Strategic Management Flashcards
What does are the Key principles of strategic planning for Porter?
GOAL
o Strategy is the creation of a unique and valuable position, involving a different set of activities
FOCUS
o Strategy requires you to make trade offs in competing and chose what NOT to do
FIT
o Strategy involves creating ‘fit’ among compagny’s activities
What are Mintzbergs 5Ps?
A strategy activates, motivates, aligns, and enables efficient action
Plan
Goal oriented A plan has to be made before possible actions are taken and followed consciously and effectively
Pattern
Some strategies emerge from numerous activities from which patterns develop over time that are subsequently recognized as strategies - With strategy as a Pattern, we learn to appreciate that what was successful in the past can lead to success in the future. As for Position, strategy is about how the organization relates to its competitive environment, and what it can do to make its products unique in the marketplace.
- To use this element of the 5 Ps, take note of the patterns you see in your team and organization. Then, ask yourself whether these patterns have become an implicit part of your strategy; and think about the impact these patterns should have on how you approach strategic planning.
Strategy is a pattern - specifically, a pattern in a stream of actions. Strategy is consistency in behaviour, whether or not intended. The definitions of strategy as plan and pattern can be quite independent of one another: plans may go unrealised, while patterns may appear without preconception.
Position
The organisations position in the market, the interaction between the internal and external context
Perspective
Strategy is about more than the chosen position/ larger perspective. A strategy is meaningful (vision), an overarching “perspective”. It gives the acting persons information on how the company and its environment are to be interpreted
Ploy/ move
It is a strategic choice to use ploy. One that competitors don’t expect. Organizations can surprise their environment by implementing a plan that nobody saw coming.
Explain Porters 5 Forces Model
The industry structure analysis serves to determine the attractiveness of an industry
Goal: To derive whether an industry is attractive for the company, i.e. whether it enables long- term profitable development.
The attractiveness of a sector for a company operating in it is determined by the market structure, as this influences the behaviour of market participants.
5 Forces : Negotiating/Bargaining power of suppliers Customer/Buyer bargaining power Threat from new competitors/entrants Threat from substitute products \+ Intensity of competition in the sector
What are the aspects for each Force in Porter’s model of 5 Forces?
Competitive Rivalry
o number and strength of your competitors. How many rivals do you have? Who are they, and how does the quality of their products and services compare with yours?
o Where rivalry is intense, companies can attract customers with aggressive price cuts and high- impact marketing campaigns.
o On the other hand, where competitive rivalry is minimal, and no one else is doing what you do, then you’ll likely have tremendous strength and healthy profits.
Supplier Power
o This is determined by how easy it is for your suppliers to increase their prices. How many potential suppliers do you have? How unique is the product or service that they provide, and how expensive would it be to switch from one supplier to another?
o The more you have to choose from, the easier it will be to switch to a cheaper alternative. But the fewer suppliers there are, and the more you need their help, the stronger their position and their ability to charge you more. That can impact your profit.
Buyer Power.
o Here, you ask yourself how easy it is for buyers to drive your prices down. How many buyers are there, and how big are their orders? How much would it cost them to switch from your products and services to those of a rival? Are your buyers strong enough to dictate terms to you?
o When you deal with only a few savvy customers, they have more power, but your power increases if you have many customers.
Threat of Substitution.
o This refers to the likelihood of your customers finding a different way of doing what you do. For example, if you supply a unique software product that automates an important process, people may substitute it by doing the process manually or by outsourcing it. A substitution that is easy and cheap to make can weaken your position and threaten your profitability.
Threat of New Entry
o Your position can be affected by people’s ability to enter your market. So, think about how easily this could be done. How easy is it to get a foothold in your industry or market? How much would it cost, and how tightly is your sector regulated?
What does VUCA stands for ?
It stands for : Volatility Uncertainty Complexity Ambiguity = world is not stable, nobody knows what happens tomorrow, no prediction, acceptance
Constitutive characteristics of a strategy
A strategy is a planned bundle of measures for competitive positioning and for shaping the necessary resources.
Competitive advantage
Strategy is a general plan to achieve one or more long-term or overall goals under conditions of uncertainty
Flexibility as the market and costumer evolves with time
What about the alignment of the strategy, how is it achieved?
The Mission, Value Network, Strategy, and Vision define the strategic direction for a business. They provide the what, who, how, and why necessary to powerfully align action in complex organizations.
A business strategy is a set of guiding principles that, when communicated and adopted in the organization, generates a desired pattern of decision making.
A strategy is therefore about how people throughout the organization should make decisions and allocate resources in order accomplish key objectives
What is Porters Value Chain?
A value chain is a set of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market
Primary activities and Support Activities = Margin
Primary activities -> Inbound logistics/ Operations/Outbound logistics/Marketing and sales/Service
Support activities -> Firm infrastructure/ Human resource Management/ Technology development/procurement
What does the McKinsey 7S Framework show and contain?
McKinsey 7s model is a tool that analyses firm’s organizational design by looking at 7 key internal elements:
(strategy, structure, systems: hard factors ) (shared values, style, staff and skills: soft factors)
The goal is to identify if they are effectively aligned and allow organization to achieve its objectives
What are the different Strategic Management Models?
Porters Value Chain/ strategy SWOT Analysis McKinsey 7S Mintzberg’s 5P Porter’s Five Forces
What is the WHY of a company?
It’s the PURPOSE of the company
Expresses why the business exists in the first place
It’s the reasons people wake up in the morning and love to work for a company
People don’t buy what you do but why you do it !
Identifying and committing to a “why” makes evident what work a company must prioritize as most important. It gives them the perspective to see what they really want to accomplish. It reveals a direction, a North Star to move towards. But not only that, it inspires people.
What is a vision?
The Vision is a realisable vivid image of your business in the future based on goals and aspirations ( dream like)
- directional, inspiring,plausible and concise
- directed inwards -> motivate employees
- answers the question where do you want to be ?
- communicates purpose and values of a company
- aligns with organisational values and culture
What is a mission?
A mission statement talks about HOW and WHAT you do and do different than competitors
: the present leading into the future
- defines purpose&fulfill customers needs/team values
-official statement to clients&stakeholders -> directed outwards
-list broad goal, key measure for clients& stakeholders
Explain the difference between a vision and mission of a company
What is the Value Proposition of a company?
-Tells prospects why they should do business with you
-Emphasises benefits of product/service
-explains how it solves customers problems
- why buy from you and not competitors
( connected to the WHY)
