Strategic Management Flashcards
(35 cards)
What does are the Key principles of strategic planning for Porter?
GOAL
o Strategy is the creation of a unique and valuable position, involving a different set of activities
FOCUS
o Strategy requires you to make trade offs in competing and chose what NOT to do
FIT
o Strategy involves creating ‘fit’ among compagny’s activities
What are Mintzbergs 5Ps?
A strategy activates, motivates, aligns, and enables efficient action
Plan
Goal oriented A plan has to be made before possible actions are taken and followed consciously and effectively
Pattern
Some strategies emerge from numerous activities from which patterns develop over time that are subsequently recognized as strategies - With strategy as a Pattern, we learn to appreciate that what was successful in the past can lead to success in the future. As for 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.
- To use this element of the 5 Ps, take note of the patterns you see in your team and organization. Then, ask yourself whether these patterns have become an implicit part of your strategy; and think about the impact these patterns should have on how you approach strategic planning.
Strategy is a pattern - specifically, a pattern in a stream of actions. Strategy is consistency in behaviour, whether or not intended. The definitions of strategy as plan and pattern can be quite independent of one another: plans may go unrealised, while patterns may appear without preconception.
Position
The organisations position in the market, the interaction between the internal and external context
Perspective
Strategy is about more than the chosen position/ larger perspective. A strategy is meaningful (vision), an overarching “perspective”. It gives the acting persons information on how the company and its environment are to be interpreted
Ploy/ move
It is a strategic choice to use ploy. One that competitors don’t expect. Organizations can surprise their environment by implementing a plan that nobody saw coming.
Explain Porters 5 Forces Model
The industry structure analysis serves to determine the attractiveness of an industry
Goal: To derive whether an industry is attractive for the company, i.e. whether it enables long- term profitable development.
The attractiveness of a sector for a company operating in it is determined by the market structure, as this influences the behaviour of market participants.
5 Forces : Negotiating/Bargaining power of suppliers Customer/Buyer bargaining power Threat from new competitors/entrants Threat from substitute products \+ Intensity of competition in the sector
What are the aspects for each Force in Porter’s model of 5 Forces?
Competitive Rivalry
o number and strength of your competitors. How many rivals do you have? Who are they, and how does the quality of their products and services compare with yours?
o Where rivalry is intense, companies can attract customers with aggressive price cuts and high- impact marketing campaigns.
o On the other hand, where competitive rivalry is minimal, and no one else is doing what you do, then you’ll likely have tremendous strength and healthy profits.
Supplier Power
o This is determined by how easy it is for your suppliers to increase their prices. How many potential suppliers do you have? How unique is the product or service that they provide, and how expensive would it be to switch from one supplier to another?
o The more you have to choose from, the easier it will be to switch to a cheaper alternative. But the fewer suppliers there are, and the more you need their help, the stronger their position and their ability to charge you more. That can impact your profit.
Buyer Power.
o Here, you ask yourself how easy it is for buyers to drive your prices down. How many buyers are there, and how big are their orders? How much would it cost them to switch from your products and services to those of a rival? Are your buyers strong enough to dictate terms to you?
o When you deal with only a few savvy customers, they have more power, but your power increases if you have many customers.
Threat of Substitution.
o This refers to the likelihood of your customers finding a different way of doing what you do. For example, if you supply a unique software product that automates an important process, people may substitute it by doing the process manually or by outsourcing it. A substitution that is easy and cheap to make can weaken your position and threaten your profitability.
Threat of New Entry
o Your position can be affected by people’s ability to enter your market. So, think about how easily this could be done. How easy is it to get a foothold in your industry or market? How much would it cost, and how tightly is your sector regulated?
What does VUCA stands for ?
It stands for : Volatility Uncertainty Complexity Ambiguity = world is not stable, nobody knows what happens tomorrow, no prediction, acceptance
Constitutive characteristics of a strategy
A strategy is a planned bundle of measures for competitive positioning and for shaping the necessary resources.
Competitive advantage
Strategy is a general plan to achieve one or more long-term or overall goals under conditions of uncertainty
Flexibility as the market and costumer evolves with time
What about the alignment of the strategy, how is it achieved?
The Mission, Value Network, Strategy, and Vision define the strategic direction for a business. They provide the what, who, how, and why necessary to powerfully align action in complex organizations.
A business strategy is a set of guiding principles that, when communicated and adopted in the organization, generates a desired pattern of decision making.
A strategy is therefore about how people throughout the organization should make decisions and allocate resources in order accomplish key objectives
What is Porters Value Chain?
A value chain is a set of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market
Primary activities and Support Activities = Margin
Primary activities -> Inbound logistics/ Operations/Outbound logistics/Marketing and sales/Service
Support activities -> Firm infrastructure/ Human resource Management/ Technology development/procurement
What does the McKinsey 7S Framework show and contain?
McKinsey 7s model is a tool that analyses firm’s organizational design by looking at 7 key internal elements:
(strategy, structure, systems: hard factors ) (shared values, style, staff and skills: soft factors)
The goal is to identify if they are effectively aligned and allow organization to achieve its objectives
What are the different Strategic Management Models?
