Topics 2 & 3 Flashcards
What is strategy?
- long term OBJECTIVES
- course of ACTION
- allocation of RESOURCES
- important TRADE-OFFS
What is Operational Effectiveness?
- increasing efficiency
- generally includes benchmarking which by definition means doing things similarly to competitors
What is TPS
The Positioning School - positioning achieves competitive advantage
What is RBV
Resource-Based View - strategic resources provide competitive advantage
Resources -> Capabilities -> Competitive advantage -> Strategy -> Repeat
What is TPS strategy?
- distinctive activities or methods
- trade-offs
- fit between activities
What are the principles/sources of uniqueness TPS?
variety- based
needs-based
access-based
What are the requirements for a strategic resource in RBV?
Valuable
Rare
Inimitable
Organized to take advantage of it
Non-substitutable
What are the four big issues in strategy?
- Boundaries of the firm
- Market and Competitive Analysis
- Positioning and Dynamics
- Internal Organization
What is the strategic management process?
- Strategic Formulation
- Strategic Implementation
- Strategic Evaluation
What is the process of strategic formulation?
- Develop vision and mission statements
- Internal environmental analysis
- External environmental analysis
- Objectives
- Generate and choose strategies
What are the types of opportunities and threats in the external environment?
- Economic
- Trends and events
- Technology
- Political, government, and legal
- Social, cultural, and environmental
What is PESTEL?
External factor assessment:
- Political
- Economic
- Social
- Technological
- Environmental
- Legal
What are the external and internal parts of a SWOT analysis?
Internal:
- Strengths
- Weaknesses
External:
- Opportunities
- Threats
What are Porter’s 5 forces?
- Bargaining power of Suppliers
- Bargaining power of Buyers
- Threat of Substitutes
- Threat of New Entrants
- Industry Rivalry
What is zero-sum competition?
The market is finite, and whatever one company gains another must lose.
What is positive-sum competition?
The market is able to be expanded, and so increasing numbers of firms can service different parts of the market, expanding the market as they forge their unique path.
What are the two forms of competition or industry rivalry?
- Price competition
- Non-price competition
What are forms of non-price competition?
- advertising
- customer service
- warranties
- quality
When does price competition intensify?
- many sellers
- some firms have a cost advantage
- industry has excess capacity
- undifferentiated products
- low switching costs
- prices and terms of sale not easily observable
What are the two forms of barriers to entry?
- exogenous (nature of the industry)
- endogenous (incumbent’s strategic choices)
Game theory and predatory pricing are examples of what kind of barrier to entry?
Endogenous
What are the kinds of exogenous barriers to entry?
- Economies of scale
- Network effects
- Switching costs
- Incumbent advantage
- Capital requirements
- Access to distribution channels
What are the main reasons for buyers having market power?
- customer concentration
- switching costs
- threat of backwards integration
- undifferentiated products
- substitutes
What affects the bargaining power of suppliers?
- supplier concentration
- industry switching costs
- threat of forwards integration
- few substitute inputs
- differentiated product
- low dependence on the industry
- size/frequency of orders
How to cope with the five forces in general:
- develop a cost or differentiation advantage
- seek industry segment where 5 forces are weaker
- create switching costs (industry rivalry)
- entry-deterring strategies
- tapered integration (buyer/ supplier power)
What are the four main aspects of strategy implementation?
- budgeting
- talent sourcing
- align policies and procedures with strategy
- internal information and communication
- culture
How do we see competitive advantage?
Superior economic performance
How do we measure competitive advantage?
Accounting:
- ROA
- ROSales
- ROEquity
Economic:
- Capital budgeting/ NPV
- Opportunity cost
What are the components of a balanced scorecard?
- Financial
- Customer
- Internal Business Processes
- Learning and Growth
- Vision and Strategy
