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301 > Week 3 strategy and strategic management > Flashcards

Week 3 strategy and strategic management Flashcards

1
Q

what is strategic management?

A

The set of managerial decisions and actions that involve managers developing and implementing strategies to achieve strategic goals.

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2
Q

what is involved in strategic management? 4 steps

A
  1. Identification of the corporate mission and major corporate goals
  2. Analysis of the organisation’s internal and external environment (SWOT analysis)
  3. Development and selection of strategies
  4. Strategy implementation and evaluation
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3
Q

what does strategic management focus on integrating?

A

management, marketing, finance/accounting, production/operations, research and development, and computer information systems to achieve organisational success.

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4
Q

what is SWOT analysis?

A

A method of analysing an organisational competitive situation
Internal: Strength and weakness
External: opportunities and threats

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5
Q

what is a good strategy?

A

support mission and exploit oppo and strengths, neutralise threats, avoid weakness

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6
Q

Briefly explain strengths (Internal)?

A
  • skills/capabilities allow org to conceive and implement strategies. resources/capabilities used for competitive advantage

COMMON STRENGTHS - capabilities possessed by large number of competing business

DISTINCTIVE COMPETENCIES - strength possessed by only small number. exploitation => above average performance.

e.g. patent, cost adv, reputation, brand name

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7
Q

explain weaknesses (internal)?

A

Skills and capabilities that do not enable an organisation to choose and implement strategies to support mission

The absence of strengths can be viewed as a weakness

solution my making investments to obtain needed strengths and modify mission

e.g. opposite of strength

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8
Q

Opportunities (external)?

A

•Areas in the environment that, if exploited, may generate high performance •External environmental analysis may reveal certain new opportunities for profit and growth

eg. new market, emerging tech, reduction of regulation,less trade barrier

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9
Q

Threats (external)?

A
  • Areas in the environment that increase the difficulty of an organisation achieving high performance
  • Changes in the external environmental that may present threats to the firm
  • e.g. shift consumer taste, substitute products, regulations, political, trade barriers
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10
Q

what is Michael porters 5 competitive forces?

A
  • potential entrants
  • suppliers
  • substitute products
  • buyers
  • industry competition
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11
Q

what is strategy?

A

• A strategy outlines the basic steps that management plans to take to reach a long-term objective or a set of objectives
• A strategy is a comprehensive master plan stating HOW the
corporation will achieve its mission and objectives.

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12
Q

describe/identify 3 levels of strategy?

A

• Corporate level - a corporation’s overall direction and the
management of its businesses.
• Business level - emphasizes improving the competitive
position of a corporation’s products or services in a specific
industry or market segment.
• Functional level - concerned with developing a distinctive
competence to provide a company or business unit with a competitive advantage

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13
Q

list the 4 corporate level strategies?

A
  1. growth/expansion
  2. stability
  3. defensive or retrenchment
  4. combination
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14
Q

what is involved in growth/expansion strategy?

A
  • Concentration;
  • Diversification
  • Vertical Integration
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15
Q

stability strategy?

A

• Continuous improvement or status quo
Applied when the organisation is satisfied with present course.
Selected by default rather than a conscious plan

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16
Q

defensive or retrenchment strategy?

A
  • Turnaround: downsizing existing company or division
  • Divestiture/divestment: selling off existing division or subdivision
  • Liquidation: selling company’s assets, in parts, for their tangible worth
17
Q

combination strategy?

A

• Use of multiple strategies

18
Q

Growth strategy: Concentration?

A

• Concentrating on existing specialization
• Engages in increasing product line, market
sector or function.
• Sell products in a single geographic market
e.g. dove skincare products

19
Q

Growth strategy: Concentration strength/weakness?

A

Major strength: By concentrating all effort on one product and one market, the organisation is likely to be successful

Major weakness: If the product is not accepted or is replaced the organisation will suffer

20
Q

Growth strategy - Diversification: what is it and 2 types of it?

