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week 3 Flashcards

(12 cards)

1
Q

What is strategy formulation?

A

Strategy formulation is the process of selecting the most appropriate courses of action to achieve the organisation’s defined goals and objectives.

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2
Q

What are Porter’s three generic strategies?

A

Cost Leadership – Becoming the lowest-cost producer in the industry.

Differentiation – Offering unique products/services valued by customers.

Focus Strategy – Targeting a specific market niche with either cost leadership or differentiation.

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3
Q

What does the ‘Focus Strategy’ entail?

A

It involves concentrating on a narrow market segment with a tailored strategy—either cost-based or differentiation-based.

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4
Q

What is the key risk of the Focus Strategy?

A

The niche may become unattractive or be outcompeted by broader market players.

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5
Q

What does it mean to be “Stuck in the Middle” (Porter)?

A

A firm is “stuck in the middle” if it tries to pursue cost leadership and differentiation simultaneously without achieving either effectively, leading to poor performance.

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6
Q

Why is being “Stuck in the Middle” problematic?

A

It creates strategic confusion, weakens brand identity, and makes cost control or differentiation less effective compared to competitors with clear strategies

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7
Q

What’s a real-world example of being “Stuck in the Middle”?

A

A mid-priced clothing brand that’s too expensive for budget shoppers and not unique enough for premium buyers.

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8
Q

What external analyses are important during strategy formulation?

A

PESTEL Analysis – Evaluates macro-environmental factors: Political, Economic, Social, Technological, Environmental, Legal.

Five Forces Analysis – Assesses industry competition: rivalry, new entrants, substitutes, buyer power, supplier power.

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9
Q

What is competitor analysis?

A

It involves identifying key competitors and evaluating their strategies, strengths, weaknesses, and likely future moves.

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10
Q

What are the benefits of competitor analysis?

A

Helps anticipate strategic threats.

Identifies gaps in the market.

Informs strategic positioning.

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11
Q

What factors should be considered when selecting a strategy?

A

Internal capabilities and resources

Market conditions

Competitor positioning

Long-term sustainability

Fit with mission and values

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12
Q

Can firms successfully blend strategies?

A

es, some firms succeed in hybrid strategies by leveraging operational efficiency while offering unique value—e.g. IKEA, which combines low costs with distinctive design.

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