Porters Value Chain/ strategy SWOT Analysis McKinsey 7S Mintzberg’s 5P Porter’s Five Forces
What is the WHY of a company?
It’s the PURPOSE of the company
Expresses why the business exists in the first place
It’s the reasons people wake up in the morning and love to work for a company
People don’t buy what you do but why you do it !
Identifying and committing to a “why” makes evident what work a company must prioritize as most important. It gives them the perspective to see what they really want to accomplish. It reveals a direction, a North Star to move towards. But not only that, it inspires people.
What is a vision?
The Vision is a realisable vivid image of your business in the future based on goals and aspirations ( dream like)
- directional, inspiring,plausible and concise
- directed inwards -> motivate employees
- answers the question where do you want to be ?
- communicates purpose and values of a company
- aligns with organisational values and culture
What is a mission?
A mission statement talks about HOW and WHAT you do and do different than competitors
: the present leading into the future
- defines purpose&fulfill customers needs/team values
-official statement to clients&stakeholders -> directed outwards
-list broad goal, key measure for clients& stakeholders
Explain the difference between a vision and mission of a company
What is the Value Proposition of a company?
-Tells prospects why they should do business with you
-Emphasises benefits of product/service
-explains how it solves customers problems
- why buy from you and not competitors
( connected to the WHY)
What are the Pillars of Sustainability?
Ecological : long-term and considerate of use of natural resources and preservation of the ecosystem
( climate, energy, biodiversity)
Economical : Economic maximisation of turnover and profit with simultaneous long-term preservation of all required resources ( work,prices,consumption)
Social
Preservation of social peace and avoidance of irreversible changes in the world, which could not be wanted by future generations ( security, health,culture)
What are the SDG’s and what is their relevance for businesses?
SDG’s Sustainable Development Goals (UN)
- End poverty in all its forms
- End hunger, achieve food security
- Ensure inclusive and quality education for all and promote lifelong learning
- Ensure access to water and sanitation for all
- Promote inclusive and sustainable economic growth,
Businesses can solve ecological/ economical/societal issues through innovation and awareness of these goals to act on them
Awareness is key to create innovation
‘Framework for innovation’
The SDGs facilitate the alignment of corporate strategy with the needs of today’s society. They highlight areas of innovation and can help to open up new markets. That is why the topic of opportunities is very relevant in the context of the 17 goals.
FRAMEWORK FOR BREAKTHROUGH IMPACT ON THE SDGS THROUGH INNOVATION
The Framework provides practical guidance to corporate teams wishing to use the Sustainable Development Goals (SDGs) as an inspiration for innovation. It helps companies orient their innovation processes to better address the SDGs and provides a toolkit for leveraging disruptive technologies and new business models to build the breakthrough solutions required to progress the SDGs.
Materiality Matrix
Y = Relevance for society (low,medium,high) X = Relevance for the company (low,medium,high)
Analyses the relation and priorities of both perspectives/ groups
Is a method to identify and prioritise sustainability issues to an organisation/ stakeholder
It shows how important it is to the business and to the stakeholder
What could be different approaches of companies in regards to ecological sustainability?
In regards to ecological sustainability:
> Improving resources and energy efficiency >Reduction of greenhouse gas emissions
> Increasing use of renewable energies
Internal incentives
- Improved profitability through cost reduction
- Competitive advantages through new products and processes
- Employee motivation
What are approaches and incentives for economic/ social sustainability?
Economic Approaches > Employment opportunities > Payment of fair wages > Correct payment of taxes > Fight against corruption and economic crime Internal incentives -Creation of sustainable markets -Contribution to economically desirable objectives
Social approaches > Compliance with laws > Health and safety at work > Promotion of diversity in the company > Prohibition of child and forced labour Internal incentives -Employee motivation - Positive business environment - Social acceptance
What are possible approaches/action companies on SDG’s?
- End poverty in all its forms = Pay living wage, greater social inclusion and environmental protection in vulnerable districts
- End hunger, achieve food security and improved nutrition = New methods of sustainable crops and products, cultivating more resilient agriculture systems
- Ensure inclusive and quality education for all and promote lifelong learning = Work with public sector to ensure supply of appropriate skills and education
- Promote inclusive and sustainable economic growth = Private sector leadership in new mechanisms and incentives for co-financing sustainable development innovations, greater focus on longer term sustainability
What does Strategic Readiness mean?
We are talking about the Readiness of a company for change/development & innovation
PEOPLE - Change Management -> might be Lack of Willingness; Lack of Capabilities; Lack of accessibility
TECHNOLOGY - Technology Management -> Tech. S-Curve, Tech. Portfolio ( Tech. Attractiveness/ Resource Strength) see if invest or not !!
Innovation Management
RESOURCES - Supply Chain Management
ORGANISATION - Analysis Tools -> SWOT analysis, market analysis, product strategies
Give the difference between Change Management and Project Management
Project Management targets the technical side: Design, Develop, Deliver
Change Management targets the human side:
Engage, Adopt, Use
=> Success
What are the Phases of the change process ?
- Create urgency
- Build leadership team
- Develop visions and strategies
- Communicate goals
- Prepare for change and motivate teams
- Celebrate short-term successes
- Build on these successes
- Embed change in company culture
