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63 Cards in this Set
- Front
- Back
What is strategy? |
Action plan for outperforming competitors and achieving superior profitability |
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Four/five basic strategic approaches? |
Low cost, differentiating, best cost, focus on niche (low cost or differentiating) |
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Two elements of business model? |
Customer value proposition and profit formula |
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Three tests of winning strategy? |
Fit test, competitive advantage test, performance test |
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Five tasks of crafting and executing strategy? |
Develop strategic vision/mission statement/core values, set objectives, craft strategy, execute strategy, monitor/evaluate/correct |
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What is a strategic vision? |
Management aspirations for the future; delineates long-term direction |
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Qualities of good strategic vision statements |
Graphic, forward-looking, focused, wiggle room, feasible, good business sense, memorable |
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What is mission statement? |
Describes present business and purpose - who we are, what we do, why we're here |
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Two kinds of objectives? |
Financial and strategic |
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Hierarchy of strategy-making |
Corporate, business, functional area, operating |
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What is strategic plan? |
Strategic vision/mission + objectives + strategy |
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Four obligations of board of directors |
Oversee financial reporting; critically appraise direction, strategy and business approaches; evaluate senior execs' leadership skills; institute compensation plan for top execs that serves shareholder interest |
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Six macroenvironment factors |
PESTEL - political, economic, sociocultural, technological, environmental, legal/regulatory |
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Six additional questions (besides PESTEL) to assess competitive environment |
How strong are competitive forces (Five Forces)? What are the driving forces? What market positions do rivals occupy (Strategic Group Mapping)? What strategic moves will rivals make next? What are industry's key success factors? Is industry outlook conducive to good profitability? |
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Five forces model of competition |
From rival sellers, from potential new entrants, from producers of substitutes, supplier bargaining power, customer bargaining power |
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Three steps of driving force analysis |
Identify driving forces, assess whether they make industry more or less attractive, determine strategy changes to prepare for their impact |
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Common drivers of industry change |
Changes in industry growth rate, globalization, internet, changes in who buys and why, manufacturing innovation, marketing innovation, major firm entry/exit, diffusion of know-how, changes in costs/efficiency, reductions in uncertainty/risk, regulations, societal changes |
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Three questions to determine if driving forces make industry more or less attractive |
Demand increase/decrease? Competition more/less intense? Higher/lower profitability? |
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Strategic group mapping? |
Displays market/competitive positions of rivals. 2D map. |
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Common variables in strategic group mapping |
Price, quality, geographic coverage, product-line breadth, degree of services offered, distribution channels, vertical integration, diversification |
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Michael Porter's Framework for Competitor Analysis |
Four indicators of rival's likely moves: current strategy, objectives, capabilities, assumptions |
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Three questions to determine key factors |
What product/service attributes are crucial, used by buyers to decide? What resources and capabilities are required? What shortcomings are a certain disadvantage? |
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Six questions for internal analysis |
How well is present strategy working? What are our important resources/capabilities (VRIN)? Can we seize opportunities/overcome threats (SWOT)? Competitive cost structure and customer value proposition? Stronger/weaker than rivals? What strategic issues merit front-burner attention? |
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How well is current strategy working? Three questions |
Achieving financial/strategic objectives? Financial performance above industry average? Gaining customers/market share? |
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Types of resources |
Tangible - physical, financial, technological, organizational Intangible - humans/intellect, brands/image/reputation, relationships, culture/incentives |
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Four tests of resource's competitive power |
VRIN - valuable, rare, inimitable, non-substitutable |
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Five steps of competitive strength analysis |
List 6-10 measures/key success factors, assign weights, score competitors, sum weighed ratings, draw conclusions |
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Blue-ocean strategy |
Inventing a new industry or distinctive market segment to capture new demand |
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Five conditions for first-mover advantage |
Building reputation/loyalty, creating future switching costs, property rights protections, get ahead on learning curve, set a technical standard |
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Four conditions for late-mover advantage |
Pioneering is more costly and little learning curve, innovator's products are primitive, rapid market evolution/leapfrog, market uncertainties |
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Five objectives of mergers |
Cost-efficiency, geographic expansion, new product categories, new technologies/resources/capabilities, hedge bets on direction of industry |
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Six factors needed to benefit from alliance |
