Strategy Flashcards
(28 cards)
What are the two viewpoints of business strategy?
- Industrial organization economics
- Resource-based view
What is the ‘Industrial Organization Economics’ viewpoint when looking at business strategy?
Industry analysis & competitive positioning
- central characteristic of the business environment = competition
- sources of profit => external environment
What is the ‘Resource-based’ viewpoint when looking at business strategy?
Emphasis on resources & capabilities
- source of profit => within the firm
What is the starting point of the outside-in approach?
Understand the market (competitors, ease of entry, …)
What is the starting point of the inside-out approach?
Prior experience, capabilities, resources, …
What is the outside-in approach?
STRUCTURE (industry structure)
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CONDUCT (firm behavior)
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PERFORMANCE (firm results)
What is the inside-out approach?
RESOURCES (firm resources)
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CONDUCT (firm behavior)
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PERFORMANCE (firm results)
Both viewpoints have something in common, what?
Both viewpoints link superior performances to a competitive advantage
What are the five P’s for describing strategy? (Mintzberg)
- Plan
- Pattern
- Position
- Perspective
- Ploy
What does ‘Plan’ stand for in the five P’s for strategy?
=> INTENDED STRATEGY
Strategy is a plan:
- direction, guide, course of action into the future
- path to get “from here to there”
What does ‘Pattern’ stand for in the five P’s for strategy?
=> REALIZED STRATEGY
Strategy is a pattern: consistency in behavior over time
What does ‘Position’ stand for in the five P’s for strategy?
Strategy is a position: locating particular products in particular markets
- looking down => product meets customer
- looking out => external marketplace
What does ‘Perspective’ stand for in the five P’s for strategy?
Strategy is a perspective:
An organization’s fundamental way of doing things
(how does the organization perceive the environment and acts upon it)
- looking up => grand vision enterprise
- looking in => inside the organization
When comparing corporate and business strategy, what is corporate strategy?
Which industries should we be in?
-> growth direction company (+speed)
-> markets/products (portfolio management)
-> how to coordinate activities/business units (communication structure, power business units, etc,…)
When comparing corporate and business strategy, what is business strategy?
How should we compete within a particular industry or market?
-> how to compete in a particular market
-> how to position yourself in a particular market
When comparing corporate and business strategy, we saw that there was also a third strategy. Which one and explain?
Functional strategy
- functional areas such as marketing, manufacturing, HR, logistics, etc,…
=> corporate and business level strategies - operation level: which resources to use, how many, …
Explain: mission, values, vision
Mission: Why do you exist?
Vision: What do you want to be?
Values: (ethical values)
=> what you believe in + how you will behave
Why is it necessary to develop a clear strategy statement?
formulation/implementation
Strategic objective: explain + opinion about “maximizing shareholder value”
Strategic scope: explain the dimensions
Strategic advantage: what is a customer value proposition?
Mapping your value proposition against those of rivals
Why should customers buy YOUR product or service?
Outside-in
What is the difference between total costs, average costs and marginal costs?
Marginale kost:
dit geeft u de mate waarin de totale kosten toenemen wanneer de output met één eenheid stijgt
What is/are the economies of scale?
the average cost declines over a range of output
-> fixed costs are spread over additional output => higher operational efficiency, implying lower variable costs
Explain: economies of scale, constant returns to scale, diseconomies of scale
- When average cost decreases as output increases = economies of scale
- When average cost remains unchanged with respect to output increase = constant returns to scale
- when average cost increases as output increases = diseconomies of scale
