of suppliers in same location
  • proximity of supporting business to the producer facilitates corporation and enhances innovation
  • local advantage is created = clustering effect
  • e.g. Montebelluna hiking boots (75% of worlds ski boots of small town)

4 local strategy, structure, and competition

  • characteristics of local businesses on quality and innovation + structure of the industry lead to further competitive advantage
  • in an environment of aggregate business, local competition forces companies to constantly improve and develop in order to survive –> innovation
  • e.g. German car industry
81
Q

How can a company invest internationally?

What are pros/cons?

A

1 Exports
* easy way to operate internationally
* product created in home country and shipped to foreign country
* best suited for products that can be transported
+ no investment in facility abroud required
+ financial investment is relatively small
+ benefits from economies of scale in home country due to expansion and increase in sale
- forgo local benefits of many foreign countries (tax benefits, cost savings due to lower employee wages)
- dependency on local distributors (do not maximize possible sales)
- trade barriers and custom fees
- additional costs (custom fees, transportation) results in a more expensive product

2 Joint Ventures/Alliances
+ spits investment risk between two orgas
+ benefit from complementing companies and resources
+ combination of technical knowhow (abroad company) and market knowhow (local company)
- difficult to find suitable partner with common goal
- engage in relationship management and invest in coordination
- transfer of know-how can be exploited by local partner –> risk of loss of competitive advantage

3 Licenses
* companies do not want to sell product or services directly in a foreign market
* licence agreement = defines payments in exchange for using brand
+ partners share cost and risk
- in foreign countries difficult to find good franchise partners that respect intellectual property rights, quality standards and maximize sales
- cannot exploit local benefits (low wages) as partners reap these benefits
- risk of losing competitive advantage if quality is not delivered by partner
- risk of copycats by franchise partner
- constant need for quality control to avoid quality issues

4 Foreign Direct Investment
* capital investments in a foreign country
* influence and control operation rests with investor
* transfer know-how, technology, revenue goals are key to investment decision
+ control over operation
+ coordination of full integration = long term commitment
+ enter market quickly
+ often subsidised by local government
- large financial and coordination commitment needed
- full integration of foreign company often fails (culture and corporate culture)
- risk and expensive option to expand

82
Q

What is an exporting strategy to go international?

What are pros/cons?

A

1 Exports
International strategy for a company to expand to new markets

  • easy way to operate internationally
  • product created in home country and shipped to foreign country
  • best suited for products that can be transported

+ no investment in facility abroud required
+ financial investment is relatively small
+ benefits from economies of scale in home country due to expansion and increase in sale

  • forgo local benefits of many foreign countries (tax benefits, cost savings due to lower employee wages)
  • dependency on local distributors (do not maximize possible sales)
  • trade barriers and custom fees
  • additional costs (custom fees, transportation) results in a more expensive product
83
Q

What is a joint venture?

What are pros/cons?

A

2 Joint Ventures/Alliances
International strategy for a company to expand to new markets

  • equity or license agreement between to companies to work together
  • upstream or downstream
  • combination or resources and competencies

+ spits investment risk between two orgas
+ benefit from complementing companies and resources
+ combination of technical knowhow (abroad company) and market knowhow (local company)

  • difficult to find suitable partner with common goal
  • engage in relationship management and invest in coordination
  • transfer of know-how can be exploited by local partner –> risk of loss of competitive advantage
84
Q

What is licensing?

What are pros/cons?

A

3 Licenses
International strategy for a company to expand to new markets

  • companies do not want to sell product or services directly in a foreign market
  • licence agreement = defines payments in exchange for using brand

+ partners share cost and risk
- in foreign countries difficult to find good franchise partners that respect intellectual property rights, quality standards and maximize sales

  • cannot exploit local benefits (low wages) as partners reap these benefits
  • risk of losing competitive advantage if quality is not delivered by partner
  • risk of copycats by franchise partner
  • constant need for quality control to avoid quality issues
85
Q

What is a direct foreign investment?

What are pros/cons?

A

4 Foreign Direct Investment
International strategy for a company to expand to new markets

  • capital investments in a foreign country
  • influence and control operation rests with investor
  • transfer know-how, technology, revenue goals are key to investment decision

+ control over operation
+ coordination of full integration = long term commitment
+ enter market quickly
+ often subsidised by local government

  • large financial and coordination commitment needed
  • full integration of foreign company often fails (culture and corporate culture)
  • risk and expensive option to expand
86
Q

What are reasons why M&A activities fail?

A 
1 Ignorance
2 no common vision
3 nasty surprises resulting from poor due diligence
4 team resourcing
5 poor governance
6 poor communication
7 poor program management
8 lack of courage
9 weak leadership
10 lost baby with bathwater - walk the talk
87
Q

What are options for strategic growth?

