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organizational theory & strategic management > Klausur > Flashcards

Klausur Flashcards

1
Q

Vision

A

the vision is a view of the future, sets the stage for the firm´s strategy, focuses on key capabilities and offers a sense of direction

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2
Q

Mission

A

the mission is a broadly defined but enduring (beständig) statement of purpose that identifies the scope (Umfang) of an organization´s operations and its offerings to the various stakeholders. It describes what you strive to do best every day.

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3
Q

Strategy

A

= a plan of action designed to achieve a long-term or overall aim.

the strategy refers to top management´s plans to develop and sustain competitive advantage so that the organization´s mission is fulfilled

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4
Q

Strategy:

competitive advantage

A

state whereby a firm´s successful strategies cannot be easily duplicated by its competitors. Maintaining a sustained competitive advantage over time can be challenging

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5
Q

Strategic Management

A

a process that includes top management´s analysis of the environmental in which the organization operates prior to formulation a strategy, as well as the plan for implementation and control of the strategy

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6
Q

Business model

A

it explains how the organization seeks to earn a profit by selling its goods / services

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7
Q

5 characteristics of a successful strategy

A
  1. understand the competitive environment (industry life cycle)
  2. understand how resources translate into strengths and weaknesses.
  3. The strategy is consistent with the mission and goals of the organization.
  4. Plans for putting the strategy into action are designed before it is implemented.
  5. Possible future changes are evaluated before the strategy is adopted (looking for future trends to not loose track)
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8
Q

IKEA - examples of vision & mission

A

Vision:
to create a better everyday life for the many people

Mission:
offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them

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9
Q

Strategic management process

A

method by which managers conceive (konzipieren) and implement a strategy that can lead to a sustainable competitive advantage (on top of planning)

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10
Q

Strategic planning process

A

systematic or emerged way of performing strategic planning in the organization through initial assessment, thorough analysis, strategy formulation, its implementation and evaluation.

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11
Q

SMP
vision and mission
(how to start)

A

the company´s mission describes the business and how it wants to fulfill the vision. It informs organization´s stakeholders about the product, customers, markets, concern for public image and employees of the organization

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12
Q

Strategy Formulation

and Tools to use

A
  1. Review the information from analysis
  2. Determine what resources the business currently has that can help reach the defined goals and objectives
  3. Identify any areas of which the business must seek external resources
  4. Prioritize issues by their importance to you scuess
  5. formulate strategy

Tools:
Scenario Planning
BCG - Matrix
Bowman Clock

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13
Q

Strategy Implementation

A
  1. setting annual objectives
  2. revising policies to meet the objectives
  3. in case, changing organizational structure to meet new strategy
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14
Q

Strategy Monitoring

and tools to use

A
  1. Internal and external factors review, measuring company´s performance

Tools:
Benchmarking
ROI
Gap Analysis

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15
Q

Corporate-level strategy

A

strategy top management formulates for the overall corporation.

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16
Q

how to come up with a corporate strategy

A

the strategic focus and ressources are attributed to each SBU!

Definition of a mission for each strategic business unit:

  1. what is the contribution of the SBU to the corporation (profit, innovation, services)
  2. what is the purpose of the corporation (which needs and demands are adressed?)
  3. definition of the required competencies (core competencies)
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17
Q

3 Options of a Corporate Strategy (in general)

A
  1. compete in a single industry: allows a firm to specialize
  2. compete in related industries: allows a firm to develop synergy among the business units
  3. compete in unrelated industries: minimizes risk through diversification; but no clear focus
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18
Q

3 Options of corporate strategies (performance)

A
  1. growth: increase in size internal or external
  2. stability: retain current size
  3. retrenchment: decrease in size
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19
Q

Internal growth (corporate strategy)

A

expanding by internally increasing its size and sales

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20
Q

External Growth (corporate strategy)

A

acquiring other companies!

unrelated diversification
horizontal integration
horizontal related integration
vertical integration
strategic alliances (joint venture)
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21
Q

External Growth:

Merger

A

occurs when two or more firms, usually of roughly similar sizes, combine into one through an exchange of stock

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22
Q

External Growth:

Acquisition

A

is a form of merger whereby one firm purchases another, often with a combination of cash and stock

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23
Q

why diversify? (Corporate Strategy)

A

cost saving opportunities
capture strategic fit
spread business risk
leverage (einflussreicher) brand name

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24
Q

what to consider when thinking about diversification?

