Strategy and Growth Strategies Flashcards
What is strategy
Coming up with a way to get a competitive advantage
What does VUCA stand for and what do is denote
Volatility
Uncertainty
Complexity
Ambiguity
There is no concrete demand curve for a new product for these reasons
What are mintzbergs 5 psa and what do they mean
How firms can deal with VUCA for new product: Plan Ploy Pattern of bahviour Position with respect to others Perspective
What are all the business environments or influences a bsuiness must consider - PESTLE
Political Economic Social/cultural Technological Environmental Legal must look at the world through these lenses
What are the three steps of stetegic management
Strategic analysis
Strategic choice
Strategic implementation and execution
What are the five competitive forces that shape strategy - Porter
Rivalry among existing competitors - based on where you are in the market Potential entrants Buyers Substitutes Suppliers
Define Cost leadership strategy
Driving out inefficiency in every stage of the value chain. Ex: Ryanair
Define differentiation strategy
Promote the uniqueness of your own product Ex: Nike promotes itself as a quality choice
Define Focus strategy
Identification of a market niche and capturing the whole market Ex: Build a bear
Define business model
The business model is the story that explains how an enterprise works
What are four main things to consider in a business model
Customer value proposition
Key processes
Key resources
Profit formula
Explain the minimum effect scale
Minimum effect scale - the size of the individual factory or of the whole firm, beyond which no significant additional economies of scale can be gained
What are four constraints on growth?
Financial conditions - Internal funds, borrowing, new shares
Shareholder confidence - Balance growth vs dividends, takeover constraints, valuation ratio
Demand conditions - Profitability and growth depend on market demand
Managerial conditions - Ability of managers to exploit growth opportunities
What are three forms of internal expansion
Vertical integration
Horizontal expansion
Conglomerate diversification
What are two forms of external expansion
Merges and acquisitions
Strategic alliances
Explain vertical product differentiation
Where a firm’s product differs from its rival’s product with respect to quality
Explain horizontal product differentiation
Where a firm’s product differs from its rivals’ products, although the product is seen to be of a similar quality
What are the features of a product - very simply put
Technical standards, quality standards, design characteristics, service characteristics
Name the four marketing strategies in the ansoff matris
Market penetration
Market development
Product development
Diversification
Explain vertical intergration
A business growth strategy that involves expanding within an existing market, but at a different stage of production. This can be “forward” (ex:retail) or “backwards” (ex: raw materials)
What are the advantages and issues of vertical integration
Advantages: Greater efficiency in the chain of production Reduce uncertainty Innovation Monopoly Power Barriers to entry
Issues:
Inflexibility
Opportunity cost
Define diversification and give its advantages
Diversification - a business growth strategy in which a business expands into new markets outside of its current interests
Advantages of diversification - Growth, Stability and Maintaining profitability
Define joint venture
Where two or more firms set up and jointly own a new independent firm
Define franchise
A formal agreement whereby a company uses another company to produce or sell some or all of its products
Define licensing
Where the owner of a patented product allows another firm to produce it for a fee
Define outsourcing
A firm employs another firm to produce part of its output or some of its inputs
Define consortium
Two or more firms work together on a specific project
What are the advantages of a strategic alliance
New markets, risk sharing, capital pooling
What are the benefits of a merger
Growth, economies of scale, monopoly power, reduce uncertainty, increase market valuation and opportunity
Define merger
The outcome of a mutual agreement made by two firms to combine their business activities
Define takeover
Where one business acquires another. A takeover may not necessarily involve mutual agreement
Define corporate inversion
the process by which companies move overseas to reduce the tax burden on income - not socially admirable
