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Chapter 4 - Introduction to business strategy Flashcards

1
Q

What is strategy?

A

Direction and scope of an organisation over long term, achieves advantages for the organisation

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2
Q

What are the considerations of strategy?

A
  • Long term
  • Whole organisation
  • Resources and external environment
  • Stakeholders (internal and external
  • How to gain sustainable competitive advantageW
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3
Q

What are the three levels of strategy?

A

Corporate
Business
Functional (operational)

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4
Q

What is corporate strategy?

A

Strategies determined at main board level for the business as a whole

e.g. product market decision, method of growth, major investment decisions

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5
Q

What is the business strategy?

A

Planning, developing and producing

e.g. how to gain a sustainable competitive advantage

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6
Q

What is Functional (operational) strategies?

A

Strategies for the main functions within each SBU

e.g. operations, finance, HRM and marketing strategies

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7
Q

What is a strategic plan?

A

Long term goals along with a definition of the strategies and policies which ensure achievement of these goals

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8
Q

What are the four main stages of strategic planning according to Johnson & Scholes) ?

A
  1. Analysis - Where are we now?
  2. Strategic choice - strategic option
  3. Strategy implementation - Convert into plans / objectives
  4. Review and control - Monitor targets and budgets
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9
Q

What are the FORMAL stages of strategic planning?

A
  1. Internal/external analysis
  2. Corporate appraisal
  3. Mission and objectives
  4. GAP
  5. Strategic choice
  6. Strategy implementation
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10
Q

What is external analysis in business strategy?

A

Factors outside the business which can present opportunities or threats

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11
Q

What factors are involved in the external envrionment?

A
  1. Physical - Touch + feel e.g. neighbours tree fell on your shop
  2. General - covers economical, social, technology and legal influences in the countries the business operates
  3. Task - Factors relevant to the business e.g. competitors
  4. Business
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12
Q

What are the two forms of environmental uncertainty?

A
  1. Static environments
  2. Dynamic Environments
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13
Q

What are characteristics of static envrionment

A
  • Static/slow change
  • Single product/market
  • Simple technology
  • Safe envrionmentW
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14
Q

What are the characteristics of dynamic envrionments?

A
  • Dynamic changes
  • Diverse product/market
  • Difficult environment
  • Dangerous to stand still
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15
Q

What are the PESTEL analysis?

A
  1. Political
  2. Economical
  3. Social and demographic
  4. Technological
  5. Ecological environmental
  6. Legal issues
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16
Q

What are the potential political issues in PESTLE analysis?

A
  • Taxation
  • Government spending
  • Foreign trade
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17
Q

What are the potential economical issues in PESTLE analysis

A
  • Economic growth
  • Exchange/interest rates
  • Inflation
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18
Q

What are the social and demographic issues in PESTLE analysis

A
  • Attitudes, tastes and fashions
  • Population demographics
  • Income distribution
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19
Q

What are the technological issues in PESTLE analysis

A
  • New products
  • Improved production methods
  • Rate of obsolesce
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20
Q

What are the potential Ecological issues in PESTLE analysis

A
  • Sustainability
  • Pollution
  • Climate change
21
Q

What are the potential Legal issues in PESTLE analysis

A
  • Industrial regulation
  • Competition legislation
  • Employment law
22
Q

What are Porter’s five force analysis?

A
  1. Threat of new entrants - competition
  2. Bargaining power of supplier - increasing prices
  3. Threats of substitutes - Different products satisfying the same needs
  4. Bargaining power of customer - Few customers, buyers can bring down the prices
23
Q

What is competitor analysis?

A

Used to analyse competitive rivalry

24
Q

What are Philip Kotler’s list of four types of competitors?

