Strategy Flashcards
who wrote about the five forces that shape strategy
Michael Porter
what are porters 5 forces
industry (direct competition) threat of new entrant bargaining power of customers threat of substitutes bargaining power of suppliers
what advantages may a pre existing business have over new entrants
experience
cost advantages
specialist knowledge
what is a corporates best positioning according to porter
to find the best position to defend itself against all the forces
example of barriers to new entrants
economies of scale product differentiation capital requirements cost disadvantages access to distrubution channels government policy
how is product differentiation an issue for new entrants
consumer loyalty may already exist to another brand and consumers trust this brand abroad etc
what are the cost disadvanatges which can be a problem for new entrants
technology age and experience access to raw materials location government subsidies
What sort of government policies could be barriers to new entrants
license requirements, pollution standards, safety regulations
how can suppliers use their power against the firm
raise prices
reduce quality
forward movement
when is a supplier powerful
when their product is differentiated
when they are bigger than the industry they sell to
when the industry they sell to is just one of their smaller customers
how can buyers use their power against the firm
demand better quality
demand lower prices
backward movement
when is a buyer powerful
if they purchase in large volumes
if the products being sold are undifferentiated and can be easily substiuted
if the product they are buying is a small component of their product so they can shop around
quality is unimportant
how can companies have power over their substitute products
brand differently
rivalry among existing competitors includes
price competition product introduction foreign competitorss lacking differentiation high exit barriers
when is rivalry highest
many competitors similar in size and power slow industry growth not much differentiation too expensive to leave / change industry eg airline industry
how to position company with regards to strengths and weaknesses
match strengths were company can confront competition and weaknesses where company should avoid competition
how should company plan its strategy for potential shifts
is there trends or cycles? anticipate these and respond to them
who wrote
“Are you sure you have a strategy”
Hambrick and Frederickson
according to hambrick and frederickson, what is the issue with calling everything a strategy
there is confusion
credibility undermined
reveals there is no integration across the companies
the word strategy is derived from the greek work
strategos meaning the art of the general
what shape did hambrick and frederickson use to describe strategy
diamond
define strategy
the central, integrated, externally orientated concept of how we will achieve our objectives