A

first a diversification move must pass 3 tests:
industry attractiveness test
the cost-of-entry test
the better-off test

furthermore you need to consider:
level and degree of diversification
mode of diversification
number of relatedness (Bezogenheit)

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25
Q

Combination related-unrelated diversification strategies

A

dominant-business firms:
1 major core business with several small related or unrelated businesses

narrowly diversified firms:
diversification includes a few related or unrelated businesses

broadly diversified firms:
wide collection of either related or unrelated businesses or a mixture

multibusiness firms:
diversification portfolio includes several unrelated groups of related businesses

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26
Q

Related Diversification

A

there is a technological similarity between the industries, which means that the firm is able to leverage (hebeln) its technical know-how to gain some advantage

f.e. seek new products which have tech or marketing synergies with existing product lines appealing to new customers

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27
Q

Unrelated Diversification

A

= diversifying into businesses with no strategic fit and no synergies in value chain

companies pursuing unrelated diversification are often referred to as conglomerates

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28
Q

Horizontal integration

A

a firm that acquires other companies in the same line of business. Doing so allows a firm operating in a single industry to grow rapidly without moving into other industries

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29
Q

Horizontal related diversification

A

a firm requires a business outside its present scope of operation, but with similar or related core competencies

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30
Q

Vertical Integration

A

refers to merging (verschmelzen) various stages of activities in the distribution channel.

When a firm acquires its suppliers -> backward integration

When a firm acquiring its buyers -> forward integration

f.e. Mc Dondalds

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31
Q

Strategic Alliances

A

= partnerships
occur when two or more firms agree to share the costs, risks and benefit associated with pursuing new business opportunities

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32
Q

Stability Strategy

A

= attempting to maintain the present size and scope of operations. Attractive when:

  1. industry growth is slow or non-existent
  2. costs associated with growth do not exceed its benefits
  3. growth may place great strains on quality and customer service
  4. large, dominant firms may not want to risk prosecution for monopolistic practices
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33
Q

Retrenchment Strategies

A

= decrease in size.
when performance is disappointing.

is often accompanied by a reorganization process known as corporate restructuring

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34
Q

3 Forms of Retrenchment

A

Turnaround:
transform the corporation into a leaner, more effective firm and includes such actions as reducing the size of the workforce

Divestment:
selling one or more of a firm´s business units.
May be necessary when the industry is in decline

Liquidation:
strategy of last resort and terminates the business unit by selling its assets

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35
Q

Business Unit

A

an organizational entity with its own mission, set of competitors and industry

36
Q

Generic Strategies

A

a simple categorization of competitive strategies available to businesses

37
Q

Strategic Group

A

Businesses employing the same generic strategy

38
Q

Business unit strategies

A

defines the strategic goals for the BU and how these goals will be realized:

which products, which markets, which time, which target groups

39
Q

Functional Strategies

A

dictates what must be done within the various functions

all functional strategies must blend together to support the business strategy

different functions: marketing, finance, HR

40
Q

Limitations of Porter´s Five Forces

A
  1. does not consider partner firms
  2. assumes that large firms cannot influence the industry structure
  3. assumes industry factors, not firm resources, are primary profit drviers
  4. Difficult to apply to firms operating in multiple countries
41
Q

Market evaluation

A

market size

market growth

market profitability

price development

competitive rivalry

market segmentation

threats and risks

possibility of differentiation

trade structure

42
Q

Analysis of the macroenvironment

A

macroenvironmental forces affect industries and individual firms wihin industries.

The focus at this stage of analysis is on the industry, not the firm!

certain forces may be more prominent in some industries than in others

43
Q

PESTEL Analysis

Political and Legal

A

Political:
political factors include areas such as tax policy, labor, law, trade restrictions & tariffs
-> goods and services which the government provides or does not provide (education, health)

Legal:
factors include discrimination, antitrust, health, safety, employment, consumer protection laws

44
Q

PESTEL Analysis

Economic and Socio-cultural

A

Economic:
include economic growth, interest rates and inflation rate, purchasing power

Socia-cultural:
include the cultural aspects, educational level, population growth rate.
Trends in social factors affect the demand for a company´s products and how that company operates

45
Q

PASTEL Analysis

Technological and Environmental

A

Technological:
factors include technological aspects such as R&D, activity, automation, incentives

Environmental:
include ecological and environmental aspects such as weather, climate

46
Q

What is an industry?

A

an industry is a group of companies that produce competing products or services.

