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Strategic Management Flashcards

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1
Q

A strategy is a ______________ which positions the firm to _______________________

A

A strategy is an integrated set of choices which positions the firm to create a sustainable economic advantage

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2
Q

Strategy relies on (3)

A

Simple agreed goals
Appraisal of resources
Understanding competition

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3
Q

Types of strategy:
Corporate strategy: _____ to compete
Business strategy: ___ to compete
Functional:

A

Corporate strategy: Where to compete
Business strategy: How to compete
Functional: Technical steps to implement

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4
Q

I/O analysis: Definition and assumption

A

Industrial organisational economics assumes that outer environment dictates the actions of firms.

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5
Q

Structures incompatible with I/O (4)

A

Monopoly
Oligopoly
Perfect competition
Monopolistic competition

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6
Q

Assumptions of the I/O model (4)

A

All firms have similar capabilities
Resources are mobile
All firms act to maximise profit
Restrictions in the external environment

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7
Q

RBV: Definition and assumption

A

Resource based view says that the source of competitive advantage is the resources that a firm has.

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8
Q

Assumptions of RBV model (3)

A

Resources aren’t mobile
Resources are inhomogenous
Resources change over time

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9
Q

Definition: an industry is a __________ whose products/services

A

Definition: an industry is a collection of firms whose products/services are perfect/near perfect substitutes

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10
Q

Uses of I/O analysis: (2)

A

Helps to identify competitors

Helps to identify success indicators

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11
Q

Define and give example: Monopoly

A

One firm dominates the entire industry (DeBeers, Microsoft)

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12
Q

Define and give example: Oligopoly

A

A collection of firms dominate the industry (Wifi or mobile phone networks)

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13
Q

Define and give example: Perfect competition

A

Many small firms which offer near identical goods (commodity markets)

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14
Q

Define and give example: Monopolistic competition

A

Collection of small firms who have a different product, with consumers aware of the non-monetary benefits (hairdressers)

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15
Q

Porter’s Five forces (5)

A 
Threat of new entrants
Power of buyers
Power of suppliers
Threat of substitutes
Rivalry
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16
Q

Sources: threat of new entrants (9)

A 
Capital requirements
Technological requirements
Government legislation
Economies of Scale
Threat of retaliation
Established connections
Ease of switching
Product differentiation
Learning Curve cost effect
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17
Q

Threat of substitutes (4)

A

[ ] of substitutes and level of differentiation
Quality of product
Price of product
Ease of switching

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18
Q

Power of buyers (5)

A 
[ ] of buyers
Buyer information
Backwards integration threat
Lack of differentiation
Intensity of competition
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19
Q

Power of suppliers (5)

A 
[ ] of suppliers
Necessity of the product in the supply chain
Ease of switching
Forwards integration
Availability of substitutes
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20
Q

Degree of rivalry ((1x5),(1x5))

A

Intensity of competition: [ ] of competitors, growth in the industry, fixed costs, level of differentiation and more firms supplying
Exit barriers: specialised assets, fixed exit costs, strategic or emotional relationships, government legislation

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21
Q

Define:
Resource
Capability
Core competency

A

What a firm has
What a firm does: The firm’s capacity or ability to integrate firm resources to achieve a required goal
Actions a firm does particularly well to create a sustainable economic advantage

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22
Q

Types of resources (2)

A

Tangible and intangibles

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23
Q

Categories of tangible resources (4) and how to identify

A

Financial
Physical
Technological
Organisational

Can see their value on the balance sheets, check websites etc

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24
Q

Categories of intangible resources (4) and how to identify

A

Human
Reputation
Innovation
IP

Goodwill after M&A or as Kaplin of Harvard business school states, how closely aligned to the firm’s strategy are they

