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International Corporate Strategy > Exam Preparation > Flashcards

Exam Preparation Flashcards

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
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2
Q

What is not Strategy according to Porter?

A

8 examples work

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3
Q

What is Strategy?

⇒ Key definition

A
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4
Q

What are some key strategy questions?

A
  • See alignment
  • Industry
  • Internal resources and capabilities
  • Operation/Execution
  • Environment
  • Timing
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5
Q

What is alignment?

A
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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
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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
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8
Q

How to analyze a case?

A
  1. Assess Context
    • External
    • Internal
    • What do you wish you knew? Is this know-able?
  2. Assess Firm Performance
    • What is the firm’s competitive advantage?
    • How well is it meeting customers needs?
    • How well is it competing with rivals?
  3. Identify “Symptoms”
  4. Diagnose the problem
    • What has changed?
    • What constraints the firm’s choices?
  5. Indentify Management Levers
    • What options does management have?
    • Consider changes in: market, value proposition, “5 forces” etc.
  6. Consider impact of alternatives
    • Think through the cost and benefits of particular changes
    • Consider unintended consequences
  7. Create a plan of action (POA)
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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
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10
Q

Value to customers from Porter airlines

A
  • Convience
  • Speed
  • Service
  • (Flexibility)
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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
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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”
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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.
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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
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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?
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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
Q

Link between Resourcs and Competitive Advantage

A
  • VRIO Framework
    • Valuable
    • Rare
    • Inimitable
    • Organized (to capture value)

International Corporate Strategy (3 decks)

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