Strategy Flashcards
What is Vision?
The desired long-term future state.
What is Strategy?
A long-term direction.
Defines the scope of organizational activities.
Defines how to address changes.
What is Mission?
Is the overriding purpose aligned to the values and expectations of stakeholders.
What is a business model?
Defines how the organization creates added value.
Specifies the flow of products, services and/or information between parties and its cost structure.
Competitive Strategy according to Michael Porter:
A different set of activities that deliver a unique mix of value in order to achieve a superior industry position by differentiating the products/services from the customers perspective.
Describe the 3 levels of Strategy:
Corporate level strategy (defines overall purpose, scope, main business units).
Business level strategy (competitive strategy, defines the position in the market, resources)
Operational level strategy (delivers results to upper-level strategies in terms of resources, processes and people).
Competitive Strategy (definition) according to Johnson, Scholes, Whittington:
The mixed view. It is a direction and scope over the long term.
Aims to achieve advantage in a changing environment by configuring resources and competences to fulfill stakeholders expectations.
Competitive Strategy according to Hamel, Prahalad:
A unique selling proposition coming from unique resources and capabilities.
Generally speaking: doing what you are best at.
Describe the Market Based View (MBV):
Strategy has to fit with the outside.
Considers mature, static markets.
Product-centric cost, cash-flow balance, differentiation.
Strategic Advantage as business specific and observable.
The company is made from business units.
Short and mid-term.
Defensive in nature, adaptation of strategy to competitive forces.
Describe the Resource Based View (RBV):
Company made from core competencies: capabilities and resources.
Suits emerging, dynamic markets.
Growth through core competences.
Strategic advantage is long-lasting and hard to attack (tacit knowledge).
Long-term is emphasized.
More offensive, enhancement of old business and entry into new business.
Describe Porter’s 5 forces, what you achieve with them and why it corresponds to the MBV:
New entrants (Threat of) Suppliers (Power of) Rivalry (Industry competitors) Buyers (Power of) Substitute products
Achievement: understand an evaluate an industry -> Get Superior market position
MBV: Because it makes the organization react, match or adapt to the market
Describe the Hamel/Prahalad model and mention why it belongs to the RBV:
A unique selling proposition is made by Core Competencies.
Core Competencies are composed from:
Resources (tangible or intangible)
Capabilities (structures, processes and systems)
RBV: belongs to it because it relies on the exploitation of companies competences and its more offensive in its approach (active).
Describe Porter’s strategic reactions to the 5 market forces:
- Positioning
Defense against the forces based on capabilities.
The industry is given -> match it with strengths and weaknesses - Influence the balance of forces:
improve with innovation and vertical integration - Anticipate shifts:
Exploit change
Have a strategy for the new balance before others see it.
Describe Porter’s Value Chain and its use:
Used to analyze companies activities.
Support activities: Infrastructure, HR, Technology, Procurement.
Primary activities: Inbound logistics, Operations, Outbound logistics, Marketing and sales, Sales service
Describe Porter’s Generic Strategies:
They are based on 2 axis:
- Competitive Advantage Source (Low cost or Differentiation)
- Market Scope (Broad Target or Narrow Target)
