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Strategic and International Management > 5 > Flashcards

5 Flashcards

1
Q

What is the SWOT analysis?

A

The SWOT analysis is a framework that allows managers to synthesise insights obtained from an internal analysis of a company’s strengths and weaknesses with those from an analysis of exernal opportunities and threats.

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2
Q

What can be gleaned from the SWOT insights?

A
  • Identify company resource strength and competitive capabilities
  • identify company resource weaknesses and competitive deficiencies
  • identify the company’s market opportunities
  • identify external threats to the company’s future well-being.
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3
Q

What are the implications from improving the company strategy?

A
  • Use company strength and capabilities as cornerstones of strategy
  • pursue those market opportunities best suited to company strengths and capabilities
  • correct weaknesses and deficiencies which impair pursuit of important market opportunities or heighten vulnerability to external threats
  • use company strength to lessen the impact of important external threats.
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4
Q

How do I use these strengths to take advantage of these opportunities?

A

Matching strategies.

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5
Q

Hoe do I overcome the weaknesses that prevent me taking advantage of these opportunities?

A

Change strategies.

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6
Q

How do I use my strengths to reduce the likelihood and impact of these threats?

A

Neutralizing strategies.

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7
Q

How do I dress the weaknesses that will make the threats a reality?

A

Defensive strategies.

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8
Q

What is part of the internal analysis?

A

Resources, core competencies, value chain.

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9
Q

What is part of the external analysis?

A

Macro environment, industry and competitive environment, strategic groups.

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10
Q

What are the requirements for imitation in a sustainable competitive advantage?

A
  • Identification
  • incentives for imitation
  • diagnosis
  • resource acquisition.
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11
Q

What is the isolating mechanism of identification?

A

Obscure superior performance.

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12
Q

What is the isolating mechanism of incentives for imitation?

A

Deterrence: signal aggressive intentions to imitators.
Preemption: exploit all available investment opportunities.

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13
Q

What is the isolating mechanism of diagnosis?

A

Rely on multiple sources of competitive advantage to create causal ambiguity.

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14
Q

What is the isolating mechanism of resource acquisition?

A

Base competitive advantage on resources and capabilities that are immobile and costly to replicate.

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15
Q

What are the possible elements of cost advantage?

A
  • Cost control
  • product/service standardization
    -economies of scale and scope
  • learning effects
  • outsourcing/vertical integration
    -bargaining power
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16
Q

What are the risks of cost advantage?

A
  • catch-up of competitors
  • cost-price dynamics (“hypercompetition”)
  • technical changes
  • changes in consumer behaviour.
17
Q

What is the experience curve?

A

Evaluating the positive relationships between market shares and cost level.
The experience or learning curve as an empirical estimate of the proportion by which unit costs fall as volume of production increases.
Firms that manage itself to establish first in the market can realize cost advantages through higher market shares and accelerated learning.

18
Q

What are economies of scale?

A
  • Economies of scale (EoS) refer to the extent to which cost per unit of output falls as the scale of operations increases.
  • Scale economies usually arise in the case of capital intensive operations.
  • The strategic significance of scale economies depends on the minimum efficient scale (MES).
  • Sources of economies of scale are indivisibilities and spreading of fixed costs
19
Q

What happens when the minimum efficient scale gets higher?

A

The higher the MES to market size ratio, the lower the number of firms that compete in the market since achieving economies of scale is harder.

20
Q

What are economies of scope?

A

Average costs of product lowered by joint production with other products.
Economies of scope depend on increased variety and not higher volume of output.

21
Q

What are the sources of economies of scope?

A
  • Use of one or more common resources (or inputs) in the production of both outputs
  • Spreading fix costs over more products
  • Application of knowledge and core capabilities to the production of several
    outputs
22
Q

What are the divers of cost advantages?

A
  • Economies of scale
  • Economies of learning
  • Production techniques
  • Product design
  • Input costs
  • Capacity utilization
  • Residual efficiency
23
Q

How do we use the value chain to analyse costs?

A
  1. Identify activities
  2. Allocate total costs
  3. Identify cost drivers
  4. Identify linkages
  5. Identify opportunities for cost reduction
24
Q

What are the possible elements of differentiation strategy?

A
  • brand name / reputation / image
  • superior product quality
  • first mover advantage
  • strong service and process skills
  • design / marketing skills
  • ability to attract creative employees
25
Q

What are the risks of differentiation strategy?

A
  • overspending erodes profitability
  • inadequate price premiums
  • imitation by the competitors
26
Q

How do we deliver value via broad differentiation?

A
  1. Lower buyer ́s costs of using the product: e.g. autonomous or energy efficient devices
    for business customers.
  2. Incorporate tangible features to the product to increase customer satisfaction: e.g. design features, services and long term warranty.
  3. Incorporate intangible features to enhance buyer satisfaction: e.g. exclusivity, status, prestige.
  4. Signal the value of the product (justify it in the customers’ minds): e.g. high price, fancy packaging, focused advertisement on the unique features.
27
Q

What is the characterisation of a focus niche strategy?

A
  • Satisfy the needs of a specific customer segment better than any other competitor.
  • This niche may be defined by geographic uniqueness, specialized requirements in the product usage or special product attributes appealing only to members of this segments.
28
Q

What are the two types of focus niche strategy?

A
  • Achieve lower costs than rivals in serving a well-defined buyer segment (focused low-cost strategy)
  • Offer a product appealing to unique preferences of a well-defined buyer segment (focused differentiation strategy)
29
Q

What are the elements of a focus niche strategy?

A
  • Protect niche through entry barriers:
    ▪ Patents/technology
    ▪ Customer loyalty
    ▪ Unique service
    ▪ Unique bundling
30
Q

What are the risks of a focus niche strategy?

A
  • Niche becomes unattractive
  • Niche becomes attractive to competitors
  • New players re-segment the market
  • The strategy is imitated in duration
31
Q

When is cost leadership best to pursue?

A
  • Products of rivals are identical
  • It is difficult to achieve differentiation
  • Buyers use the product in same way
  • Switching costs of customers are low
    Avoid relying on easily replicable cost reduction approaches and becoming obsessed with cost cutting!
32
Q

When is product differentiation best to pursue?

A
  • Few rivals would be able to follow same approaches
  • It is possible to achieve differentiation
  • Buyer needs are diverse
  • Technological change pace is high, buyers are interested
    Avoid relying on easily replicable differentiation approaches and investing in improvements with no customer value!
33
Q

When is focused (niche) low cost or focused differentiation strategy best to pursue?

A

Best to pursue a focused strategy when there is a market niche to which competitors show low interest due to its costly and specialization needs.

34
Q

When is best-cost provider strategy best to pursue?

A
  • Product differentiation is a norm and when there are a large number of value conscious customers (e.g. recessionary times)
  • There is a competitive space for a price/performance optimal product(e.g.high quality medium price or medium quality low price)
    Avoid sticking in the middle!
35
Q

What is stuck in the middle?

A

Porter stressed the idea that a firm should either adopt a cost leadership or a differentiation strategy and failure to do so will result in a “stuck in the middle” scenario.

Strategic and International Management (10 decks)

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