Understanding Business Strategy

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Questions and Answers

In the context of strategic thinking, what fundamental element distinguishes planning from plan?

  • Planning incorporates adaptability and foresight, whereas a plan is a rigid, static document. (correct)
  • Planning involves resource allocation exclusively, whereas a plan includes market segmentation strategies.
  • Planning is tactical, while a plan represents a comprehensive deployment schema.
  • Planning is inherently short-term, whilst a plan embodies long-term visionary goals.

When assessing corporate strategy, which of the following metrics provides the most holistic view of a company's strategic posture?

  • Market valuation relative to tangible book assets.
  • The rate of annual growth of shareholder equity.
  • Alignment of explicit policies with the nature of its intended economic and non-economic contributions. (correct)
  • Employee satisfaction scores segmented by department.

In the context of a 'constraining environment,' what represents the ultimate dependent variable management seeks to optimize, particularly when facing multiple stakeholder demands?

  • Maximizing the Nash equilibrium of stakeholder utility functions. (correct)
  • The integral of performance derivatives over time.
  • Balancing the quadratic divergence of stakeholder satisfaction.
  • A lexicographic optimization balancing shareholder value and social responsibility.

Given the dynamic shift in strategic orientation from 'Planification' (70s-80s) to 'Invention' (00s-10s), what critical competency has become paramount for sustaining a competitive advantage?

<p>Deep contextual understanding coupled with predictive adaptability. (A)</p>
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How do functional strategies interplay within the hierarchy of strategic levels in a multi-divisional corporation to ensure cohesive goal achievement?

<p>Corporate sets broad investment, business designs competitive and functional designs operational plans. (B)</p>
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When evaluating the impact of environmental factors on strategic choices, what advanced technique yields the most robust insights for long-term decision-making?

<p>Bayesian network modeling incorporating exogenous shocks and endogenous feedbacks. (A)</p>
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Considering the specific traits that define strategic decisions, why does the 'integration of different functional facets' present a particular challenge for large, diversified organizations?

<p>The computational complexity of harmonizing conflicting operational goals. (B)</p>
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Within the strategic management framework, how does 'strategic diagnosis' interface with both 'strategic choices' and 'strategic deployment' to ensure organizational coherence and effectiveness?

<p>Strategic diagnosis informs strategic choices by assessing fit with intention alongside deployment viability. (B)</p>
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How does the dynamic interplay between planned initiatives and emergent strategies contribute to the realized business strategy of an agile organization?

<p>An agile approach balances deliberate elements alongside reactive responses to harness both stability and adaptability. (B)</p>
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Beyond the conventional 'Goodness of Fit,' 'Competitive Advantage,' and 'Performance' tests, what additional criterion serves as a determinant for confirming a 'winning strategy' in environments characterized by radical uncertainty?

<p>Resilience to Black Swan Events (C)</p>
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In the business-level strategy process, how does a firm's 'value system' most effectively mediate between 'internal capabilities' and 'external environment' to generate sustainable advantage?

<p>The value system guides exploitation and alignment of core competencies for distinct position in environment. (B)</p>
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When defining an organization's 'mission,' especially in sectors undergoing disruptive innovation, how should it balance between current operational realities and future adaptive aspirations?

<p>The mission is adaptable yet tethered to core values with future orientation to stakeholders. (B)</p>
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What is the primary strategic goal of British Airways by aiming to 'offer superior service quality on all our market segments'?

<p>Create a sustainably high customer lifetime value. (D)</p>
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Within the context of crafting corporate strategy, how does the framework of environmental analysis facilitate a more profound and insightful decision-making regime?

<p>Offers the ability to identify emergent trends and refine strategic capabilities adaptively. (D)</p>
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What distinguishes 'key drivers for change' from general environmental factors in strategic analysis?

<p>Key drivers impact strategic success, while environmental encompass non-strategic effects. (D)</p>
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How can scenario planning best assist a strategic leader in navigating a market environment characterized by 'high uncertainty'?

<p>Examining multiple scenarios lets organizations adapt in an unknown future. (D)</p>
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How does Michael Porter's Five Forces framework extend beyond mere static industry to empower dynamic understanding of competitive forces?

<p>The framework influences managers' decisions for competitive advantage. (B)</p>
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In applying Porter's Five Forces to a strategic business unit (SBU), what is the most critical consideration for ensuring the analysis yields actionable insights?

