Business Strategy Overview
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Questions and Answers

A company that changes its strategy every six months has a clear and stable strategy.

False

The mission statement of an organization provides clarity about what the organization fundamentally aims to do.

True

The perimeter of a value creation model refers to how competitors can imitate the model.

False

A vision statement describes the future the organization aims to create and motivates employees.

<p>True</p> Signup and view all the answers

Allocating resources effectively is not important for implementing a strategy.

<p>False</p> Signup and view all the answers

The purpose of a strategy should be irrelevant to stakeholders for it to be effective.

<p>False</p> Signup and view all the answers

The VIP model comprises value, imitation, and perimeter, which are key aspects of competitive advantage.

<p>True</p> Signup and view all the answers

A strategy statement is only relevant to large corporations.

<p>False</p> Signup and view all the answers

Core values of an organization are likely to remain unchanged over time.

<p>False</p> Signup and view all the answers

To maintain competitive advantage, the organization's stated purpose should be vague and non-specific.

<p>False</p> Signup and view all the answers

Corporate strategy focuses on the overall scope and resource allocation within an organization.

<p>True</p> Signup and view all the answers

Business-level strategy is primarily concerned with corporate acquisitions and overall organisational scope.

<p>False</p> Signup and view all the answers

Objectives are often expressed in vague terms without specific outcomes.

<p>False</p> Signup and view all the answers

A strategy statement should include the organization's mission, vision, and objectives.

<p>True</p> Signup and view all the answers

Functional strategies are focused on delivering corporate and business-level strategies effectively.

<p>True</p> Signup and view all the answers

Quantifiable market-based objectives can include metrics like customer service and market share.

<p>True</p> Signup and view all the answers

A clear strategy statement is a poor indicator of managerial competence.

<p>False</p> Signup and view all the answers

The Exploring Strategy Framework does not consider the organization’s stakeholders.

<p>False</p> Signup and view all the answers

IKEA's strategy focuses on high-priced items to create a better everyday life for people.

<p>False</p> Signup and view all the answers

The advantages or capabilities of an organization are irrelevant to its strategy statement.

<p>False</p> Signup and view all the answers

Public-sector organizations require strategy statements mainly for internal guidance.

<p>False</p> Signup and view all the answers

Innovation is a primary focus of functional strategies.

<p>False</p> Signup and view all the answers

Strategy statements are expected to be achieved under all circumstances.

<p>False</p> Signup and view all the answers

Vertical integration refers to the geographical location of customers.

<p>False</p> Signup and view all the answers

Chandler emphasizes a logical flow from determining goals to the allocation of resources.

<p>True</p> Signup and view all the answers

According to Porter, strategy revolves around random choices rather than deliberate competition.

<p>False</p> Signup and view all the answers

Drucker suggests that strategy is primarily concerned with how a firm will lose.

<p>False</p> Signup and view all the answers

Mintzberg views strategy as a rigid plan that is always executed exactly as it is designed.

<p>False</p> Signup and view all the answers

Strategies are typically measured over short time frames, usually less than a year.

<p>False</p> Signup and view all the answers

One of the advantages of long-term orientation in strategy is the ability to have both deliberate and emergent decisions.

<p>True</p> Signup and view all the answers

Gaining competitive advantage requires creating value that is easily imitated by competitors.

<p>False</p> Signup and view all the answers

If a company shares the same strategy as its competitors, it has a robust and unique strategy.

<p>False</p> Signup and view all the answers

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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Business Strategy 2024/2025 PDF

Description

This quiz covers the essential aspects of business strategy, including its definitions, frameworks, and levels. Understand the long-term orientation and advantages of strategic planning as presented by renowned thinkers like Chandler, Porter, and Mintzberg.

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