Strategic Position Flashcards
What is strategy?
The long term direction of an organization
The determination of the long run goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out this goals.
A pattern in a stream of directions
What are the 3 Horizons of Strategy?
Horizon 1: Extend and defend core business
Horizon 2: Build emerging businesses
Horizon 3: Create viable options
What is strategic management?
An integrative management field that combines analysis, formulation, and
implementation in the quest for competitive advantage. It involves managing people, relationships and resources.
What are the 3 levels of strategy?
Corporate: Scope of an organization
Business: how individual businesses should compete
Operational: how components of an organization effectively delivers their corporate and business level strategies
What are the components of Organizational purpose?
Mission
Vision
Values
Objectives
What is a mission?
Aims to provide employees and stakeholders with clarity about what the organization is fundamentally there to do.
What is the vision?
It is concerned with the future the organization seeks to create.
Typically expresses an aspiration
What are corporate values?
Communicate the underlying/ enduring core principles which guide an organization’s strategy
Defines the way in which the organization should operate
What are objectives?
Statements of “specific outcomes” that are to be achieved.
eg: financial
quantifiable/ market based
how to gain competitive advantage
triple bottom line
What is a strategic statement?
Expresses a clear/motivating purpose
Should cover:
- Goals of an organization
- Scope of organization activities
- advantages and capabilities
Who are stakeholders?
Individuals or groups that depend on the organization to fulfill their own goals and whom in turn the organization depends
Who are the stakeholder groups?
- Suppliers
- Government
- Political groups
- Owners/Shareholders
- Financial community
- Activist groups
- Customers
- Managers
- Unions
- Employees
- Trade associations
- Competitors
What are some conflicts that may arise between stakeholders?
- Pursuit of short term profits at the cost of investment in long term competitive advantage
- Family business seeks growth
- Low cost strategies
- Excelling in specialized services
- Large MNCs
What is stakeholder mapping?
It identifies stakeholder power and attention in order to understand political priorities
Benefits:
Can understand:
- who are key blockers/facilitators
- feasibility of repositioning certain stakeholders
- maintaining level of interest or power of some key stakeholders
- necessity to discourage some stakeholders from repositioning themselves
What are the benefits of stakeholder mapping
Stakeholder mapping can also help in understanding the following issues:
▪ Who the key blockers and facilitators of a strategy are likely to be and the appropriate response.
▪ Whether repositioning of certain stakeholders is desirable and/or feasible.
▪ Maintaining the level of interest or power of some key stakeholders.
▪ It may also be necessary to discourage some stakeholders from repositioning themselves (Keep
informed
What is Corporate governance?
Corporate governance is concerned with the structures and systems of control by which managers are held accountable to those who have a legitimate stake in an organisation.
What are the 2 different models of governance?
Shareholder model of governance
Stakeholder model of governance
Explain the features of Shareholder model of governance?
- The shareholder model is dominant in publicly quoted companies.
- Shareholders have priority in regard to the wealth generated by the company, as opposed to employees
- Shareholders can typically vote for the board of directors according to the number of their shares, while also exerting indirect influence through the trading of shares.
- Dissatisfied shareholders may sell their shares, leading to a drop in the company’s share price and an increased threat to directors of takeover
by other firms
Explain the features of Stakeholder model of governance?
- This is founded on the principle that wealth is created by a variety of stakeholders, all of whom
deserve a portion. - In the stakeholder governance model,
management need to attend to multiple
stakeholders. - In some governance systems, some of these stakeholders, for example banks and employees, may be formally represented on boards.
- Moreover, shareholders in the stakeholder model often take larger stakes in their companies than in the pure shareholder model, and hold these stakes longer term
What are the pros and cons of stakeholder model of governance?
Pros:
Long term horizons
Less reckless risk taking
Better management
Weaker decision making
Uneconomic investments
Reduced innovation and entrepreneurship
Cons:
Weaker decision making
Uneconomic investments
Reduced innovation and
entrepreneurship
What are the pros and cons of shareholder model of governance?
Pros:
Higher rates of return
Reduced risk
Increased innovation and entrepreneurship
Better decision making
Cons:
Diluted monitoring
Vulnerable minority shareholders
Short termism
What is Corporate Social
Responsibility?
The commitment by organizations to
behave ethically and contribute to economic development while improving
the quality of life of the workforce and
their families as well as the local community and society at large.
What are the components of the PESTEL framework?
Political
Economic
Social
Technological
Ecological
Legal
What are political factors?
The political environment describes the
processes and actions of government bodies that can influence the decisions and behavior of firms
What are economic factors?
Growth rates
Interest rates
Levels of employment
Price stability (inflation and deflation)
Currency exchange rates
What are social factors?
Cultures
Norms
Values
Demographics
What are economic factors?