<p>Use must remain at SBU level. (C)</p>
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While analyzing the threat of entry using Porter's 5 forces what subtle factor, beyond standard barriers like scale, most profoundly deters potential competitors and why?

<p>Anticipated aggressive retaliation. (A)</p>
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Within a mature industry, where competitive rivalry is high, which strategic approach allows a company to neutralize the threat stemming from powerful buyers?

<p>Enhancing product differentiation. (C)</p>
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What is the most sophisticated approach for constructing strategic groups and leveraging them for competitive insight?

<p>Analyzing group movements plus dynamics (B)</p>
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During market segmentation, how is it possible to reveal strategic choices that are not or badly satisfied with current products or services?

<p>By combining and analyzing data, tech, and market needs. (B)</p>
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When analyzing segment value using a lifecycle which choice below is a phase?

<p>Emergence (C)</p>
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How does understanding Key Success Factors (KSFs) in a given market segment influence a company's competitive benchmarking process?

<p>Understanding allows resources allocated to overperform. (C)</p>
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How should a company effectively utilize a competitive analysis to inform its strategic positioning against key industry rivals (e.g. airlines)?

<p>Interpret and predict competitor moves. (D)</p>
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When building different scenarios, as part of a strategy process, which is the most important action to keep in mind?

<p>Ensure the scenarios remain logically consistent. (A)</p>
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How are organizational intentions and capabilities related to competitive action?

<p>Org capability and intentions are assessed. (B)</p>
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Within the context of stakeholder analysis, how might an organization prioritize its engagement strategies with stakeholders?

<p>Focus almost entirely on high power/high interest. (B)</p>
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How is the value chain useful when identifying organizational skills?

<p>It helps decompose processes (A)</p>
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Why does the concept of 'related diversification' receive substantial emphasis in portfolio strategy frameworks?

<p>It generates stability of returns. (C)</p>
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In applying portfolio analysis, a business attempting “DYNAMIC” analysis would...

<p>Evaluate different aspects of each over time. (C)</p>
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How should a highly profitable company with no debt look into future technology?

<p>Double down on tech. (A)</p>
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How do related diversification strategies play a pivotal role in maximizing the potential benefits derived from existing competencies?

<p>Synergistic activity. (D)</p>
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Within a robust balanced portfolio strategy, how do individual business activities contribute to overall risk mitigation and enhanced returns?

<p>To hedge the overall org. (B)</p>
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If an organization determines outsourcing is best, what's the most important strategic activity?

<p>Which activities can’t be given to partners. (C)</p>
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When evaluating different firms it is discovered that the firm is more effective, but then wants to consider creating an alliance, what is the new question to consider?

<p>What skill must be gained. (C)</p>
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Aligning key resources to maximize strategic effectiveness, what must be designed?

<p>Strategic capacity (C)</p>
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What describes best the need for Business Models?

<p>Helps define a complete org with market insight. (C)</p>
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How can Business Model archetypes and frameworks be utilized to foster business model innovation within an organization?

<p>The models provide insight. (B)</p>
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What elements should value propositions offer?

<p>Address customer needs. (B)</p>
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When looking at Business Models what must be clearly laid out?

<p>Economic equations of value. (C)</p>
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How should a business best construct and utilize its distribution channels to gain market exposure?

<p>Careful consideration of market segment . (B)</p>
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Which is the correct assessment for revenues and why?

<p>The model and customer base determines price. (B)</p>
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Given a need to shift strategy, what element will be central to the success?

<p>Resources and competencies. (A)</p>
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To facilitate a successful strategy deployment, what kind of organizational design is useful to consider?

<p>One with no blockages. (A)</p>
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Flashcards

Corporate Strategy

A pattern of decisions that defines a company's objectives, purposes and goals.

Elements of an Offer

Price, quality, time frame & variety

Stakeholders

Shareholders, clients, employees, and society.

Evolution of Strategy Definition

Planification to Adaptation to Invention

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Corporate Strategy Level

The overall organizational direction

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Competitive Strategy Level

Creating a sustainable competitive advantage

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Functional Strategy

Implementing strategy at corporate and business levels

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Types of Environments

Competitive, technological, economic, regulatory, social.

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Types of Resources

Financial, physical, human, technological, reputation, organization.

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Traits for strategic decisions

Taking the long-term view, often irreversible, and integrating functional facets

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3 Strategic Questions

Where are we now? Where do we want to go? How are we going to get there?

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Strategy

Competitive moves and business approaches managers use to run a company

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How to get there?

