Strategy and Growth Strategies

Question 1

What is strategy

Answer 1

Coming up with a way to get a competitive advantage

Question 2

What does VUCA stand for and what do is denote

Answer 2

Volatility
Uncertainty
Complexity
Ambiguity

There is no concrete demand curve for a new product for these reasons

Question 3

What are mintzbergs 5 psa and what do they mean

Answer 3

How firms can deal with VUCA for new product:
Plan
Ploy
Pattern of bahviour
Position with respect to others
Perspective

Question 4

What are all the business environments or influences a bsuiness must consider - PESTLE

Answer 4

Political
Economic
Social/cultural
Technological
Environmental
Legal
must look at the world through these lenses

Question 5

What are the three steps of stetegic management

Answer 5

Strategic analysis
Strategic choice
Strategic implementation and execution

Question 6

What are the five competitive forces that shape strategy - Porter

Answer 6

Rivalry among existing competitors - based on where you are in the market
Potential entrants
Buyers
Substitutes
Suppliers

Question 7

Define Cost leadership strategy

Answer 7

Driving out inefficiency in every stage of the value chain. Ex: Ryanair

Question 8

Define differentiation strategy

Answer 8

Promote the uniqueness of your own product Ex: Nike promotes itself as a quality choice

Question 9

Define Focus strategy

Answer 9

Identification of a market niche and capturing the whole market Ex: Build a bear

Question 10

Define business model

Answer 10

The business model is the story that explains how an enterprise works

Question 11

What are four main things to consider in a business model

Answer 11

Customer value proposition
Key processes
Key resources
Profit formula

Question 12

Explain the minimum effect scale

Answer 12

Minimum effect scale - the size of the individual factory or of the whole firm, beyond which no significant additional economies of scale can be gained

Question 13

What are four constraints on growth?

Answer 13

Financial conditions - Internal funds, borrowing, new shares
Shareholder confidence - Balance growth vs dividends, takeover constraints, valuation ratio
Demand conditions - Profitability and growth depend on market demand
Managerial conditions - Ability of managers to exploit growth opportunities

Question 14

What are three forms of internal expansion

Answer 14

Vertical integration
Horizontal expansion
Conglomerate diversification

Question 15

What are two forms of external expansion

Answer 15

Merges and acquisitions

Strategic alliances

Question 16

Explain vertical product differentiation

Answer 16

Where a firm’s product differs from its rival’s product with respect to quality

Question 17

Explain horizontal product differentiation

Answer 17

Where a firm’s product differs from its rivals’ products, although the product is seen to be of a similar quality

Question 18

What are the features of a product - very simply put

Answer 18

Technical standards, quality standards, design characteristics, service characteristics

Question 19

Name the four marketing strategies in the ansoff matris

Answer 19

Market penetration
Market development
Product development
Diversification

Question 20

Explain vertical intergration

Answer 20

A business growth strategy that involves expanding within an existing market, but at a different stage of production. This can be “forward” (ex:retail) or “backwards” (ex: raw materials)

Question 21

What are the advantages and issues of vertical integration

Answer 21

Advantages:
Greater efficiency in the chain of production
 Reduce uncertainty
 Innovation
Monopoly Power
Barriers to entry

Issues:
Inflexibility
Opportunity cost

Question 22

Define diversification and give its advantages

Answer 22

Diversification - a business growth strategy in which a business expands into new markets outside of its current interests
Advantages of diversification - Growth, Stability and Maintaining profitability

Question 23

Define joint venture

Answer 23

Where two or more firms set up and jointly own a new independent firm

Question 24

Define franchise

Answer 24

A formal agreement whereby a company uses another company to produce or sell some or all of its products

Question 25

Define licensing

Answer 25

Where the owner of a patented product allows another firm to produce it for a fee

Question 26

Define outsourcing

Answer 26

A firm employs another firm to produce part of its output or some of its inputs

Question 27

Define consortium

Answer 27

Two or more firms work together on a specific project

Question 28

What are the advantages of a strategic alliance

Answer 28

New markets, risk sharing, capital pooling

Question 29

What are the benefits of a merger

Answer 29

Growth, economies of scale, monopoly power, reduce uncertainty, increase market valuation and opportunity

Question 30

Define merger

Answer 30

The outcome of a mutual agreement made by two firms to combine their business activities

Question 31

Define takeover

Answer 31

Where one business acquires another. A takeover may not necessarily involve mutual agreement

Question 32

Define corporate inversion

Answer 32

the process by which companies move overseas to reduce the tax burden on income - not socially admirable