Lesson 10-12 Flashcards
What is the definition of strategy making & strategy process:
are activities that determine the formation of strategies on the business, corporate and/or network level(s).
- They are exercised along the continuum from “ad hoc problem solving” to “fully patterned, repeatable and reliable” practices/ routines.
- We know from academic research that strategy processes have an impact on performance differences across firms. Thus, they matter!
- Put differently, while strategy content deals with the “what” of strategy, strategy process deals with the “how” of strategy.
The strategy process consists of two sequential phases:
2) Implementation of strategies
The question was the answer :)
Strategic Planning: Mention the 7 steps of strategic planning.
Mention some of the benefits and drawbacks of strategic planning.
☺ Systematic search for information
☺ Comprehensive analysis of firm and environment
☺ Rational process based on evidence and facts
☺ Improves communication and offers corporate wide set of tools and methods
☺ Coordinates and controls activities toward common goals
☺ Creates a common sense of direction
☹ Involvement of just a limited amount of people (top management, board, heads), while neglecting lower management levels
☹ Separates thinking from acting (smart people think, the others should act accordingly)
☹ Problem of commitment (implement plans of someone else)
☹ Problem of detachment (strategies are not sufficiently linked to on-going business operations – ivory tower)
☹ Strategic planning favors analysis over synthesis
☹ Often very bureaucratic – more strategic programming and budgeting than serious discussions about strategy
☹ Slow to react, as it is a yearly process following a predefined timetable
What are some of the basic characteristics of strategy making?
- The basis of strategy-making may not always be the formulation and implementation of strategic plans.
- Identifying strategic issues and creating strategic initiatives are at the center of strategymaking in some firms.
- The role of top management is the design and management of the context for strategy making.
- Top management designs the context, and managers at lower levels identify issues and propose strategic initiatives.
- Top management selects initiatives, allocates resources and reviews progress.
- Continuous strategy-making may be more appropriate for firms in industries facing dynamic and uncertain competitive environments, where responsiveness in „real time“ (versus periodic response) is important.
Explain the guided evolution of strategy
- Guided evolution follows another sequence of stages, called Variation, Selection and Retention.
- It assumes that new strategic initiatives can generate everywhere in the organization.
- These initiatives have to prove themselves both in the external market place (clients, competitors) as well as in the internal market place (resources, management attention, people).
- Top Management is now not longer the mastermind of strategy content and process, but has to set an appropriate context into which evolutionary process can unfold – it guides the evolution of strategic initiatives along their life-span (including deciding upon them, and stopping them).
- Definition: A strategic initiative is a coordinated undertaking (formal or informal) to develop or renew the capabilities associated with competitive advantage.
WHAT ARE STRATEGIC INITIATIVES?
- The content of initiatives may include new products, process improvements, new business ventures, etc.
- Initiatives may be formal (induced by top management) or informal (autonomous activity at middle and lower levels).
- Initiatives are the principal means („learning laboratories“) by which organizations learn to do new things (change existing or develop new capabilities).
Mention the 4 knowledge flows in the MNC.
What is a subsidary initiative?
The proactive and deliberate pursuit of a new business opportunity by a subsidiary company, undertaken with a view to expand the subsidiary´ s scope of responsibility in a manner consistent with the MNC s strategic goals.
What is the definition of a business model?
Whenever a business enterprise is established, it either explicitly or implicitly employs a particular business model that describes the design or architecture of the value creation, delivery, and capture mechanisms it employs.
The essence of a business model is in defining the manner by which the enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit.
It thus reflects management’s hypothesis about what customers want, how they want it, and how the enterprise can organize to best meet those needs, get paid for doing so, and make a profit.
Here is an example of how a company can compare itself with competetion and how their business model can be visualized.
What are Business Model, Strategy and Tactics distinghuised?
- Business Model refers to the logic of the firm, the way it operates and how it creates value for its stakeholders
- Strategy refers to the choice of business model through which the firm will compete in the marketplace;
- Tactics refers to the residual choices open to a firm by virtue of the business model it chooses to employ.
Explain the business model of Ryan Air.
Lowest ticket prices
Low commissions to travel agents
Standardized fleet of 737s Single-class
Low airport fees
Bargaining power with suppliers
Economies of scale
Attracts combative team
Low fixed cost
Flexibility in rostering staff
Explain business models in international firms - how are they different?
Multinational enterprises create and capture value through appropriate business models that fit both distinctive capabilities and dynamic markets.
The key elements of a global business model include propositions for adding customer value and capturing a share of that value, methods to control, deploy, and utilize critical resources, and integrated processes that deliver value to target global customers.
Global markets add layers of complication, as the MNE needs both a global umbrella business model and a local business model for each product and international host market.
Mention the parameters of a business model of a MNC. Do not know this by heart, but read and understand each of the points of the business model.
What is the definition of a supply chain?
What is the definition of supply chain management?
- Supply chains are sets of interdependent organizations involved in the process of making a product or service available for use or consumption.
- Supply chain management is defined as “the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long term performance of the individual companies and the supply chain as a whole” (Mentzer et al., 2001).