What is Strategy?

Question 1

What is strategy?

Answer 1

The pattern of decisions in a company that determines and reveals its objectives, purposes, or goals.
It is planned and emergent
Defines economic and non-economic value creation
Determines how you interact with stakeholders and the environment

Question 2

What does strategy help to explain?

Answer 2

1. How the organization intends to compete in the marketplace
2. Creation of a unique, valuable position involving combination of a different set of activities
3. Expression of how the organization can be unique in a way that cannot be imitated
4. Provides overall direction to achieve sustained superior performance

Question 3

Why should strategy not be tied to operational effectiveness?

Answer 3

It leads to imitation and homogeneity in most cases

Question 4

What are some important points about strategy from Porter?

Answer 4

1. It rests on unique activities
2. You cannot be all things to all people, a good strategy requires tradeoffs
3. Creating clear strategy is dependent on leadership
4. Fit drives competitive advantage

Question 5

What are the 4 elements of a business strategy?

Answer 5

1. Goals
2. Core activities
3. Product/market focus
   4.Value proposition

Question 6

What is a goal in terms of business strategy?

Answer 6

An expression, in measurable terms, of what a business intends to achieve relative to competition which can vary in time frame

Question 7

What is the difference between a hard goal and a soft goal?

Answer 7

Hard goals are associated with quantifiable metrics and are financial where soft goals are socially focused

Question 8

What are core activities in terms of business strategy?

Answer 8

Activities critical to the effectiveness of the operation of the business

Question 9

What are the 2 purposes of outlining core activities of a business?

Answer 9

1. Tells us which activities contribute directly to the value proposition. Helps us distinguish between necessary activities and those that add value
2. Highlights key jobs that need to be done and capabilities that should be developed

Question 10

What is a product market focus?

Answer 10

What the company is providing to whom and where. Provides clarity about which products are priority currently and in the future

Question 11

What are the 4 product market focuses?

Answer 11

1. Market penetration
2. Product development
3. Market development
4. Diversification

Question 12

What product market focus do you have if you are targeting an existing product to an existing market segment?

Answer 12

Market penetration

Question 13

What product market focus do you have if you are targeting an existing product to a new market segment?

Answer 13

Market development

Question 14

What product market focus do you have if you are targeting a new product to an existing market segment?

Answer 14

Product development

Question 15

What product market focus do you have if you are targeting a new product to a new market segment?

Answer 15

Diversification

Question 16

What is a value proposition?

Answer 16

A statement of the fundamental benefits that the company has chosen to offer in the marketplace

Question 17

What are the generic strategies from Porter?

Answer 17

1. Low cost (focused or broad)
2. Differentiation (focused or broad)
3. Best cost provider (integrated)
4. Stuck in the middle

Question 18

How does a value proposition create competitive advantage?

Answer 18

If it is important to customers, different from competitors, and hard for competitors to match

Question 19

What is the low-cost generic strategy?

Answer 19

The firm attempts to provide products at a lower price than the competition

Question 20

What is the differentiation generic strategy?

Answer 20

The firm sets itself apart from competition through something different

Question 21

What are the 2 approaches to securing a cost advantage?

Answer 21

1. Do a better job than rivals of doing value chain activities efficiently and cheaply
2. Revamp value chain to bypass cost producing activities that provide little value

Question 22

What are the benefits of a successful differentiation strategy?

Answer 22

1. Allows us to command a premium price and/or
2. Increase unit sales and/or
   Build brand loyalty

Question 23

What is the key to a successful differentiation strategy?

Answer 23

Finding a way to create value for buyers that is not easily matched or cheaply copied by rivals

Question 23

What is a best-cost provider (integrated) strategy?

Answer 23

Pursuing low cost operations and differentiation

Question 24

What does a company need to do for a best-cost provider strategy?

Answer 24

1. Incorporate attractive features at lower cost
2. Manufacture good quality at lower cost
3. Still get premium price for product
4. Provide attractive customer service at lower cost

Question 25

What is the risk of using a best-cost provider (integrated) strategy?

Answer 25

May turn into a stuck in the middle strategy.
Low-cost leaders can siphon away customers with low price
Differentiators can siphon away customers with better product attributes

Question 26

What is focused cost leadership?

Answer 26

Competing based on price to target a narrow market. Charging low prices relative to other firms in the market

Question 27

What is focused differentiation?

Answer 27

Delivering customized products to niche markets. Requires offering unique features to fill the demands of a narrow market