Chapter 2: Strategy And Business Flashcards
(11 cards)
what is strategy?
the direction/scope of an organisation which achieves advantage for the organisation
What makes planning strategic?
- it considers the long term, i.e 15 years.
- considers the whole organisation and not just SBUs.
- it considers both internal and external stakeholders.
- it considers the resources and external environment.
- it has a sustainable competitive advantage
what is a sustainable competitive advantage and some examples?
A sustainable competitive advantage is a feature that a business can use to leverage.
- Cost leadership, i.e a business that offers lower costs than their competitors thus attracting more customers.
- Product differentiation i.e. a company that supplies a unique or different product than its competitors in order to attract customers
- Product focus is a strategy where an organisation provides a product/ line of products to a specific market / customer.
define the rational/ top down approach
the rational approach adopts a systematic process of first identifying goals and then selecting strategies to achieve them.
what are the merits/advantages of strategic planning?
- Provides a framework
- Promotes long term planning
- Optimised use of resources
- Goal congruence - i.e. everyone is working towards the same goal
- considers the needs of stakeholders
- considers changes in the environment
- Monitors progress
what are the demerits/disadvantages of strategic planning?
- Lack of evidence that it leads to success
- Inhibits initiative and innovative thinking
- Political infighting may disrupt the process
- Businesses may need to be more dynamic and respond to issues as they occur
what are emergent strategies?
also known as the bottom up approach,
adopted behaviours that have a strategic impact. they emerge from businesses responding to issues as they come and developing strategies over time
what types of organisation is the emergent approach suitable for?
Organisations that:
- operate in dynamic environments that require quick decision making
- have decentralised structures where midline managers are able to make decisions and respond fast to issues
What are Mintzberg’s different grades of strategy?
Mintzberg’s strategy types include:
• Intended strategy – the original plan.
• Deliberate strategy – parts of the plan that are carried out.
• Unrealised strategy – planned actions that aren’t implemented.
• Emergent strategy – unplanned strategies that develop over time.
• Realised strategy – the final result, combining deliberate and emergent strategies
What is a resource-based approach to strategic advantage, and what is its main risk?
The resource-based approach focuses on using internal resources and capabilities that are hard to copy by competitors, creating a market to exploit these strengths.
Risk: The organization might not keep up with market changes, and its strengths may become less valuable to customers.
What is a positioning approach to strategic advantage, and what is its main risk?
The positioning approach focuses on understanding the external environment and meeting changing customer needs.
Risk: Constant change in customer demands forces the organization to keep adapting and developing new capabilities, which can be challenging.
