Management

4 elements of strategy

Setting the strategic agenda, Analysing the situation, Formulating the strategy and implementing the strategy

What strategy is not

Grandiose statements, failure to face competitive challenges and operational, effectiveness, competitive benchmarking or other tools

2 competitive advantages

Differentiation, cost leadership

PESTEL

Political, Economic, Social, Environmental, Legal (external analysis)

Competitive scope

Narrow scope , broad scope

Technological factors

Product innovation or process innovation

Porter’s 5 forces

Rivalry, new entrants, buyers, Suppliers and substitutes

Abell model : defining industry

WHO (customer groups), WHAT (customer needs), HOW (technologies)

Creating competitive advantage

increase value perceived or lower cost of production

Industry effect

Firm performance = economic structure of the industry

Firm effect

firm performance= actions of strategic leaders

Barriers to reduce threat of entry

Economies of scale, product differentiation, customer switching cost, capital requirements, threat of retaliation, government policy, network effects

For a resource to create value it has to be (VRIO framework)

Valuable, rare, costly to imitate, organised to capture value

Business level strategy

Goal Directed action managers take to have competitive adv

tangible differentiation

add a visible characteristic

intangible differentiation

Add invisible value

Sources of economies of learning

Enhanced human skills, simplification of products and processes, better material selection, higher coordination, higher programmability of activities

Source of economies of scale

Employing specialised systems and equipment, effects of specialisation, lower per unit purchasing cost, spreading cost over a large output

Diseconomies of scale

Complexity, quality

Economies of scope

Complementary of production/ distribution, same campaign for multiple products, same R&D budget, same assets/ capabilities

Red ocean

Enter an already existing market

Blue ocean

Create a new market

4 actions for value

Eliminate, raise, create, reduce

3 dimensions of growth

Vertical Intergration, product diversification, geographic diversification

intergrated firm

Components made and assembled by company

Specialist firm

Components made separate, assembled by your company

Backward intergration

The company buys their suppliers

Complete vertical intergretion

The company controls every aspect of the supply chain

Forward intergration

The firm buys distribution (create their own stores)

CVC

companies investing in start ups for strategic benefits

Porter’s three essentials

Attractiveness test, cost of entry test, better off test

Better off test

Hypothesis

Specific, testable and falsifiable

SWOT

Strength, weakness, opportunity, threats