Exam Preparation Flashcards
(25 cards)
1
Q
What is Strategy according to Porter?
A
- choosing a different set of activities to create a unique mix of value
- How is the business going to compete?
- Integrating the activities of diverse functional departments in a firm
2
Q
What is not Strategy according to Porter?
A
8 examples work
3
Q
What is Strategy?
⇒ Key definition
A
4
Q
What are some key strategy questions?
A
- See alignment
- Industry
- Internal resources and capabilities
- Operation/Execution
- Environment
- Timing
5
Q
What is alignment?
A
6
Q
Alignment Questions Examined
A
- Are these about “strategy” or other things?
- Can we ignore operational effectiveness?
- Can we ignore “vision” or “philosophy”?
- Do you disagree with Porter at all?
- Boundaries between concepts are fuzzy ⇒ there is not just one right way
7
Q
What are Porters Key concepts?
A
- Productivity frontier
- Trade-offs
- Opportunity costs
- Need to avoid “straddeling”
- Competitive convergence
- Alignment
- Promote sustainability
- Growth Trap
- Straddeling
8
Q
How to analyze a case?
A
-
Assess Context
- External
- Internal
- What do you wish you knew? Is this know-able?
-
Assess Firm Performance
- What is the firm’s competitive advantage?
- How well is it meeting customers needs?
- How well is it competing with rivals?
- Identify “Symptoms”
-
Diagnose the problem
- What has changed?
- What constraints the firm’s choices?
-
Indentify Management Levers
- What options does management have?
- Consider changes in: market, value proposition, “5 forces” etc.
-
Consider impact of alternatives
- Think through the cost and benefits of particular changes
- Consider unintended consequences
- Create a plan of action (POA)
9
Q
Critical Resources for Porter, deliver value to the customer and protect Porter from threats
A
- Terminal building
- Majority of landing slots
- Downtown location
- Technology (i.e. the plane type)
- quiet
- fast
- spacious
- well-appointed
- fuel efficient
10
Q
Value to customers from Porter airlines
A
- Convience
- Speed
- Service
- (Flexibility)
11
Q
How is Porter protected from threats by their critical resources?
A
- Ownership of terminal ⇒ control end-to-end experience (no competition for inputs or supplier failure)
- Edge out Air Canada and other entrants
- Low substiution risk already
12
Q
Why do we care about strategy?
A
- Framework for analysis and assessment
- Link to action
- Justification not to do something
- Prevent “tyranny of incrementalism”
- Spur continous improvement
- Prioritize/guide allocation of limited resources
- Strategy may be implicit, rather than explicit - “you are what you do”
13
Q
Industry Structure / Industry organization
On what can the intensity of rivalry depend on?
A
- Number of competitors
- Basis of competition
- Price (Betrand)
- Quantity (Cournot)
- Quality
- Segmentation of demand
- Scope for tacit collusion (stillschweigendes Kartell)
- Clarity of “game” and signaling
-
Coststructure of the industry
- High fixed cost and low marginal cost can lead to price competition
- Etc.
14
Q
What is the boundary of a firm?
A
- Its “core activites”
- Value chain
- all of the activities from raw materials production to final sale and disposal that determine the cost and benefits of stakeholders
15
Q
Boundary of a firm: How does the firm add value to different steps of the value chain?
A
How does the firm add value to different steps of the value chain?
- Technology
- Decrease costs
- Differentiation
- Increase value and WTP
- …
- Marketing
- Brand
- Increase WTP
- Price discrimination
- Product bundling
- ….
- Operational Execution
- Reduce costs
- Process innovation
- Add value through availability, timeliness, support services
- More?
16
Q
Boundary of a firm: How does a firm select its core activities?
A
How does a firm select its core activities?
- Value-added (and where it can be extracted)
- Competence
- Synergies
- Transaction costs
- Supply risk
- Consumer risk
- Etc.
17
Q
Globalization take-aways
A
- Many policies that matter for international strategy are rooted in norms or other social constructs, not necessarily written into laws
- Laws and norms differ accross countries
- Certain global institutions try to provide harmonized rules for global competition
- Who should decide what is “fair”? Western developed countries have disproportiante power in many of these institutions
- Where is the line between enforcing important values (e.g. environmental and child labour) and paternalism
- Not coordinating or deciding at a global level forces individual consumers or firms to enforce values
- This might be unfair, too
- It might be bad for busines
- Different policies can lead to a “race to the bottom” that further disadvantages less-devoleped countries.
- These questions are complicated and deeply important
- They are becoming increasingly important at a time of tighter global connection and accelarating technological change
- Example of needing to train machine learning algorithms on vast seas of data and the challenge of privacy law differences across different countries ⇒ China
- Example of dissruption caused by universal basic income (UBI)
18
Q
Ghemawat reading Take aways (1/2)
What are the risks to pursuing a Cosmopolitan Strategy?
A
- Firms and people are deeply rooted in their origins and home country
- Ignoring this causes big problems
- It is crucial to accept these differences and distances and work with them
19
Q
Ghemawat reading Take aways (2/2)
How can we evauluate these strategies?
A
- Strategy - AAA framework: Adaptation, aggregation and arbitrage
- Adaptation: responding to differences by adjusting to local standards
- Aggregation: reducing differences to leverage economies of scope and scale
- Arbitrage: taking advantage of differences for own gain
- Organization: Diverse management and managing differences is importan
- People: Teaching people the rooted cosmopolitan mindset (knowing your origins but being aware and open to other cultures)
20
Q
Where do external risks/threats come from?
A
- Misreading the situation
- Bad data
- Wrong data
- Cognitive biases
- Causal ambiguity
- Miscalculating timing
- Direction is right, slope is wrong
- Competitive surprises
- Role of corporate secrecy
- Entry hard to predict
- Government/Policy intervention
- Wrong bets
- Big risks may be necessary, but do not always pay off
- Root: Insufficient resources to respond (time, $$$, people, creativitiy)
21
Q
What is path dependece?
A
- Firms resources and capabillities may hard to change quickly
- Path dependence: having something today that hinges on choices made in the past (⇒ you are what you do)
- Understanding resources and capabilities helps us to understand how firms respond to their external context:
- What they are
- Where they come from
- How they can change
22
Q
What is a resource?
A
- Provides a firm with the potential to act
- Wherewithal to execute strategic decisions (Wherewithal = nötige) ⇒ necessary for strategy execution
- Owned or otherwise “belonging” to the firm
- Examples
- Scale
- Market share
- Brand
- Access to inputs
- Supply chain relationships
- Location
- Cash flow
- Human Capital
- Coporate reputation
- Etc.
23
Q
What is a capability?
A
- The ability of an organization to perform a coordinated set of tasks, utilizing organizational resources, for the purpose of achieving a particular end result.
- Examples
- Speed
- Productivity
- Cultural effectiveness
- Talent management
- Innovation
24
Q
Where do Capabilities come from?
A
- Processes
- Path dependence / History
- Employee behavior
- Incentives
- Norms
- Culture
- Leadership
- Organizational structure
- Where does the authority lie
- How do the parts of the organization relate to each other?
25
Link between Resourcs and Competitive Advantage
* VRIO Framework
* Valuable
* Rare
* Inimitable
* Organized (to capture value)
