Podcast
Questions and Answers
A company that changes its strategy every six months has a clear and stable strategy.
A company that changes its strategy every six months has a clear and stable strategy.
False (B)
The mission statement of an organization provides clarity about what the organization fundamentally aims to do.
The mission statement of an organization provides clarity about what the organization fundamentally aims to do.
True (A)
The perimeter of a value creation model refers to how competitors can imitate the model.
The perimeter of a value creation model refers to how competitors can imitate the model.
False (B)
A vision statement describes the future the organization aims to create and motivates employees.
A vision statement describes the future the organization aims to create and motivates employees.
Allocating resources effectively is not important for implementing a strategy.
Allocating resources effectively is not important for implementing a strategy.
The purpose of a strategy should be irrelevant to stakeholders for it to be effective.
The purpose of a strategy should be irrelevant to stakeholders for it to be effective.
The VIP model comprises value, imitation, and perimeter, which are key aspects of competitive advantage.
The VIP model comprises value, imitation, and perimeter, which are key aspects of competitive advantage.
A strategy statement is only relevant to large corporations.
A strategy statement is only relevant to large corporations.
Core values of an organization are likely to remain unchanged over time.
Core values of an organization are likely to remain unchanged over time.
To maintain competitive advantage, the organization's stated purpose should be vague and non-specific.
To maintain competitive advantage, the organization's stated purpose should be vague and non-specific.
Corporate strategy focuses on the overall scope and resource allocation within an organization.
Corporate strategy focuses on the overall scope and resource allocation within an organization.
Business-level strategy is primarily concerned with corporate acquisitions and overall organisational scope.
Business-level strategy is primarily concerned with corporate acquisitions and overall organisational scope.
Objectives are often expressed in vague terms without specific outcomes.
Objectives are often expressed in vague terms without specific outcomes.
A strategy statement should include the organization's mission, vision, and objectives.
A strategy statement should include the organization's mission, vision, and objectives.
Functional strategies are focused on delivering corporate and business-level strategies effectively.
Functional strategies are focused on delivering corporate and business-level strategies effectively.
Quantifiable market-based objectives can include metrics like customer service and market share.
Quantifiable market-based objectives can include metrics like customer service and market share.
A clear strategy statement is a poor indicator of managerial competence.
A clear strategy statement is a poor indicator of managerial competence.
The Exploring Strategy Framework does not consider the organization’s stakeholders.
The Exploring Strategy Framework does not consider the organization’s stakeholders.
IKEA's strategy focuses on high-priced items to create a better everyday life for people.
IKEA's strategy focuses on high-priced items to create a better everyday life for people.
The advantages or capabilities of an organization are irrelevant to its strategy statement.
The advantages or capabilities of an organization are irrelevant to its strategy statement.
Public-sector organizations require strategy statements mainly for internal guidance.
Public-sector organizations require strategy statements mainly for internal guidance.
Innovation is a primary focus of functional strategies.
Innovation is a primary focus of functional strategies.
Strategy statements are expected to be achieved under all circumstances.
Strategy statements are expected to be achieved under all circumstances.
Vertical integration refers to the geographical location of customers.
Vertical integration refers to the geographical location of customers.
Chandler emphasizes a logical flow from determining goals to the allocation of resources.
Chandler emphasizes a logical flow from determining goals to the allocation of resources.
According to Porter, strategy revolves around random choices rather than deliberate competition.
According to Porter, strategy revolves around random choices rather than deliberate competition.
Drucker suggests that strategy is primarily concerned with how a firm will lose.
Drucker suggests that strategy is primarily concerned with how a firm will lose.
Mintzberg views strategy as a rigid plan that is always executed exactly as it is designed.
Mintzberg views strategy as a rigid plan that is always executed exactly as it is designed.
Strategies are typically measured over short time frames, usually less than a year.
Strategies are typically measured over short time frames, usually less than a year.
One of the advantages of long-term orientation in strategy is the ability to have both deliberate and emergent decisions.
One of the advantages of long-term orientation in strategy is the ability to have both deliberate and emergent decisions.
Gaining competitive advantage requires creating value that is easily imitated by competitors.
Gaining competitive advantage requires creating value that is easily imitated by competitors.
If a company shares the same strategy as its competitors, it has a robust and unique strategy.
If a company shares the same strategy as its competitors, it has a robust and unique strategy.
Flashcards
What is strategy?
What is strategy?
A plan for achieving a long-term goal, involving resource allocation and deliberate choices to create sustainable competitive advantage.
Chandler's view of strategy
Chandler's view of strategy
Focuses on the logical flow from goal setting to resource allocation.
Porter's view of strategy
Porter's view of strategy
Emphasises deliberate choices, differentiation, and competition.
