Summary Class notes - Strategic Management

- Strategic Management
- -
- 2019 - 2020
- Erasmus Universiteit Rotterdam (Erasmus Universiteit Rotterdam, Rotterdam)
- International Business Administration
215 Flashcards & Notes
1 Students
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Summary - Class notes - Strategic Management

  • 1547074800 Chapter 1

  • When does a company have a competitive advantage?
    When it implements a strategy that competitors cannot imitate.
  • What are the 4 different views on strategy?
    1. Strategy as a plan 
    2. Strategy as a pattern
    3. Strategy as a position
    4. Strategy as a perspective
  • What are the characteristics of the 'strategy as a plan' view?
    1. Strategy is viewed as as a conscious and rational course of action that is based on a clear mission & objective. 
    2. Implies having loads of data to be analysed to decide on investments
  • What are the characteristics of the 'strategy as a pattern' view?
    1. Strategy vs viewed as partly conscious and purposeful, and partly random 
    2. Firm has clear mission & objective, but more flexible with changing it to adapt to new circumstances  
    3. Formulation and implementation may differ
  • What are the characteristics of the 'strategy as a position' view?
    1. Strategy is viewed as a positioning decision on where and how to compete
    2. It implies selecting a niche market and defending the position smartly
  • What are the characteristics of the 'strategy as a perspective' view?
    1. Strategy is viewed as creating an identity for the firm, as it affects learning
    2. Seen identically by everyone and can be managed in response to changes in context
  • What are the 2 views on how to achieve above-average returns?
    1. The I/O model
    2. The resource-based model
  • What are the steps of the I/O model?
    1. External environment - Study the environment (especially industry one)
    2. An attractive industry - Locate an industry with high potential for above-average returns 
    3. Strategy formulation - Identify the strategy called for by the attractive industry to earn above-average returns
    4. Assets and skills - Develop or acquire assets and skills needed to implement strategy
    5. Strategy implementation -  Use the firm's strengths  (developed assets and skills) to implement the strategy
  • What are the steps of the resource model?
    1. Resources - Identify the firm's resources. Study its strengths and weaknesses compared with those of competitors
    2. Capability - Determine firm's capabilities, what do they allow the firm to do better than its competitors 
    3. Competitive advantage - Determine the potential of the firm's resources and capabilities in terms of a competitive advantage
    4. An attractive industry - Locate an attractive industry
    5. Strategy formulation and implementation - Select strategy that best allows firm to utilise its resources and capabilities relative to opportunities in external environment
  • 1547161200 Chapter 2

