Week 4 - Strategic thinking - Organisational Strategy Flashcards
What is the definition of strategy?
A plan of action for allocating resources and dealing with environmental influences to help the business achieve its goals.
What are the key concepts related to strategy formulation?
- Reactive & proactive nature of developing strategy
- PESTLE
- Porter’s Five Forces
- SWOT
What are Porter’s four competitive strategies?
- Cost Leadership
- Differentiation
- Cost Focus
- Differentiation Focus
What does corporate strategy guide?
The organization as a whole, including decisions on expansion, acquisitions, and entering new markets.
What is the focus of business strategy?
Specific products or markets, ensuring competitiveness within strategic business units (SBUs).
What does functional strategy cover?
Specific business functions (marketing, HR, finance), ensuring they support corporate and business strategies.
What is SWOT analysis?
A framework to assess a firm’s internal strengths and weaknesses alongside external opportunities and threats to develop strategic options.
What are the pros of SWOT analysis?
- Helps in strategy formulation and decision-making
- Encourages objective internal and external assessment
- Provides a foundation for strategic choices
What are the cons of SWOT analysis?
- Can be subjective and oversimplified
- Lacks prioritization and doesn’t provide solutions
- Prospect theory suggests threats may be overemphasized over opportunities
What does PESTLE analysis evaluate?
Political, Economic, Social, Technological, Legal, and Environmental factors.
What are Porter’s Five Forces?
- Threat of New Entrants
- Threat of Substitutes
- Bargaining Power of Buyers
- Bargaining Power of Suppliers
- Industry Rivalry
What is the rational approach to strategy formulation?
A structured, scientific method using tools like SWOT and forecasting to maximize profits.
What are the challenges of the rational approach?
- Assumes perfect data
- Struggles with complex environments
- Can lead to similar strategies across firms
What does the flexible approach to strategy formulation involve?
Uses scenario planning to prepare for multiple futures.
What is the creative approach to strategy formulation?
Encourages innovation over rigid analysis, avoiding ‘paralysis through analysis.’
What is the behavioral approach to strategy?
Recognizes that strategy is shaped by power, politics, and human biases rather than logic.
What does the incremental approach to strategy suggest?
Views strategy as emerging over time through learning and adaptation.
What is an example of the absence of strategy?
Some firms focus on efficiency instead of formal strategy, only responding when crisis strikes.
What does the mixed approach to strategy combine?
Rational analysis with negotiation and politics.
What is cost leadership?
Competing by being the lowest-cost producer.
What is differentiation in strategy?
Competing through unique products and branding.
Fill in the blank: _______ focuses on low-cost strategy for niche markets.
Cost Focus
Fill in the blank: _______ involves premium, specialized products for a specific market.
Differentiation Focus
What are the three strategic planning styles mentioned?
- Formalized Planning
- Negotiation & Consultation
- Entrepreneurship
What ethical issues can arise in strategy implementation?
Profit-driven strategies can lead to unethical practices.
What is Management by Objectives (MBO) in strategy execution?
Goal-setting theory suggests that clear, measurable objectives improve performance.
What is the importance of mission statements in strategic planning?
They should serve as a foundation for strategy, clearly stating an organization’s purpose, values, and direction.
What are stretch goals in strategy?
Targets set far beyond current achievements that can drive innovation.
Why do marketing metrics matter in strategy?
- Helps in allocating resources efficiently
- Provides ROI insights
- Supports strategic planning and forecasting
What is the role of situation analysis in strategy formulation?
It helps prioritize key factors that have the most immediate and significant impact.
Fill in the blank: Not all external factors are equally important; strategy must prioritize the most _______.
impactful elements
What is the bargaining power of suppliers?
Suppliers control availability and pricing.
What is a challenge related to talent retention?
Retaining skilled professionals is challenging due to competition from international projects.
What is a challenge related to technological advancements?
Dependence on outsourcing for advanced tech means reliance on external vendors.