Drucker's view on strategy
Drucker's view on strategy
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Mintzberg's view of strategy
Mintzberg's view of strategy
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Three Horizons Framework
Three Horizons Framework
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Gaining competitive advantage
Gaining competitive advantage
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Business Model
Business Model
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Resource Allocation
Resource Allocation
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VIP Model
VIP Model
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Organizational Purpose
Organizational Purpose
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Mission Statement
Mission Statement
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Vision Statement
Vision Statement
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Corporate Values
Corporate Values
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Objectives
Objectives
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Strategy Statement
Strategy Statement
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Scope of Activities
Scope of Activities
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Competitive Advantage
Competitive Advantage
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IKEA's Strategy Statement
IKEA's Strategy Statement
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Strategy Flexibility
Strategy Flexibility
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Unforeseen Circumstances
Unforeseen Circumstances
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Corporate Strategy
Corporate Strategy
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Business-Level Strategy
Business-Level Strategy
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Functional Strategies
Functional Strategies
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Strategic Position
Strategic Position
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Macro-environment
Macro-environment
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Industry Environment
Industry Environment
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Strategic Capability
Strategic Capability
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Study Notes
Business Strategy
- The presentation is about business strategy, specifically covering definitions, frameworks, and levels of strategy.
Definitions
- Strategy is the determination of long-run goals and objectives, adopting action courses, and allocating resources for achieving those goals. (Alfred D. Chandler)
- Competitive strategy involves deliberately choosing different activities to create a unique mix of value. (Michael Porter)
- A firm's theory of gaining competitive advantages. (Peter Drucker)
- A pattern within a stream of decisions. (Henry Mintzberg)
- The long-term direction of an organization. (Exploring Strategy)
Three Elements of Strategy
- Long-term orientation, measured over years or decades.
- Strategic direction, following a long-term trajectory.
- Organisation, involving complex internal and external relationships.
Long-Term Orientation Advantages
- Includes deliberate and emergent decisions.
- Based on competitive advantage, cooperation, or imitation.
Three Horizons Framework
- The framework depicts profit potential over time.
- Horizon 1: Extend and defend the core business
- Horizon 2: Building emerging businesses
- Horizon 3: Creating viable options (profit potential).
Strategic Decisions Characteristics
- Gaining competitive advantage: create additional value for customers, which makes the offer more valuable than the cost.
- Value creation system (business model) must be hard for competitors to imitate.
Allocation of Resources
- Crucial for deploying a strategy.
- Strategists need to allocate resources effectively to promising activities.
- Decisions need to be difficult to reverse.
VIP Model
- Value creation model: how is the organization performing with it?
- Imitation: how can competitors be avoided, ensuring long-term survival advantages?
- Perimeter: what aspects of the value creation model should a business focus on? (what to do, what not to do, which markets, along which value chain?)
The Purpose of Strategy
- Strategists need to define and express a clear and motivating purpose.
- A clear purpose is essential for strategy to be meaningful to stakeholders.
- Purpose answers how the organization makes a difference and for whom.
Mission Statement
- Aims to provide clarity on the basic purpose of the organization.
- Includes questions like, "What business are we in?" and "How do we make a difference?"
Vision Statement
- Focuses on the future the organization wishes to create.
- Aims to motivate stakeholders with a picture of desired future accomplishment.
- Includes what the organization wants to achieve.
Corporate Values
- Enduring principles guiding the organization's strategy.
- Define how the organization operates, but may change with circumstances.
Objectives
- Specific, measurable outcomes to be achieved.
- Often expressed in financial terms, such as sales, profits, or share valuations.
- May include quantifiable market-based metrics.
Strategy Statements
- Summarize an organization's strategy.
- Includes fundamental goals, scope of activities, and the organization's advantages.
IKEA Example
- To create a better everyday life for many people through well-designed and affordable home furnishings.
Levels of Strategy
- Corporate Strategy: Concerns the overall scope and value adding of the organization.
- Involves geographical scope, product diversification, acquisitions, and resource allocation across divisions.
- Business-Level Strategy: Defines how individual business units will compete in their markets (often called "competitive strategy").
- Includes innovation, scale, response to competitors.
- Functional Strategies: These support the corporate and business strategy by focusing on operational effectiveness.
- Focuses on using resources, processes, and people appropriately for operational effectiveness.
The Exploring Strategy Framework
- Strategic Position: Concerned with the impact of macro-environment, industry, capabilities, stakeholders and culture.
- Strategic Choices: Options for strategy (direction and methods).
- Strategy in Action: How strategies are formed and implemented.
Strategy Statements Relevance
- Relevant across many organizations
- Examples: small startups; public sector and voluntary organizations (e.g. using statements to inspire volunteers and donors).
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