A
  1. Brand - smaller size firms with similar products
  2. Industry - Similar products but different markets or distribution methods
  3. Form - Distinctively different products satisfying the same needs - mcdonalds vs coffe shop
  4. Generic - Different products but compete for the same disposal income
25
What are Kotler's four reaction profiles?
1. Laid back - no response to competitor moves 2. Tiger - Responds aggressively to all competitor moves 3. Selective - reacts to some threat in some markets but not other 4. Stochastic - difficult to predict when or how they will react
26
What is internal analysis?
Comprises the business's strengths and weaknesses
27
What are the 9M model
Help identify resources available to the business help achieve critical success factors 1. Men/women - skills, number, wages 2. Machines - 3. Money - Credit & turnover 4. Material - Source, supplier 5. Markets - Product/customer 6. Makeup - brands, good will 7. Management - size, skills 8. Methods - how activities are carried 9. MIS - generate ideas
28
What is value chain?
Analyse the business activities which add value to products and services produced by company
29
What is the Porter's value chain analysis?
Support activities: - Firm infrastructure: finance, legal, QA - Technology development: technology involved in product itself - Human resources: training, recruitment management - Procurement (suppliers): acquiring resources for all aspects for value chain Primary activities 1. Inbound logistics 2. Operations - outputs, assembly 3. Outbounding logistics - storage and delivery 4. Marketing and sales - making customers aware of the products 5. Services - avoid confusion with sales industry AND THEN MARGIN
30
What are the 4 stages of the Product life cycle?
1. Development 2. Introduction to market 3. Growth (sales/revenue) 4. Maturity 5. Decline
31
What does the BGX matrix analyse?
Analyses the balance of a business product portfolio based on the combination of both market growth and market share
32
The BCG Matrix - What icon is High Market growth and High Market share?
Star - Market share is high but under constant threat from new entrants. Requires business to build causing cash neutral position
33
The BCG Matrix - What icon is Low Market growth and high Market share?
Cash Cow - Reduced threat from new entrants, makes it easier for the business to hold their position and just harvest +ve cash flow
34
The BCG Matrix - What icon is High Market Growth and Low Market Share
Question Mark - Business must decide whether to harvest or build by injecting further finance -ve cash flow
35
The BCG Matrix - What icon is Low Market Growth and Low Market Share
Dog Business must decide to divest or hold position in short-term if modest positive cash flow
36
What is the SWOT analysis
Technique that can be used to perform a corporate appraisal to evaluate the strategic position of an organisation
37
What are the internal and external components of SWOT
Internal - Strengths - Weakness External: - Opportunities - Threats
38
Strategies should be consistent with the organisations missions and objectives
That's all!
39
What are the components of Mendelow's power-interest stakeholder matrix
1. Minimal effort can be directd Low Power Low interest 2. Keep informed Low Power High interest 3. Keep satisfied High power Low interest 4. Key players need participation High interest High power
40
What to consider after analysis of internal and external envrionments
- How to compete (Porter's generic strategies) - How to grow? (Ansoff's matrix)
41
What is Porter's generic strategies?
- Suggests competitive advantage can be achieved by finding a position that competitors find hard to replicate - Organisations need to address to key questions 1. Which strat, differentiation or cost leadership 2. Should the scope be broad or narrow
42
What are the four components of Porter's generic strategies
1. Cost leadership - Lower cost - Broad Target 2. Cost Focus - Lower cost - Narrow Narget 3. Differentiation - Differentiation - Broad Target 4. Differentiation focus - Differentiation - Narrow Target
43
What is cost leadership and how can it be achieved?
- More competitive Achieved through - Economies of scale - e.g. primark - Seek cheaper sources of supply e.g. budget supermarkets - Reduced labour costs - e.g. manufacturers who outsource overseas
44
What is differentiation and how can it be achieved?
Standing out from competitors due to product features or consumer perception Achieved through - Strong branding e.g. designer clothes - Product innovation e.g. Apple, Dyson - Quality e.g. M&S clothing - Product Performance e.g. BMW
45
What is Focus strategy and how can it be achieved?
- Specialising on a clearly defined market segment or segments - Identify a segment of consumers with similar needs - Choose whether to adopt differentiation or cost focus approach - Develop the marketing mix to meet the needs of the segment
46
What is Ansoff's Matrix?
Looks at growth by considering opportunities to sell more existing products/develop new products and building market share in existing/new markets
47
What are the four components of Ansoff's Matrix?
1. Market Penetration: More sales of existing products to existing markets e.g. price cuts - Existing Markets - Existing Products 2. Market Development: Find new markets for existing products, e.g. new customer segments or geographical location - Existing Products - New products 3. Product development : Develop new products for existing markets - Existing Market - New Product 4. Diversification: Develop new products for new markets - New products - New markets
48
Evaluation of markets is important. What is Johnson, Scholes and Whittington's tests before choosing strategy is chosen
1. Suitability (bold internal and external) - Does it exploit strengths - Mitigate weaknesses - Take advantage of opportunities - Meet sustainability objectives 2. Feasibility (resources capable?) - Time-scale achievable? - Availability to finance - Other resources - Internal competencies 3. Acceptability (risk and return pov key shareholders) - What are the risks - Potential returns - Acceptable to shareholders?
49
What key functions of the business are involved with the strategy implementation
1. HRM 2. Finance 3. Operations 4. Marketing

BTF (13 decks)

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