Pick good partner, be sensitive to cultural differences, benefit both sides, ensure commitments met, swift decision-making, learn/adjust |
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Three advantages of alliance over integration/merger |
Lower investment, more flexible, more rapidly deployed |
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Five reasons to enter foreign markets |
Gain new customers, achieve lower costs through scale/experience/purchasing power, exploit core competencies, gain access to resources/capabilities, spread business risk |
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Five reasons competing across national borders makes strategy more complex |
Different home-country advantages (Porter's Diamond Framework), location-based value chain advantages, government policies/tax/inflation, currency/exchange rates, buyer tastes |
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Porter's Diamond of National Competitive Advantage |
Demand conditions; factor conditions; related and supporting industries; firm strategy, structure and rivalry |
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Five strategic options for entering foreign markets |
Export, license, franchise, subsidiary, alliance/joint venture |
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Three international strategies |
Multidomestic (local/local), global (global/global), transnational (global/local) |
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Profit sanctuaries |
Country markets that provide a company with substantial profits because of strong or protected market position |
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Three ways to gain competitive advantage in international markets |
Lower costs; sharing, replicating or transferring resources/capabilities; cross-border coordination |
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Five ways local companies can defend against multinational companies |
Exploit shortcomings in distribution/infrastructure, knowledge of local customer needs/preferences, knowledge of local labor force, acquisition/rapid growth, transfer expertise to cross-border markets and compete internationally |
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Four facets of crafting a diversification strategy |
Picking new industries/means of entry, leverage cross-business value chain relationships and strategic fit into competitive advantage, establish investment priorities, initiate actions to boost combined performance |
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Three tests for diversification |
Industry attractiveness, cost-of-entry, better-off |
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Three means of entering new businesses |
Acquisition, internal startup, joint ventures |
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Four questions in choosing mode of entry into new businesses |
Do we have all the resources/capabilities? Entry barriers? Is speed important? What's the least costly method that fits objectives? |
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Six steps in evaluating diversified company's strategy |
Evaluate industry attractiveness, evaluate business unit competitive strength, determine value of strategic fit, check for resource fit, rank business units, craft new strategic moves |
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Integrated social contracts theory |
Universal norms form social contract, local cultures can go beyond |
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10 basic managerial tasks, 1-3 (building an organization capable of good strategy execution) |
Staffing the organization; building necessary organizational capabilities; structuring the organization and work effort |
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10 basic managerial tasks, 4-8 (managing internal operations) |
Allocating resources to strategy execution effort, instituting policies/procedures that facilitate strategy execution, instituting best practices and employing process management tools, installing information and operating systems, using rewards/incentives to promote better strategy execution |
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10 basic managerial tasks, 9-10 (corporate culture and leadership) |
Instilling a corporate culture conducive to good strategy execution, leading the strategy execution process |
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Four types of organizational structure |
Simple, functional, multi-divisional, matrix |
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Three ways to build competencies and capabilities |
Develop internally, acquire through mergers, access through partnerships |
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Four considerations in structuring work effort to promote successful strategy |
Decide what to do internally/outsource, align organizational structure with strategy, centralize/decentralize authority, facilitating collaboration with partners/allies |
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Three ways policies facilitate strategy execution |
Provide top-down guidance, ensure consistency, promote creation of work climate |
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Six Sigma for existing process |
DMAIC - define, measure, analyze, improve, control |
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Six Sigma for new process |
DMADV - define, measure, analyze, design, verify |
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Four steps in changing a problem culture |
Identify facets that pose obstacles, specify what should be in new culture, talk openly about both, take visible/forceful actions to ingrain |
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Five unhealthy cultures |
Change-resistant, politicized, insular, unprincipled/greedy, composed of incompatible subcultures |
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Culture is (four parts)? |
Shared values, ingrained attitudes, core beliefs, company traditions |
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Outsourcing advantages |
Perform better/more cheaply, not crucial to competitive advantage, improves flexibility/speed, reduce risk exposure to changing tech/preferences, assemble diverse expertise quickly, concentrate on core business |
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Outsourcing disadvantages |
Hollow out own capabilities, lack of direct control, outside parties lack incentives to make investments |
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Three steps to developing competitive advantage |
Distinctive competencies, cost advantage, value creation |
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Three steps in creating core competency |
Develop, coordinate, refine |