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Advanced Management Accounting > Strategy, MC and MA > Flashcards

Strategy, MC and MA Flashcards

Appreciation of how strategic decisions are formulated / Competitive Advantage at Business Level / Corporate level strategy / Industry level strategy

1
Q

What is management control?

A

focuses on execution

Are employees likely to behave appropriately?

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2
Q

What is strategic control?

A

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

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3
Q

Teese’s Shape, Sense and Seize framework

A

Dynamic Capabilities

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4
Q

Two views to strategy

A

Rational-Analytical View

Emergent View

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5
Q

Rational-Analytical view to strategy

A

Prescriptive
Intended
Developed using formats strategic planning systems

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6
Q

Emergent View to Strategy

A

Over time

New opportunities leading to adaption

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7
Q

Business Level Strategy

A

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

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8
Q

Porters Generic Strategies (PGS)

A

Cost Leadership vs Differentiation

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9
Q

Differentiation (PGS)

A

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

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10
Q

Cost Leadership (PGS)

A

Focused on reducing costs

Diagnostic important here

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11
Q

Bowmans Strategy Clock

A 
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
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12
Q

Corporate Level strategy

A

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

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13
Q

Economics of Diversification

A

Scope of economies

Synergistic Benefits

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14
Q

Scope of economies

A

eliminate costs by operating two companies under one parent

E.g. Virgin and Sainsburys

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15
Q

Synergistic Benefits

A

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

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16
Q

Strategic Typologies

A

Miles and Snow 1978

Defenders, prospector, analyser, reactor

17
Q

Defenders (Miles and Snow)

A

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

18
Q

Analyser (Miles and Snow)

A

Slow change
Seek market opportunities but protect existing areas
Prescriptive

19
Q

Prospector (Miles and Snow)

A

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

20
Q

Reactor (Miles and Snow)

A

Growing or Slow
Responding only to others
Prescriptive

21
Q

Industry Level

A

Porters 5 forces

Product life cycle

22
Q

Porters 5 forces

A

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

23
Q

Product life cycle

A

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

24
Q

Advantages of Diversification

A

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.

25
Q

Disadvantages of Diversification

A 
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
26
Q

Three models of diversification

A

Palich et al 2000
Linear model
Inverted U model
Intermediate Model

27
Q

Linear Model of diversification

A

Obviously does not hold.

28
Q

Inverted U Model

A

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

29
Q

Intermediate model

A

Related no more superior than unrelated

30
Q

Results of Diversification

A

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

31
Q

Questions to consider

A

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

Advanced Management Accounting (18 decks)

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