Strategy, MC and MA

Question 1

What is management control?

Answer 1

focuses on execution

Are employees likely to behave appropriately?

Question 2

What is strategic control?

Answer 2

is our strategy still valid and if not how should we change it?
Example Kodak: did the continually question the relevance of their strategy?

Question 3

Teese’s Shape, Sense and Seize framework

Answer 3

Dynamic Capabilities

Question 4

Two views to strategy

Answer 4

Rational-Analytical View

Emergent View

Question 5

Rational-Analytical view to strategy

Answer 5

Prescriptive
Intended
Developed using formats strategic planning systems

Question 6

Emergent View to Strategy

Answer 6

Over time

New opportunities leading to adaption

Question 7

Business Level Strategy

Answer 7

Porters Generic Strategies
Bowmans Strategy Clock
Using these to formulate appropriate management controls

Question 8

Porters Generic Strategies (PGS)

Answer 8

Cost Leadership vs Differentiation

Question 9

Differentiation (PGS)

Answer 9

Focused Strategies
Boundary very important here
Interactive to ensure they are consistently different

Question 10

Cost Leadership (PGS)

Answer 10

Focused on reducing costs

Diagnostic important here

Question 11

Bowmans Strategy Clock

Answer 11

1995
Goes against Porter - says you can be profitable in the middle region "hybrid"
Price low to high (x axis)
Perceived Benefits low to high (y axis)
Hybrid (3)
Differentiation (4)
no frills (1)
(6 7 8) danger zone

Question 12

Corporate Level strategy

Answer 12

Value adding or destroying?
Extent of diversification
Typology of the firm

Question 13

Economics of Diversification

Answer 13

Scope of economies

Synergistic Benefits

Question 14

Scope of economies

Answer 14

eliminate costs by operating two companies under one parent

E.g. Virgin and Sainsburys

Question 15

Synergistic Benefits

Answer 15

Market power - strengthen brand and competitive position
Corporate Growth
Increased shareholder value

Question 16

Strategic Typologies

Answer 16

Miles and Snow 1978

Defenders, prospector, analyser, reactor

Question 17

Defenders (Miles and Snow)

Answer 17

Stable environment
Protect market share and current position
Tight control - centralised
Prescriptive strategy

Question 18

Analyser (Miles and Snow)

Answer 18

Slow change
Seek market opportunities but protect existing areas
Prescriptive

Question 19

Prospector (Miles and Snow)

Answer 19

Growing, Dynamic
Explore and take risks
Decentralised, flexible
Emergent strategy

Question 20

Reactor (Miles and Snow)

Answer 20

Growing or Slow
Responding only to others
Prescriptive

Question 21

Industry Level

Answer 21

Porters 5 forces

Product life cycle

Question 22

Porters 5 forces

Answer 22

Threat of new entrants
Bargaining power of suppliers (Switching costs?)
Bargaining power of buyers (Switching costs?)
Threat of substitute products/services
Rivalry amongst existing competition

Question 23

Product life cycle

Answer 23

Development / Growth / Shake out / Maturity / Decline
Low rivalry / growing rivalry / some exits / stronger buyers / extreme rivalry
What is the strategy at different stages

Question 24

Advantages of Diversification

Answer 24

Palich et al 2000
Market power- driving existing rivals out/discouraging new
Internal Market efficiencies - tax advantages
Portfolio theory - reducing the unsystematic risk of the firm
Get around TC
Economies of scope - sharing resources etc.

Question 25

Disadvantages of Diversification

Answer 25

``` Palich et al 2000 Managers drawn to overinvestment - empire building and managerial entrenchment. Hubris etc. (Microsoft/Linkedin) Loss of control strain on management being spread thinly Inta-firm conflicts ```

Question 26

Three models of diversification

Answer 26

Palich et al 2000 Linear model Inverted U model Intermediate Model

Question 27

Linear Model of diversification

Answer 27

Obviously does not hold.

Question 28

Inverted U Model

Answer 28

Optimal level of diversification Reaches a certain point and begins to negatively affect performance Related is superior to unrelated

Question 29

Intermediate model

Answer 29

Related no more superior than unrelated

Question 30

Results of Diversification

Answer 30

Palich et al 2000 Firm diversification is related to accounting and market performance Link between the two being inverted U shaped model

Question 31

Questions to consider

Answer 31

Are there any stable industries anymore? Can any company really have a prescriptive strategy? How would you expect each strategy to use different MC