General Strategy Terms & Analysis PDF

### **General Strategy Terms** 1. 2. 3. 4. 5. 6. ### **External Environment Analysis** 7. 8. 9. ### **Internal Environment Strengths and Weaknesses** 10. 11. 12. 13. 14. 15. 16. 17. 18. ### **Measures of Strategic Performance** 19. 20. ### **Strategy Formulation -- Business-Leve...

### **General Strategy Terms** 1. 2. 3. 4. 5. 6. ### **External Environment Analysis** 7. 8. 9. ### **Internal Environment Strengths and Weaknesses** 10. 11. 12. 13. 14. 15. 16. 17. 18. ### **Measures of Strategic Performance** 19. 20. ### **Strategy Formulation -- Business-Level** 21. 22. - - - - ### **Strategy Formulation -- Corporate-Level** 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. ### **Strategy Formulation -- International** 34. 35. 36. 37. 38. 39. 40. 41. ### **1. Why might financial ratio analysis be a better way to measure a firm's social capital than a balanced scorecard?** **Answer:\ **Financial ratio analysis can offer more direct and quantifiable insights into the economic outcomes of social capital, such as improved sales, cost efficiencies, or increased investment returns. While the balanced scorecard is broader, encompassing customer and learning perspectives, it may not isolate the specific financial impact of social capital. **Example:\ **A company like Starbucks might analyze its **return on assets (ROA)** and **profit margins** to assess how well its investments in employee relationships and community engagement drive profitability. For instance, if Starbucks observes higher revenues in regions where it heavily engages in community support, financial ratios will directly reflect these outcomes. ### **2. How might managers use value chain analysis to help their firm develop social capital?** **Answer:\ **Value chain analysis identifies areas within a firm's operations where relationships with stakeholders can create added value. Managers can focus on activities like supplier relationships, employee training, or customer service to strengthen social ties and collaboration. **Example:\ **Nike could use value chain analysis to enhance supplier relationships by implementing sustainable sourcing practices. Collaborating closely with suppliers to meet environmental standards not only adds value to Nike\'s products but also fosters trust and shared goals, increasing social capital. ### **3. How might a firm use value chain analysis to create a competitive advantage based on social capital?** **Answer:\ **Value chain analysis helps firms pinpoint activities that foster strong external relationships, which in turn can differentiate the firm in the market. Social capital derived from robust supplier, customer, or partner relationships can result in superior product quality, innovation, or loyalty. **Example:\ **Apple can leverage its value chain to create a competitive advantage by focusing on its design and customer service activities. For instance, its close collaboration with app developers enhances innovation, and its emphasis on customer feedback strengthens its brand, building social capital that competitors struggle to replicate. ### **4. For a firm that follows a multidomestic strategy in a single industry, what stage of the industry life-cycle is most likely to be prone to economic risk?** **Answer:\ **The **maturity stage** is most prone to economic risk for firms with a multidomestic strategy. During maturity, market saturation and price competition are high, making local economic fluctuations more impactful. **Example:\ **McDonald's operates a multidomestic strategy by adapting its menu to local tastes. In a mature fast-food industry, economic downturns in specific countries (e.g., a recession in Europe) can reduce discretionary spending, posing significant risks to local operations. ### **5. For a firm working to benefit from a corporate-level strategy, how might it apply the transaction cost perspective to its efforts to exploit parenting advantage?** **Answer:\ **Using the **transaction cost perspective**, a firm evaluates whether managing business units internally (hierarchy) is more cost-effective than relying on external market transactions. A parent company can leverage its advantage by providing centralized support to reduce transaction costs for its subsidiaries. **Example:\ **Unilever, managing diverse product lines, could centralize marketing and supply chain operations for all subsidiaries. This reduces redundancies and costs that each subsidiary would face if managing these tasks independently. By doing so, Unilever maximizes its parenting advantage and minimizes external transaction costs. ### **6. Describe which trends in the general environment will most likely affect the development of a firm's social capital.** **Answer:\ **Trends such as **technological advancements**, **demographic shifts**, and **socio-cultural changes** can significantly impact social capital. For example, the rise of social media enables firms to build stronger customer and community relationships, while demographic shifts, like an aging population, may require firms to adapt their workforce engagement strategies. **Example:\ **Coca-Cola could leverage technology by engaging with younger consumers through interactive campaigns on social media. This trend not only strengthens relationships with its customer base but also boosts its brand image, enhancing social capital.