Summary Key Elements Strategy for Pre-master

Strategy for pre-master most important concepts


Table of Contents
Week 1 – External analysis.................................................................................................2
Week 2 – Internal analysis.................................................................................................3
Week 3 – Business level strategies.....................................................................................5
Week 4 – Real options and collusion..................................................................................9
Week 5, 6, 7 – Corporate-level strategy............................................................................12
Week 9 – Strategy implementation..................................................................................16
Week 10 – Strategic alliances...........................................................................................18
Week 11 – Mergers and acquisitions................................................................................21
Week 12 – International strategies...................................................................................24

,Week 1 – External analysis

Measuring competitive advantage
- Accounting measures
- Economic measures

Accounting measures
- Profit rations
- Liquidity ratios
- Leverage ratios
- Activity ratios

Economic measures
- Cost of debt
- Cost of equity
- Weighted average cost of capital (WACC)

Levels of external analysis
- General environment
- Industry
- Strategic group
- Individual firm (internal / competitor)

General external environment
- Technological change
- Demographic trends
- Cultural trends
- Economic climate
- Legal / political conditions
- Specific international events

SCP-model
- Structure
- Conduct
- Performance

5 forces model
- Threat from existing competitors (rivalry)
- Threat from new competitors (entry)
- Threat of substitute products
- Threat of supplier leverage
- Threat from buyers’ influence
- Sixth force  complementors

High threat of existing competitors industry conditions
- Large number of competitors

2

, - Slow or declining industry growth
- Low product differentiation (leading to low customer loyalty and switching costs)
- Industry capacity added in large increments

High threat of new competition industry conditions
- High industry growth rate
- Low barriers of entry
o Economies of scale
o Product differentiation
o Government regulation of entry
o Retaliation of incumbent
o Proprietary technology
o Managerial know-how
o Favorable access to raw materials
o Learning-curve cost advantages

High threat of substitutes industry conditions
- High potential of fulfilling the same need (high quality)
- Low switching costs for customers

High threat of supplier leverage industry conditions
- Small number of firms in supplier’s industry
- Highly differentiated product
- Lack of close substitutes for suppliers’ products
- Focal firm is an insignificant customer of supplier
- High switching costs for focal firm

High threat of buyers’ influence conditions
- Small number of buyers
- Low level differentiation
- Low switching costs

Drawbacks five forces
- Averages with big variance
- Unclear weight separate forces
- Highly dependent on industry definition
- Oversimplification / not complete
- Catch 22



Week 2 – Internal analysis

Resource categories
- Financial
- Physical
- Human

3