  • What are the 3 layers of the environment?
    1. Micro-environment - parties directly linked to company. E.g. customers and creditors
    2. Industry environment - parties connected to the industry. E.g. competitors, buyers, suppliers, etc.
    3. Macro environment - comprised of social, economic, political and technological dynamics.
  • What dimensions comprise the external/general environment?
    1. The industry environment (determines an industry's profit potential)
    2. The competitor environment
  • What are the segments of the industry environment dimension?
    1. Demographic - concerned with population's size, age, etc. 
    2. Economic - nature and direction of the economy in which a firm competes
    3. Physical - refers to changes in the physical environment
    4. Sociocultural - concerned with society's attitude and cultural values
  • What are the segments of the competitor environment segments?
    1. Global - includes relevant new global markets and changes in the existing ones
    2. Technological - includes the institutions and activities involved with creating new knowledge and translating that knowledge into new outputs  
    3. Political/legal - concerned with the legal boundaries of a firm when competing for political attention for resources
  • What are the components of an external analysis?
    1. Scanning - identify early signs of changes/trends in environment
    2. Monitoring - detect meaning of changes/trends through ongoing observation
    3. Forecasting - develop projections of anticipated outcomes based on monitoring
    4. Assessing - determine timing and importance of changes/trends for firm's strategies
  • What are the 5 forces of the Porter model?
    1. Threat of new entrants
    2. Intensity of rivalry (industry competitors)
    3. Bargaining power of suppliers
    4. Bargaining power of buyers
    5. Threat of substitutes
  • What is the 6th force that has been identified in the Porter model?
  • With which 2 factors is the threat of new entrants measured?
    1. Entry barriers 
    2. Expected reaction of current companies in the market
  • What are the most common entry-barriers?
    1. High degree of economies of scale or a learning curve
    2. Benefits related to costs for already established companies (e.g. patents)
    3. Strong preference for a certain brand and a high degree of loyalty 
    4. Strong network effects (market where customers focus strongly on what other people buy)
    5. The difficulty of finding suppliers 
    6. Regulations set by the government
  • What factors define how strong the threat of substitutes is?
    1. The availability of substitutes
    2. Are the substitutes attractively priced
    3. Are switching costs high or low
  • What factors decide how big the threat of bargaining power of suppliers is?
    1. The available amount of the supply
    2.  How much suppliers differentiate the product
    3. High switching costs 
    4. If there are a lot of substitutes for the supply
    5. Share in selling for supplier 
    6. Backwards integration (working out the supplier)
  • What are the factors that decide how big the threat of bargaining power of buyers is?
    1. Switching costs
    2. Level of product standardisation 
    3. Buyers are large, but there a few
    4. There is a low demand 
    5. Customers are very well informed
    6. Threat of backwards integration
    7. Customers can postpone a purchase or are sensitive to price
  • What is a strategic group?
    A set of firms within an industry that emphasise similar strategic dimensions to use a similar strategy
  • What is researched in a competitor analysis?
    1. Future objective (what drives the competitor)
    2. Current strategy (what is the competitor doing)
    3. Assumptions (what does the competitor believe about the industry)
    4. Strengths and weaknesses (competitor's capabilities)
  • What are the components of the internal analysis?
    1. Resources
    2. Capabilities
    3. Core competencies
    4. Discovering core competencies
    5. Competitive advantage
    6. Strategic competitiveness
  • What are the 4 criteria of sustainable advantages?
    1. Valuable 
    2. Rare
    3. Costly to imitate
    4. Non-substitutable
  • What are the different types of tangible resources?
    1. Physical resources
    2. Financial resources
    3. Technological assets (patents, copyrights, etc.)
    4. Organisational resources (IT, communication systems)
  • What are the 4 types of intangible resources?
    1. Human assets and intellectual capital
    2. Brands, image and reputational assets 
    3. Relationships
    4. Organisational culture and incentive system
  • What is the difference between primary activities and support activities?
    Primary activities are all about your product, while support activities provide the necessary assistance for your primary activities
  • What are the primary activities?
    1. Inbound logistics
    2. Operations 
    3. Outbound logistics
    4. Marketing and sales
    5. Service
  • What are the support activities?
    1. Firm infrastructure
    2. Human resource management
    3. Technology development
    4. Procurement
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Latest added flashcards

What is the capital structure change defence strategy?
Dilution of stock, making it more costly
Medium popularity among firms
Medium defence effectiveness
Inconclusive wealth effect stockholders
What is the standstill agreement defence strategy?
Contract between both parties in which pursuer agrees to not acquire more stock of the target firm for a specific time in exchange for a fee
Low popularity among firms
Low defence effectiveness
Negative wealth effect stockholders
What is the greenmail defence strategy?
The repurchase of shares of stock that have been acquired by the aggressor at a premium in exchange for an agreement that aggressor won't target firm anymore
Very low popularity among firms
Medium defence effectiveness
Negative wealth effect stockholders
What is the litigation defence strategy?
Lawsuits that help a target company stall hostile attacks
Medium popularity among firms
Low defence effectiveness
Positive wealth effect stockholder
What is the golden parachute defence strategy?
Lump-sum payments of cash that are distributed to select groups of senior executives when the firm is acquired in a takeover bid 
Medium popularity among firms
Low defence effectiveness
Negligible wealth effect stockholders
What is the corporate charter amendment defence strategy?
Amendment to stagger the elections of board members of attacked firm so that they are not elected during the same year, which prevents a bidder from installing a completely new board in the same year 
Medium popularity among firms
Very low defence effectiveness
Negative wealth effect stockholders
What is the poison pill defence strategy?
Preferred stock in merged firm is offered to shareholders at an attractive rate of exchange.
High popularity among firms
High defence effectiveness
Positive wealth effect stockholders
What are the different managerial defence tactics?
1. Poison pill
2. Corporate charter amendment
3. Golden parachute
4. Litigation
5. Greenmail
6. Standstill agreement
7. Capital structure change
What is market for corporate control?
The mechanism that is activated whenever the internal controls of an organisation fail (we assume that it comes from managerial failure)
Why is the implementation of interest alignments through executive compensation difficult?
1. Strategic decisions are complex, making it difficult to accurately assess their quality
2. Financial outcomes are determined by an agent's decisions only in the long-term, making it difficult to measure the quality of decision-making based on performance
3. Corporate success or failure is influenced by environmental factors as well