Rivals often share critical success factors (CSFs); which are elements of the strategy that are promote (but not guarantee) success within a given industry

47
Q

Market Share

A

market share represents the proportion of industry sales attributed to a particular rival

48
Q

Identify Industry & Competitors

A

Consider the question “where would the firms customers go if the firm did not exist?

Draw a picture to illustrate firms inside and outside of the industry

provide market shares if possible

49
Q

Mintzberg: 5 P´s

A

Each of the 5 Ps is a different approach to strategy.

Plan

Ploy

Pattern

Position

Perspective

50
Q

Mintzberg

Plan

A

Plan: strategy needs to be developed in advance and with purpose

51
Q

Mintzberg

Ploy

A

Ploy: strategy is a means of outsmarting the competition

52
Q

Mintzberg

Pattern

A

Pattern: we learn to appreciate that what was successful in the past can lead to success in the future

53
Q

Mintzberg

Position

A

Position: strategy is about how the organization relates to its competitive environment and what it can do to make its products unique in the marketplace

54
Q

Mintzberg

Perspective

A

Perspective: emphasizes the substantial influence that organizational culture and collective thinking can have on strategic decision making within a company

55
Q

How does the Mintzberg´s model helps a company?

A

to think from a variety of viewpoints

to test initial ideas

to check for inconsistencies

56
Q

The Miles and Snow Strategy Framework

A

Prospectors:
seek first mover advantages by introducing new products and services

Defenders:
seek stability and only compete in a predictable segment of the market

Analyzers:
represent a middle ground between prospectors and defenders and emphasize flexibility and second mover advantage

Reactors:
lack consistency and perform poorly

57
Q

What shall answer a company´s strategy?

A
  1. How does a company outperform its competitors and win in the market?
  2. How can it perform well for a prolonged period of time and ensure lasting company survival?
58
Q

Economies of Scale

Sources of Cost Advantage

A

Spreading fixed costs over large volume

purchasing discounts

specialization of labor

specialized machines and technology

59
Q

Economies of Scale

A

a proportionate saving in costs gained by an increased level of production.

cost advantages companies experience when production becomes efficient, as costs can be spread over a larger amount of goods. The companies benefit from their size of operations.

60
Q

What are required factors to reach economies of scale?

A

Required factors to reach economies of scale can be division of labor, specialized technology, network economies of scale, purchaising disccounts and spreading fix costs over a large sales volume.

61
Q

Economies of scope

A

means that the production of one good reduces the cost of producing another related good. Economies of scope occur when producing a wider variety of goods or services in parallel is more cost effective for a firm than producing less of a variety, or producing each good independently.

62
Q

What are required factors to reach economies of scope?

A

shared tangible resources:
unit costs can be reduced, when tangible resources like production plants, transportation systems, etc. are utilized across a range of products

shared intangible resources:
f.e. HP with their inkjet technology

pooled negotiation power:
by combining their purchases, different strategic business units can benefit from bulk discounts

63
Q

Experience (learning) curve

A

Each time the accumulated production quantity is doubled the cost per unit decrease by a certain (constant) percentage

64
Q

Implications of the experience (learning) curve

A

profitability depends on experience curve effects, thus companies with higher market share can expect a higher return on investment

First mover advantage! In industries with high experience curve effects, first mover can gain market share quickly, create a cost advantage and prevent competitors from entering the industry by reducing prices along the experience curve

65
Q

Strategic positioning

A

attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. It means performing different activities from rivals, or performing similar activities in different ways

66
Q

For key principles of strategic positioning

A
  1. operational effectiveness alone is not strategy
  2. strategy is the creation of a unique and valuable position, involving a different set of activities
  3. strategy requires you to make trade-offs in competing - to choose what NOT to do
  4. strategy involves creating “fit” among a company´s activities
67
Q

Operational Effectiveness

A

means performing activities better than rivals, lower production cost, and offer higher value to customers

68
Q

Competitive Convergence

A

is the result of individual practices being copied.

What was once a source of advantage has now become the industry standard.

69
Q

Strategic positioning - the strategic fit

explain the different types of fit

A

first order fit:
simple consistency between each activity and the overall strategy

Second order fit:
activities are reinforcing (Verstärkung)

Third order fit:
Optimization of effort

70
Q

Business Model Canvas

A

is a strategic management and lean startup template for developing new or analyzing and documenting existing business models

71
Q

9 key factors or “building blocks” of the business model

A 
Key Activities
Key Resources
Partner Network - Value Proposition
Customer Segments
Channels
Customer Relationsship
Cost Structure
Revenue Streams
72
Q

What is Scenario Planning?