A

1 organic growth
2 merge or acquire another company
3 strategic alliance

88
Q

What is a Do-it-yourself strategy?

What are pros/cons?

A
  • organic growth of the company
  • investment into development and growth of own resources and competencies
  • it takes time to grow into new areas and experiences
    + slow growth = investment is spread over time
    + easier to finance by own resources
    + no need to find suitable partners
    + stay independent on strategic path
  • resources to grow into innovative new markets or international markets are not available
  • to succeed innovative and entrepreneurial corporate culture is required
  • heavy investments into new projects over time (long time before benefits can be seen)
89
Q

What is a M&A?

A
  • Merger = formation of larger organization by two companies operating as equal partners together
  • Acquisition = take-over of other company (either supported = friendly takeover or not supported = hostile takeover)
90
Q

What are motives for M&A?

A

1 Strategic Motives

  • expansion of range of products
  • new markets or international expansion
  • benefit from economies of scale
  • increased size and influence on market
  • cost benefits from centralisation
  • power over competitors, suppliers or customers due to size
  • expansion of capabilities

2 Financial Motives

  • focus on financial goals
  • increase financial efficiency by offsetting profits of entity with losses from another
  • corporation benefits from the growth in size by acquiring the indebted entity
  • tax advantages if a company operates in a country with lower taxes
  • hostile takeover = selling parts of the company to profit (worth more than total)

3 Personal Motives

  • personal ambition of CEO
  • short-term evaluation of management = need to grow share price
  • to grow fast, companies acquire or merge
  • successful takeover boosts reputation of managers
91
Q

What are strategic motives for M&A?

A

1 Strategic Motives

  • expansion of range of products
  • new markets or international expansion
  • benefit from economies of scale
  • increased size and influence on market
  • cost benefits from centralisation
  • power over competitors, suppliers or customers due to size
  • expansion of capabilities
92
Q

What are financial motives for M&A?

A

2 Financial Motives

  • focus on financial goals
  • increase financial efficiency by offsetting profits of entity with losses from another
  • corporation benefits from the growth in size by acquiring the indebted entity
  • tax advantages if a company operates in a country with lower taxes
  • hostile takeover = selling parts of the company to profit (worth more than total)
93
Q

What are management motives for M&A?

A

3 Personal Motives

  • personal ambition of CEO
  • short-term evaluation of management = need to grow share price
  • to grow fast, companies acquire or merge
  • successful takeover boosts reputation of managers
94
Q

What criteria play a role in the selection of a company for M&A?

A

Similar corporate cultures are prerequisite

1 Fundamental fit

  • willingness and readiness to merge
  • basic indicators are checked for compatibility (size, history, capabilities)
  • if company is opposed, acquisition and integration will most likely fail

2 Strategic fit

  • strategic fit of strategic goals of orga to be acquired and management know-how
  • work in same direction
  • knowledge of core competencies, strengths, weaknesses
  • knowledge of position in market, competitive environment, related strategy
  • are strategies of the two companies compatible?
  • do the two companies strengthen market position?

3 Cultural fit

  • focus on corporate culture and management
  • analysis of: communication style, management style, openness, ability to delegate work, ability to work in teams, mission vision and values
  • very difficult to integrate two different cultures
  • integration requires always very detailed plans
95
Q

What are the two main aspects to analyse for integration strategies?
What is the implication?

A
  • Strength of their strategic interdependence
  • need for organisational autonomy

Depending on how distinct these two aspects are, either a company will adapt fairly quickly to new strategy, culture and systems or not at all

96
Q

Which integration strategies can be selected?

A

1 Maintenance

  • little strategic interdependence
  • high need for organisational autonomy
  • orgas operate in separate businesses
  • no dependency between products or services of the companies
  • better to preserve strategies, cultures, systems seperately
  • Integration occurs at minimum level; companies operate as separate entities

2 Symbiosis

  • high strategic interdependence
  • need for organisational autonomy
  • two companies are mutually dependant
  • certain processes and systems have to be integrated to increase efficiency
  • companies can learn and benefit from strengths and build on available capabilities
  • long and difficult integration process

3 Adsorption

  • very high strategic interdependence
  • little need for organisational autonomy
  • one company completely absorbs other company
  • integration process happens fast
  • company that is absorbed needs to be prepared to adopt strategy, culture, processes and systems of new owner

4 Holding

  • little strategic interdependence
  • high need for organisational autonomy
  • Integration does not result in any benefits
  • holding of entity until it can be sold off
  • no changes whatsoever
97
Q

What is a strategic alliance strategy?

What types can be differentiated?