To manage each functional piece; respond to market conditions; achieve performance

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Actions for Sales & Market Share

Adjusting pricing, product feature, service attributes, etc.

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Sustainable advantage definition

Sustainable competitive advantage is a lasting preference over rivals.

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Why Strategies Evolve

Evolve due to shifting markets. competitor moves. Evolving preference

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Goodness of Fit Test

Measures how strategy fits the firm's situation.

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Strategy Process

EXTERNAL and INTERNAL analysis, Strategic Diagnosis, Strategic Decision

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Mission

A fundamental statement of the organization, in line with its values

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Vision or Strategic Intent

The expected future state.

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Goal

A general declaration of intent.

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Environmental Analysis

Analyzing the external environment looking for opportunities and threats

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PESTEL

Tool to scan the external environment

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Key Drivers for Change

Those factors that are likely to have a high impact on strategy success

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Scenarios

Detailed plausible views of the business environment's future.

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Barriers to Entry

Factors that need to be overcome by new entrants.

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Substitution

Reduces demand as customers switch alternatives.

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Analyzing External Environments

Analyze competitors, markets and segment

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Analysis of Competitive Environment

Objective is bringing together competing companies

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Key Success Factors

Key success factors are elements for an orginization that leads to success

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Objectives of segmentation

Definition of unit segment in the most relevant way

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Strategic segmentation

All the activities of the company as a whole

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marketing segmentation

sector of one activity

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Value system

Competitive forces, value system and business

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what mean PESTEL in Practice

Is a planning tool to enable Analysts/ Planners to scan

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The segment life cycle

The rate of growth of the segment with the products

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Competitive advantage

Sustainable competitive advantage is achieve in industry and competitive enviroments

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STRATEGIC OPTIONS

Two main STRATEGIC OPTIONS: market SHARE or VOLUME, DIFFERENTIATION OR NICHE

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Core principles

Focuses on the big picture instead of numbers

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Blue Ocean Strategy

Look Across: time, Look Across: products or services

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Study Notes

  • There are different layers to objectives: basic concepts of strategy, competitive strategy, corporate strategy, and implementing strategy.
  • Strategy definition involves a pattern of company decisions which reveals its objectives, purposes, or goals.
  • Strategy Definition also includes the principal policies and plans for achieving goals
  • Corporate strategy defines the range of business a company pursues, the kind of economic/human organization it is or intends to be.
  • The nature of the economic and non-economic contribution a company intends to make to its stakeholders, employees, customers, and communities is part of Corporate Strategy
  • The constraining environment includes offers and the sustainable development involved.
  • In a constraining environment, Performance = f(Price, Quality, Timeframe, Variety, Sustainable Development).
  • The constraining environment involves stakeholders like shareholders, clients, management, employees and broader society.
  • In a constraining environment, Satisfaction = max (Shareholders, Clients, Management, Employees, Society).
  • The constraining environment involves competition, both global and local, as well as co-opetition.
  • In a constraining environment, Management= f(Global, Local, Competition).

Strategies Complexities by Decade

  • 70s-80s: Strategy definition focused on planification, market expectations on mass consumption, a strategic orientation specializing in internal growth with the underlying logic of conflict.
  • 80s-90s: Strategy definition focused on adaptation, market expectations on specific needs (customization), strategic orientation on diversification, modes of development on external growth via M&A with the underlying logic of conflict.
  • 00s-10s: Strategy definition focused on invention, market expectations on complex and implicit needs, strategic orientation recentlyering on "pure player", modes of development on joint growth through alliances/partnerships with an underlying logic of conflict/collaboration network.

Levels of Strategy

  • Corporate Strategy is at the headquarters level
  • Business-level Strategy sits below Corporate Strategy, above Operational Strategies
  • Operational Strategies sit below Business strategy and involves things like R&D, Personnel, Finance, Production and Marketing/Sales etc.
  • Corporate Strategy describes a company's overall direction and manages/allocates resources.
  • Competitive Strategy focuses on creating and maintaining a sustainable competitive advantage for a strategic business unit
  • Functional Strategy focuses on the implementation of strategy defined at the corporate and business levels.

Strategy Concepts

  • Strategy relates to types of environments such as competition, technology, demand, economic, regulatory and social factors.
  • Strategy involves types of resources like financial, physical, human, technological, reputation and organizational elements.
  • Strategic decisions involve the long-term view, taking into account "everything"
  • Strategic decisions involve irrevesible facets and different functional facets of a situation

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