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Theory of Strategy and Culture Flashcards

1
Q

Definition of Strategy?

A

The direction and scope of an organisation over the long term

Achieved advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations

(Johnson, Scholes and Whittington, 2009)

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2
Q

Johnson, Scholes and Whittington, 2009 define what?

A

Strategy

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3
Q

How is Strategy achieved according to Johnson, Scholes and Whittington, 2009?

A

Through its configuration of resources and competences with the aim of fulfilling stakeholder expectations

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4
Q

Basic goal of strategy?

A

To increase profit margins and therefore performance

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5
Q

What is the difference between strategy and global strategy?

A

Essentially none

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6
Q

Strategy becomes what when competing internationally?

A

More complicated

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7
Q

International Strategy definition? (Tallman and Yip, 2009)

A

“Brings forward and explicit consideration for the effects of locational differences and institutional contexts”

“that require adaptations in the application of classic strategic analysis techniques”

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8
Q

Who defined International Strategy?

A

(Tallman and Yip, 2009)

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9
Q

Why is international strategy more difficult?

A

Due to the differences companies need to take into consideration when developing their scope

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10
Q

What is the Strategy Tripod? (Peng)

A

3 perspectives on what influences a firms strategy

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11
Q

What are the three strategies in Peng’s strategy tripod?

A

Industry-based view
Resource-based view
Institutional perspective

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12
Q

What is the industry based view?

A

It is the structural conditions of the particular industry in which they operate that makes the firms differ

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13
Q

Why do firms differ?

A

Strategy Tripod- IBV, RBV, IP

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14
Q

What is the resource based view?

A

It is the resources and capabilities firms have that makes them differ (not structural conditions)

Every firm is a bundle of productive resources and capabilities, competitive advantage is based on these

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15
Q

What is the institutional perspective?

A

Institutional constraints that companies face, both formal and informal

Strategy is created within the boundaries of constraints
Firms differ due to different boundaries

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16
Q

What is determined by Porter’s Five Forces Framework?

A

Structural Conditions of the industry

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17
Q

Porter’s Five Forces Framework shows

A

Industry Competitiveness

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18
Q

Industry competitiveness is made up of (Porter’s Five Forces Framework)

A 
Bargaining power of customers
Bargaining power of suppliers
Threats of entrants
Threats of substitutes
Rivalry among competitors
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19
Q

Performance depends on?

A

Degree of competitiveness in industry

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20
Q

The stronger and more competitive the five forces are

A

The less likely to earn above average return

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21
Q

How can firms respond to different structural conditions?

A

By implementing different strategies

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22
Q

What are the three main strategies firms can implement?

A

Cost leadership
Differentiation
Focus strategy

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23
Q

What is cost leadership?

A

Focus on decreasing price, selling cheapest compared to competition in the market

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24
Q

What is differentiation?

A

Create products that are different and bring significant vale to the customers compared to competitor products