A
  • formed when two companies share resources and capabilities and engage in activities to reach a common goal
  • R&D alliance: two companies benefit rom sharing costs

Types vary regarding the ownership structure:

1 Equity Alliance
- creation of new entity which belongs to both alliance partners

2 Non-equity Alliance

  • partnership is not based on property claims
  • contractual agreements
98
Q

What are motives for alliance strategies?

A
  • similar motives to M&A: strategic, financial, personal
  • benefits from economies of scale
  • benefits from centralisation, marketing, consultation, shared resources, etc.
  • cost reduction

1 Access alliance:

  • offer companies distribution channels in foreign contries
  • sell products or services through distribution partners
  • no investment in direct sales force in countries required
  • franchise as example: cost advantage by alliance; reach in many countries possible

2 Complementary alliance:

  • individual companies that provide components to each others partnership
  • complement each other and form final product
  • complex markets = individual companies are unsuccessful to provide all components or services to be successful
  • only beneficial if benefits of alliance outweighs the cost of coordination
99
Q

What are relevant factors for a strategic growth decision?

A

Decision depends on other factors:

  • ability to find suitable partners
  • limited options for charity and non-profit orgas (since M&A is not an option)

1 Urgency

  • how fast does the company want to expand
  • high degree of urgency = unsuited for organic growth
  • Alliance or M&A strategy are faster options

2 Uncertainty

  • specific regional markets, technologies, market fluctuations influence strategy
  • in uncertain markets = alliance as best option due to risk sharing
  • alliance proves to be successful = option to acquire alliance partner later on
  • in high uncertainty environment companies should not directly invest –> cost and risk are fully bourne

3 Types of Capabilities

  • hard capabilities = machines, factories, equipment
  • soft capabilities = skills, qualifications, know-how, experience
  • depending on the type
  • hard = M&A strategy
  • soft = organic growth strategy to hire employees with experience
  • for soft capabilities M&A and alliance strategies are unsuitable because of integration efforts and potential conflicts of corporate cultures

4 Modularity of Capabilities

  • capabilities are separable into smaller parts = alliance as best option
  • joint venture to combine required capabilities and resources to create more value
  • acquisitions = problematic because whole company needs to be bought –> integration problems
  • capabilities are modular = organic growth strategy also suitable (could build a separate department - only part of the orga is affected and involved)
100
Q

How does urgency influence the growth of a company?

A

1 Urgency

  • how fast does the company want to expand
  • high degree of urgency = unsuited for organic growth strategies
  • Alliance or M&A strategy are faster options
101
Q

How does uncertainty influence the growth of a company?

A

2 Uncertainty

  • specific regional markets, technologies, market fluctuations influence strategy
  • in uncertain markets = alliance as best option due to risk sharing
  • alliance proves to be successful = option to acquire alliance partner later on
  • in high uncertainty environment companies should not directly invest –> cost and risk are fully bourne
102
Q

What are soft and hard capabilities?

How do they influence strategic growth?

A

3 Types of Capabilities

  • hard capabilities = machines, factories, equipment
  • soft capabilities = skills, qualifications, know-how, experience
  • depending on the type
  • hard = M&A strategy
  • soft = organic growth strategy to hire employees with experience
  • for soft capabilities M&A and alliance strategies are unsuitable because of integration efforts and potential conflicts of corporate cultures
103
Q

How can capabilities influence the strategic growth?

A

3 Types of Capabilities

  • hard capabilities = machines, factories, equipment
  • soft capabilities = skills, qualifications, know-how, experience
  • depending on the type
  • hard = M&A strategy
  • soft = organic growth strategy to hire employees with experience
  • for soft capabilities M&A and alliance strategies are unsuitable because of integration efforts and potential conflicts of corporate cultures

4 Modularity of Capabilities

  • capabilities are separable into smaller parts = alliance as best option
  • joint venture to combine required capabilities and resources to create more value
  • acquisitions = problematic because whole company needs to be bought –> integration problems
  • capabilities are modular = organic growth strategy also suitable (could build a separate department - only part of the orga is affected and involved)
104
Q

How can strategies be evaluated?

A

Evaluation criteria:

1 Suitability:

  • evaluates whether it is a good fit for strengths, weaknesses of the company, and opportunities and threats of the market environment
  • PESTEL, Porters 5, SWOT, Analysis of strategic possibilities, PLC, benchmarking, definition of competitive advantages) help carrying out the assessment
  • ranking of possible strategies to see which ones are best or worst suited
  • the best strategies are flexible and adaptable

2 Acceptability

  • evaluation looks at the expected performance results of the strategy
  • risk, return and reactions of shareholders
  • RISK: indicates how accurately the strategy forecasts the expected results (risk level and influence on liquidity)
  • RETURN: financial impact on shareholders, measured with ROCE to show how effectively and profitably the orga uses the invested capital
  • SHAREHOLDERS: influence on share price and dividends paid to shareholders; strong interest in seeing an increase in value
  • management needs to justify actions based on these acceptability criteria

3 Feasibility

  • capabilities and resources of an orga to pursue a strategy
  • proceeded by detailed SWOT + PLC analysis
  • feasibility analysis focused on financial means, human resources and capacity to realise strategic decisions
  • PLC looks at the product portfolio to find out how many products generate profits to allow future investments
  • consideration of right people available or requirement to recruit new staff, train and develop and incentives and promotions
105
Q

How can the suitability influence strategic decisions?