A

The number of different businesses in which an organisation is engaged and the extent to which these are related to each other

•2 types of diversification strategies

i. Related diversification
ii. Unrelated diversification

21
Q

Growth strategy - Diversification
Related diversification:
advanatges aswell

A

An organisation operates in several linked businesses
•Bases of relatedness vary but may include technology, common distribution/market skills, brand name, reputation, customers.

  • Advantages:
  • Reduces reliance on a single product
  • Economies of scale (spread costs over several businesses)
  • Exploits strengths in more than one business, synergies

Understanding the business and of knowing what the industry opportunities and threats are

22
Q

Growth strategy - Diversification
Unrelated diversification:

advatnages?

A

An organisation operates multiple businesses that are not logically associated with one another - no direct fit between business

Advantages (in theory):
•This strategy should produce stable performance over time (portfolio of assets minimises risks)
•Effective planning processes should mean that resources can be distributed annually so as to maximise overall organisational performance

23
Q

Growth strategy - Vertical Integration?

A

A strategy that allows an organisation to create value

by producing its own inputs or distributing its own outputs

24
Q

Strategy Implementation?

A

The means by which strategies are executed within the organisation (focus on how the strategy is achieved)

25
Q

strategy implemented by 3 methods?

A
  • Programs – statements /activities /steps needed to accomplish a single-use plan.
  • Budgets - statements of a corporation’s programs in dollar terms.
  • Procedures - systems of sequential steps or techniques that describe in detail how to perform particular tasks or jobs.
26
Q

Portfolio management techniques used for?

A

to make decisions about what business to engage in and how to manage these multiple businesses to maximise corporate performance
e.g. Boston Consulting Group Matrix (BCG Matrix)

27
Q

BCG Matrix - 4 categories?

A

stars
cash cows
question marks
dogs

28
Q

BCG Matrix - stars?

A

Dominant position in a growing industry
Strategy:GROWTH/ INVEST
- Add resources and build the business further based on market projections

29
Q

BCG Matrix: question marks?

A

Poor competitive position in a growing industry
Strategy: GROWTH or RETRENCHMENT
-Apply resources to accomplish positive
turnaround or pull back if outlook poor

30
Q

BCG matrix - Cash cows?

A

Dominant position in low-growth industry
Strategy: STABILITY or MODEST GROWTH
- Maintain benefits of strong Cash Flow while keeping resource investments
minimum
- Generate profits which should be used to
support stars & question marks

31
Q

BCG Matrix Dogs?

A

Poor competitive position in low-growth industry
Strategy: RETRENCHMENT / SELL
- Divest, sell, liquidate the business to eliminate resource drain

32
Q

example of framework developed to identify and classify strategic alternatives

A

• Porter’s generic strategies

33
Q

Porter’s Generic Strategies is one of the most -

A

widely accepted typologies to discuss, categorize and select strategies

  • Differentiation strategy
  • Overall cost leadership strategy
  • Focus (differentiation or low cost) - focus on specific segments in market to better understand customer need/behaviour
34
Q

what do each strategy demand?

A

Each strategy demands a different allocation of resources, structure and skills

35
Q

Strategies based on the Product Life Cycle is?

A

A product’s life cycle can be divided into several stages
characterized by the sales volume generated by the product – each
stage different strategy

36
Q

what are 5 steps of product life cycle?

A
  1. development
  2. introduction (question mark and differentiation strategy)
  3. growth (Star and differentiation strategy)
  4. Maturity (cash cow and cost leadership)
  5. decline
37
Q

Implementing Porter’s Generic Strategies

• Differentiation Strategy involves?

A
  • Promote the valued difference
  • Allocate funds focused on meeting customer needs not control of expenditure
  • Customise to meet customer wants
  • Keep adequate inventory to supply customer needs
  • Nurture a creative and customer-focused culture.
38
Q

Implementing Porter’s Generic Strategies

• Overall cost leadership involves?

A
  • Advertise value for money
  • Reduce and control costs
  • Manufacturing must be simple and efficient, emphasising volume
  • Support a culture focusing on improving efficiency

301 (12 decks)

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