A

is a foresight methodology which helps to make sense of an uncertain future.
The focus is on making better decisions

73
Q

Why do scenario planning?

A

Decisions taken today will have effects years into the future.

It is increasingly difficult to discern trends and realities, and to make well-informed decisions today

The future is not pre-determined or predictable

It makes to sense to look for ways to understand the future to deal with uncertainty

74
Q

4 Types of Future

A

Possible - “might” happen
Plausible - “could” happen
Probable - “likely to” happen
Preferable - “want to” happen

75
Q

What is Foresight?

A

Foresight is a way of thinking that enhances our understanding of our current and plausible future

76
Q

What are Scenarios?

A

Scenarios are possible views of the world, described in narrative form (stories) that provide a context in which managers can make decisions

By seeing a range of possible worlds, decisions will be better informed and a strategy based on this knowledge and insight will be more likely to suceed

Scenarios do not predict the future, but they do illuminate the drivers of change: understanding them can only help managers to take greater control of their situation

77
Q

Why make Scenarios?

A

A creative and shared process that allows time for reflection about the organisation and its future

Combining both the past and the future makes thinking about strategy stronger and promotes responsiveness, flexibility, competitive advantage

Scenarios allow a shared view of the future to be developed and

provide the opportunity for an organisation to consider how it wants to position itself in that future

78
Q

Uncertainty?

A

Low:
we are reasonably certain that it will play out or continue in ways that are fairly well understood

High:
we have no clear idea which of a number of plausible ways things might go

Moderate: somewhere in between

79
Q

Developing the Scenarios

A

Scenarios must be internally consistent and plausible: they have to make sense to the people creating them, and to the people in the organisation who will read them

80
Q

Strategic Implications for Scenario Planning

A

Expanding understanding of what options might be available in the long term:

shifts frame of reference 10-20 years out

examining implications for the services provided by your unit in each of the scenario worlds

looking to see what your unit would need to do to stay viable (lebensfähig)

81
Q

Uses for Scenarios?

A

A common language for “strategic conversations” and ongoing future-oriented discussions

Risk Assessment: specific decision

Strategy Evaluation: existing strategy

Strategy: Development: new strategy

82
Q

How to go form a scenario to a strategy?

A

Scenarios provide “clues” about what might be important drivers of change in the future, and how those drivers might interact and affect the organisation.

Aim is to identify strategies that are robust across all scenarios.

Also to identify “early warning indicators” that events in the scenarios are happening and how we will respond to them?

83
Q

Scenario Approaches to strategy?

A

Robust:
perform well over the full range of scenarios considered -> Blue Chip

Flexible:
Keep options open and/or wait for as long as possible before committing -> Hedging

Multiple Coverage:
pursue multiple strategies simultaneously until future becomes clear -> Scattergun

Gambling:
Select one strategy which works very well, but in only one or two scenarios -> Bet the Farm

84
Q

What are “Wild Cards”?

A

= low-probability, very high-impact events that are:

wide in scope and directly affect the human condition

potentially disruptive (negatively and/or positively)

intrinsically beyond the control of any single institution, group of individual

rapidly moving

f.e.: asteriod impact, stock market collapse, terrorist attack

85
Q

When do buyers have bargaining power?

A
  1. buyers are concentrated or each one purchases a significant percentage of total industry sales.
  2. The product that the buyers purchase represent a significant percentage of the buyers costs.
  3. The product are standard or undifferentiated.
  4. Buyers have few switching costs.
  5. Buyers earn low profits, creating pressure for them to reduce their purchaising costs.
  6. Buyers have the ability to become their own suppliers.
  7. Buyers have complete information
86
Q

When do suppliers have bargaining power?

A
  1. the supplying industry is dominated by one or a few companies.
  2. there are few or no substitute products.
  3. The buying industry is not a major customer of the suppliers.
  4. Suppliers are capable of becoming their own customers
  5. Suppliers products are differentiated or have built-in switching costs, reducing the ability of buyers to play one supplier against another
87
Q

Blue Ocean Strategy

red vs. blue ocean?

A

red ocean - a lot of competitors:

  • compete in existing marketplace
  • make cost-value trade-off
  • beat the competition
  • exploit (ausnutzen) existing demand
  • align the whole system of company´s activities with its strategic choices of differentiation OR low cost

blue ocean - no competition:

  • create uncontested (unbestritten) market space
  • make the competition irrelevant
  • break the value-cost trade-off
  • align the whole company´s system with its strategic choices in pursuit of differentiation AND low cost

organizational theory & strategic management (1 decks)

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