A

1 Suitability:

  • evaluates whether it is a good fit for strengths, weaknesses of the company, and opportunities and threats of the market environment
  • PESTEL, Porters 5, SWOT, Analysis of strategic possibilities, PLC, benchmarking, definition of competitive advantages) help carrying out the assessment
  • ranking of possible strategies to see which ones are best or worst suited
  • the best strategies are flexible and adaptable
106
Q

How can the acceptability influence strategic decisions?

A

2 Acceptability

  • evaluation looks at the expected performance results of the strategy
  • risk, return and reactions of shareholders
  • RISK: indicates how accurately the strategy forecasts the expected results (risk level and influence on liquidity)
  • RETURN: financial impact on shareholders, measured with ROCE to show how effectively and profitably the orga uses the invested capital
  • SHAREHOLDERS: influence on share price and dividends paid to shareholders; strong interest in seeing an increase in value
  • management needs to justify actions based on these acceptability criteria
107
Q

How can the feasibility influence strategic decisions?

A

3 Feasibility

  • capabilities and resources of an orga to pursue a strategy
  • proceeded by detailed SWOT + PLC analysis
  • feasibility analysis focused on financial means, human resources and capacity to realise strategic decisions
  • PLC looks at the product portfolio to find out how many products generate profits to allow future investments
  • consideration of right people available or requirement to recruit new staff, train and develop and incentives and promotions
108
Q

Why is it difficult to evaluate strategies?

A
  • conflicts between managers and shareholders due to different goals
  • management is responsible for decision making to the best of their knowledge and best interest of the orga
  • mgmt needs to communicate decisions to shareholders and stakeholders
109
Q

What are elements to effectively implement a strategy?

A
  • to realise goals and strategies, the structure, processes have to be considered and redesigned
  • formation of internal structures and processes as part of the implementation process

1 Organisation

  • structure and processes need to be aligned with strategic requirements
  • central task: appointing team in charge, define status and authority
  • team as central role: planning and controlling tasks
  • cross-functional teams to penetrate all departmens

2 Human Resource Management

  • program for training, selection, development of new or current employees and reward systems
  • effectiveness of implementation depends on employees and their willingness to put the plan into action
  • employees need to be involved, evaluated and rewarded in terms of strategic implementation process

3 Controlling Systems

  • controlling methods for management to follow implementation process through financial indications and action plans
  • key part of the implementation process
  • needs to be defined before the implementation process starts

4 Corporate Culture

  • infrastructure of the orga designed in a way that employees think, feel, and act accordingly to the goals set by mgmt.
  • clear communication of mgmt what the goals are and what values the orga stands for
  • supported corporate culture ready to put strategy into practice
110
Q

What is the role of corporate culture when implementing strategies?

A

4 Corporate Culture

  • infrastructure of the orga designed in a way that employees think, feel, and act accordingly to the goals set by mgmt.
  • clear communication of mgmt what the goals are and what values the orga stands for
  • supported corporate culture ready to put strategy into practice
111
Q

What is the role of a controlling system when implementing strategies?

A

3 Controlling Systems

  • controlling methods for management to follow implementation process through financial indications and action plans
  • key part of the implementation process
  • needs to be defined before the implementation process starts
112
Q

Why is human resource management important for the implementation of a strategy?

A

2 Human Resource Management

  • program for training, selection, development of new or current employees and reward systems
  • effectiveness of implementation depends on employees and their willingness to put the plan into action
  • employees need to be involved, evaluated and rewarded in terms of strategic implementation process
113
Q

Why is organisation important for the strategic implementation process?

A
  • to realise goals and strategies, the structure, processes have to be considered and redesigned
  • formation of internal structures and processes as part of the implementation process

1 Organisation

  • structure and processes need to be aligned with strategic requirements
  • central task: appointing team in charge, define status and authority
  • team as central role: planning and controlling tasks
  • cross-functional teams to penetrate all departmens
114
Q

What are the three statements belonging to the porters 5 forces model?

A

The attractiveness of the market is primarily determined by its structure.

Market structure impacts the strategic behavior of a company in this market.

The competitive strategy of an organization is decisive for its success.

115
Q

Why is global competition a risk for international companies?

A

Companies can use revenue from one venture in order to support weaker ventures.

Strategic Management (1 decks)

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