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25
Types of capabilities (2)
Visual (what we can see and measure) invisible (what is not immediately obvious). Analogous to assets/resources
26
Core competencies are activities that are _______ and combine _________ and ___________.
Core competencies are activities that are strategically valuable and combine process innovation and production ability
27
How do we analyse resources and capabilities
VRIO framework is used
28
V in VRIO
Valuable- Perceived value is higher than the actual value in the eyes of a customer (eg Apple products)
29
R in VRIO
Rare-Few or a single firm posses the ability to produce this or implement this (Ni superalloys)
30
I in VRIO
Imitability- can this be copied at a reasonable cost (could you challenge Coca Cola on their budget?)
31
O in VRIO
Organised to capture value- can the company align everything they have to create value to the product/service
32
VRIO checklist
``` Nothing = Competitive disadvantage Just V= Competitive parity V&R=Temporary competitive advantage VR&I = Unused competitive advantage VRIO = Sustainable competitive advantage ```
33
Value chain: definition
The value chain describes all values that a firm engages in to add incremental value to their product/service
34
Primary activities in Porter's value chain (IOOMS)
Inbound logistics, operations, outbound logistics, marketing and sales and services
35
Primary: Inbound logistics
Arranging inbound movement of materials and other inputs
36
Primary: operations
Activities required to convert inputs to outputs
37
Primary: outbound logistics
Activities required to collect, store and distribute products
38
Primary: marketing and sales
Retail and advertisement
39
Primary: services
Actions required after launch to keep the product or service working effectively
40
Secondary activities in Porter's value chain;
Firm infrastructure, human resources, technological development and procurement
41
Business level strategies (Porter's generic) (4)
Differentiation Cost leadership Focused differentiation Focused Cost leadership
42
Definition: Cost leadership
Same value in terms of the product, but at a lower cost
43
Aims of cost leadership (4)
Offer better customer value Target average customers using little differentiation Streamline manufacturing and materials management High volume low margin
44
Drivers of cost leadership (3)
Lower cost inputs Economies of scale Learning curves
45
Requirements and indicators of cost leadership (9)
``` Cost control Labour control Scaling Automation Incentives Control reports Cheaper inputs Low cost distribution Organisation ```
46
Definition: Differentiation
Higher value for the customers relative to the competitors. Features are unique but priced at a similar level
47
Aims: Differentiation (2)
Varied products and unique features | Low volume, high margin
48
Drivers of differentiation (3)
Strong branding Good market research Differed product
49
Indicators and requirements of differentiation (8)
``` Creative flair Incentive for skilled workers Strong branding Strong engineering Quality led Well coordinated work force ```
50
Strategy focusing occurs when firms have _________ which serves the ___________
Strategy focusing occurs when firms have intimate knowledge of a market segment which serves the need of a particular corner of the market
51
Benefit to focusing
Some core competencies are best serving a niche corner of the market
52
Successfully implementing a mixed strategy
usually you could get caught in the middle. Can circumvent this by having subsidiary businesses within a firm which cater to particular needs.
53
Definition: the value chain
The value chain describes all values that a firm engages in to add incremental value to their product/service
54
Benefits of the value chain (3)
Identify a firm's position in value chain Identify the activity which creates value identify the resources a firm has that create the value
55
4 stages in industry life cycle and shape of curve
Introduction Growth Maturity (stationary point) Decline
56
Factors which engender a new industry (2)
Sharing of knowledge | Demand growth
57
Effect of knowledge on innovation
Process innovation requires diffusion (hence curve looks like it has activation barrier).
58
Dominant design process (5)
``` Pioneers in R&D 1st prototype gets industry attention First commercial Front runner Dominant design ```
59
Dominant design and the industry cycle
``` Introduction = Product is innovated Growth = Design & manufacture of the good Maturity = Shakeout, cost cutting, differentiation and commoditisation Decline = Cost cutting and strategic issuees ```
60
Exceptions to industry cycle (3)
Food industry (no decline if necessity) Pharma/ICT (multiple versions) TV (room for improvement
61
Sources of corporate inertia (4)
Sticking to core competencies Imitation (copy each other to gain legitimacy, seen in banks), known as institutional isomorphism Limited search: accepting temporary solutions Complementary strategy: interdependent activity in a firm
62
Signs of mature industries (3)
Slowing of innovation Low technological change Market saturation
63
Cost optimisation of mature industries (4)
Economies of scale Low cost inputs Lower overheads Outsource]
64
Definition: Strategic innovation
Strategic innovation is a revamp of corporate strategy
65
Examples of strategic innovation (4)
Dramatic redefinition of the customer base Dramatic redefinition of the concept of customer value Dramatic redesign of end to end value chain architecture Bundle experience
66
Organisational ambidexterity vs Dual strategy
Organisational ambidexterity is the act of doing both strategy for now that exploits existing resources and capabilities, and future planning by having a strategy for tomorrow, SIMULTANEOUSLY. Dual strategy is doing one at a time.
67
Dynamic capabilities
Firms that readjust to address rapidly changing industries
68
Types of dynamic capability (3)
Sensing of threats and opportunities Seizing of opportunities Maintain competitiveness whilst overhauling assets
69
Declining industries: indicators and solutions (4)
Leadership: establish a dominant position. Encourage exit of rivals by commiting Niche: focus strategy Harvest: maximise cash flow Divest: Get out and sell
70
Innovation:
Commercialisation of an invention
71
Invention
Creation of products my development of new knowledge
72
Idea adopters (5)
``` Innovators Early adopters Early majority Late majority Laggards ```
73
Level of profits extracted from an invention (2)
How much value does the invention have to customers | How well can it be appropriated
74
Appropriation of ideas
Legal IP Complementary resources Imitability Lead time
75
What is the chasm and how is it surpassed?
It is the gap between the early adopters and early majority. There needs to be a need for the good
76
Benefits and drawbacks of first movers
Monopoly on the gain of a new product, but have to forge their own path (costly) and also high uncertainty.
77
Benefits of follower (3)
Can learn from first mover and exploit potential, and have more time to fine tune
78
Definition: strategic window
A period in time when the firms resources and capabilities are aligned with the market. Larger firms have a longer window, smaller firms have higher pressure to get the product to market quickly
79
Definition: emergence of standards
A standard is a format that allows inter-operability.
80
How do standards emerge (2)
This can arise from a public or private fund, and are linked to the dominant design.
81
Definition: technical standards
These emerge for network externalities, where my experience depends on your participation
82
Establishing as the standard (3)
Establish allies Pre-empt the market Manage expectations
83
How do you stimulate innovation? (5)
Cross functional product development Buying innovation Open innovation Corporate incubators
84
Definition: CSR
Coroporate social responsibility
85
Example of CSR
B-Corp. Private non profit which ranks the behaviour of firms on economics and social issues, so they can brand it.

Strategic Management (1 decks)

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