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25
What are the features of differentiation strategy?
Low volume, high margin Uniqueness is hard to identify Lower bargaining power of suppliers and buyers Key functional areas = R&D, Marketing/Sales, After Sales
26
What is focus strategy?
Focus on serving needs of a particular segment or niche of industry e.g geographical market, type of customer, product line
27
When may a focus strategy be successful?
When a firm possesses intimate knowledge about a particular segment
28
What are the two types of focus strategy?
Specialised cost leader | Specialised differentiator
29
What is a specialised cost leader?
Focus strategy that deals with a narrower segment compared with traditional
30
What is a specialised differentiator?
Has a smaller, narrower and sharper focus than a large differentiator (Focus strategy)
31
Resources and capabilities are defined as what?
The tangible and intangible assets a firm uses to choose and implement its strategy
32
What are tangible assets?
Assets that are observable and easily quantifiable
33
What are intangible assets?
Assets that are difficult to observe
34
Three types of tangible assets
Financial Physical Technological
35
Three types of intangible assets
Human Innovation Reputation
36
What is the dynamic capabilities and resources view? (Teece, 2007)
Need the ability to enhance and reconfigure resources and capabilities for long term success Extension fo RBV as RBV is too static as firms progress and change
37
Who coined the dynamic capabilities?
Teece 2007
38
For dynamic capabilities, core competencies should be used to do what?
Modify short-terms competitive positions that can be used to build a competitive advantage
39
What is the cycle of dynamic capabilities?
Sense threats and opportunities Seize opportunities Reconfigure capabilities
40
What is the VRIO framework? (Barney, 1991)
Strategic idiosyncratic resources for sustainable competitive advantage (Assessment of RBV)
41
What is the VRIO framework made up of?
Value Rarity Imitability Organisation
42
Who coined the VRIO framework?
Barney 1991
43
What is value in VRIO?
Do the resources and capabilities add value? | Necessary for competitive advantage
44
What is rarity in VRIO?
How rare are the valuable resources and capabilities? Valuable but common = no advantage Valuable and rare = temporary advantage
45
What is imitability in VRIO?
How easy is it to imitate the tangible resources and capabilities than the intangible ones? Valuable, rare but imitable = temporary advantage Valuable, rare and non imitable = sustained competitive advantage
46
Why is imitation so difficult?
Hard to acquire in a short amount of time what a competition has developed over a long period of time Events earlier in time affect future events Difficult to identify casual determinants of performance
47
What is organisation in VRIO?
How is a firm organised to develop and leverage the full potential of its resources and capabilities?
48
How can a firm leverage organisation?
Use complementary assets effectively Manage social complexity effectively Invisible relationships add value and make imitation difficult
49
VRIO only achieves a
Short term competitive advantage
50
Need what beyond the VRIO to achieve sustained competitive advantage?
Dynamic Capabilities
51
What is the institutional perspective?
Companies differ as they operate in different institutional environments
52
What are institutions according to North (1990)?
"The humanly devised constraints that structure human (political, economic and social) interaction"
53
What does North (1990) define?
Institutions
54
What is the impact of institutions on firm behaviour?
Govern individual and firm behaviour | Constrain and lead to use strategies
55
What constitutes formal institutions?
Laws Regulations Rules
56
What constitutes informal institutions?
Norms Cultures Ethics
57
What is the regulatory pillar?
Formal institutions
58
What is the normative pillar?
Informal institutions
59
What is the major role of institutions?
To reduce uncertainty by signalling which conduct is legitimate or not
60
Uncertainty can lead to
Transaction costs
61
What are transaction costs?
Costs associated with economic transactions/costs of doing business
62
What is a major source of transaction costs?
Opportunism
63
What is opportunism?
"Self interest seeking with guile" (Williamson, 1993)
64
Who defined opportunism?
Williamson (1993)
65
Who coined institutional isomorphism?
Powell and Di Maggio (1993)
66
What is institutional isomorphism?
Firms that operate in different institutional environments exhibits similar behaviours and strategies
67
What is isomorphism?
Constraining process that forces one unit in a population to resemble other units that face the same set of environmental conditions
68
What are the three types of isomorphism?
Coercitive Mimetic Normative
69
What is Coercitive Isomorphism?
From political influence and the problem of legitimacy
70
What is Mimetic Isomorphism?
From standard responses to uncertainty
71
What is Normative Isomorphism?
From professionalisation
72
Isomorphism
Organisational characteristics are modified in the direction of increasing compatibility with environmental characteristics
73
What is the Institutional Based view in the Organisational field?
Isomorphism, Powell and Di Maggio 1983
74
What are the two core propositions in the Institutional Perspective?
Bounded Rationality | Informal Ties
75
What is Bounded Rationality?
Managers and firms RATIONALLY pursue they interests and make choices within the formal and informal constraints in a given institutional framework
76
What is Informal Ties?
In situations where formal constraints are unclear or fail, informal constraints will play a LARGER role in reducing uncertainty to managers and firms (While formal and informal constraints combine to govern firm behaviour)
77
Strategic Choices are interlinked with what?
``` Institutions ------ Dynamic interactions Firms ------- Industry conditions and resource specific boundaries Strategic Choices --------Formal and informal constraints ```
78
One major informal institution is?
Culture... | Of people, of nations and workplaces
79
What is the definition of culture?
"The collective programming of the mind which distinguished the members of one human group from another" Hofstede
80
What does culture include?
"Systems of values; and values are among the building blocks of culture" Hofstede
81
Summarised definition of culture
A system of values and norms that are shared among a group of people
82
What does culture influence and why?
Business activities, international operations because of different cultural conditions Management must adapt to domestic aspired cultural values
83
What are Hofstede's 6 Dimensions of culture?
``` Power Distance Uncertainty Avoidance Individual vs Collectivism Masculinity vs Femininity Short-term vs Long-term Indulgence vs Restraint ```
84
What is Power Distance?
Extent to which the less powerful accept and expect that power is distributed unequally Emotional distance between the person at the top and one below
85
High power distance cultures are
Countries that let inequalities for into unequal power and wealth
86
High power distance cultures believe
That power and authority are facts of life Unconsciously and concisely teach that people are not equal
87
Low power distance cultures
Expect and accept power reactions that are more consultative and democratic
88
What is Uncertainty Avoidance?
To dow its handling ambiguity Extent to which different cultures socialise their members into accepting ambitious situations and tolerating uncertainty Complex, related to stress and anxiety
89
High uncertainty avoidance features
Premium on job security, retirement benefits etc.
90
Low uncertainty avoidance features
More willing to take risks, less resistance to change
91
What is Individualism vs Collectivism
Focused on relationship between individual and their fellows
92
Individualistic society features
Loose ties between individuals Individual achievement and freedom highly valued
93
Collectivism features
Tight ties Like extended family, look after collective interests
94
What is Masculinity vs Femininity?
Focused on relationship between generations and work roles
95
Features of Masculine society
Sharp distinction between men and women in same job Traditional masculine values that influence cultural ideas e.g Tough, practical
96
Features fo Feminine society
Little differentiation between men and women in the same job | e.g. Tender, concerned with Quality of Life

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