FINAL EXAM STRATEGIC MANAGEMENT
Strategy: A careful plan or method for achieving a particular goal usually over a long period of
time
1. 5 Ps of Mintzberg
Plan: deliberate course of action.
Ploy: tactic to outperform competitor.
Pattern: consistency of behavior (strategy emerges from past organizational behavior, a
consistent and successful way of doing business can develop into a strategy).
Position: locating a firm within its environment (how you decide to position yourself in the
marketplace. In this way, strategy helps you explore the fit between your organization and your
environment).
Perspective: firm’s view of the world
2. Mission and vision statement
A Mission Statement is about:
1. What business are we in (who are we now)
2. Who are our customers and how do we serve our customers
3. What makes us special
Examples:
• “Microsoft's mission: To enable people and businesses throughout the world to realize
their full potential”.
1
, • “Dell's mission is to be the most successful computer company (What business we are in;
Who are we now) in the world at delivering the best customer experience in markets we
serve (What makes us special)”.
• Ritz-Carton´s: who, what...
A Vision Statement is about:
• What business(es) do we want to be in future, e.g. 5 to 10 years from now
• What are the main directions to get there?
Examples:
• Heinz: "Our vision, quite simply, is to be ‘the world's premier food company, offering
nutritious, superior tasting foods to people everywhere’."
• Avon: "To be the company that best understands and satisfies the product, service and
self-fulfillment needs of women - globally."
3. Porter´s five forces model
Competitive advantage: What the firm does better than its competitors
Strategic management: concerned with the strategic position of an organization, the strategic
choices for the future, and turning strategy into action. Strategic position = identify external
environment, strategic capability, expectations and stakeholders.
Strategic capability: Resources, activities, and processes that allow the firm to obtain a
competitive advantage
2
,Porter’s Five Forces Model
Helps identify the sources of competition of an industry or sector. It identifies five forces that
determine the competitive intensity of an industry, and therefore the attractiveness of the
industry.
• Threat of entry:
o Are there barriers to entry?
o Barriers to entry: factors that need to be overcome by new entrants if they are to
compete successfully
o Delays, not permanent – Economies of scale – Capital requirement of entry –
Access to supply or distribution channels – Customer or supplier loyalty –
Experience – Expected retaliation – Legislation/governments – Differentiation
• Threat of substitutes
o Substitution reduces demand for a particular “class” of products as customer
switch to alternatives
▪ Product for product substitution
▪ Substitution of need
▪ Generic substitution
• Bargaining power of buyers and suppliers
o Buyers’ bargaining power is high when:
▪ There is a concentration of buyers (high volumes, or large number of small
suppliers)
▪ Switching costs of buyers to other products are low
o Suppliers’ bargaining power is high when:
▪ There is a concentration of suppliers rather than fragmented sources of
supply
▪ Switching costs of the firm (the buyer) are high
• Intensity of Rivalry
o The more intense the competitive rivalry, the lower the profits among rivals •
Intensity of rivalry is stronger when:
▪ There are many (strong) competitors
▪ The industry experiences slow growth ( INDUSTRY life cycle)
▪ Low customer loyalty
▪ Products lack differentiation or low switching costs
▪ High cost of leaving market, i.e. high exit barriers
3
, 4. PESTEL framework
6 environmental influences:
• Political
• Economic
• Social
• Technologies
• Environmental
• Legal
4
Strategy: A careful plan or method for achieving a particular goal usually over a long period of
time
1. 5 Ps of Mintzberg
Plan: deliberate course of action.
Ploy: tactic to outperform competitor.
Pattern: consistency of behavior (strategy emerges from past organizational behavior, a
consistent and successful way of doing business can develop into a strategy).
Position: locating a firm within its environment (how you decide to position yourself in the
marketplace. In this way, strategy helps you explore the fit between your organization and your
environment).
Perspective: firm’s view of the world
2. Mission and vision statement
A Mission Statement is about:
1. What business are we in (who are we now)
2. Who are our customers and how do we serve our customers
3. What makes us special
Examples:
• “Microsoft's mission: To enable people and businesses throughout the world to realize
their full potential”.
1
, • “Dell's mission is to be the most successful computer company (What business we are in;
Who are we now) in the world at delivering the best customer experience in markets we
serve (What makes us special)”.
• Ritz-Carton´s: who, what...
A Vision Statement is about:
• What business(es) do we want to be in future, e.g. 5 to 10 years from now
• What are the main directions to get there?
Examples:
• Heinz: "Our vision, quite simply, is to be ‘the world's premier food company, offering
nutritious, superior tasting foods to people everywhere’."
• Avon: "To be the company that best understands and satisfies the product, service and
self-fulfillment needs of women - globally."
3. Porter´s five forces model
Competitive advantage: What the firm does better than its competitors
Strategic management: concerned with the strategic position of an organization, the strategic
choices for the future, and turning strategy into action. Strategic position = identify external
environment, strategic capability, expectations and stakeholders.
Strategic capability: Resources, activities, and processes that allow the firm to obtain a
competitive advantage
2
,Porter’s Five Forces Model
Helps identify the sources of competition of an industry or sector. It identifies five forces that
determine the competitive intensity of an industry, and therefore the attractiveness of the
industry.
• Threat of entry:
o Are there barriers to entry?
o Barriers to entry: factors that need to be overcome by new entrants if they are to
compete successfully
o Delays, not permanent – Economies of scale – Capital requirement of entry –
Access to supply or distribution channels – Customer or supplier loyalty –
Experience – Expected retaliation – Legislation/governments – Differentiation
• Threat of substitutes
o Substitution reduces demand for a particular “class” of products as customer
switch to alternatives
▪ Product for product substitution
▪ Substitution of need
▪ Generic substitution
• Bargaining power of buyers and suppliers
o Buyers’ bargaining power is high when:
▪ There is a concentration of buyers (high volumes, or large number of small
suppliers)
▪ Switching costs of buyers to other products are low
o Suppliers’ bargaining power is high when:
▪ There is a concentration of suppliers rather than fragmented sources of
supply
▪ Switching costs of the firm (the buyer) are high
• Intensity of Rivalry
o The more intense the competitive rivalry, the lower the profits among rivals •
Intensity of rivalry is stronger when:
▪ There are many (strong) competitors
▪ The industry experiences slow growth ( INDUSTRY life cycle)
▪ Low customer loyalty
▪ Products lack differentiation or low switching costs
▪ High cost of leaving market, i.e. high exit barriers
3
, 4. PESTEL framework
6 environmental influences:
• Political
• Economic
• Social
• Technologies
• Environmental
• Legal
4
