Globus Exam

What is strategy? - A company's strategy is the set of actions that its managers take to outperform the company's competitors and achieve superior profitability. What are 3 components of a good strategy? What is a good strategy? - What is our present situation? (Analysis) Business environment and industry conditions Firm's financial and competitive capabilities - Where do we want to go from here? (Formulation) Creating a vision for the firm's future direction - How are we going to get there? (Implementation) By crafting an action plan and DO it What is competitive advantage and how do we create it? - A firm achieves a competitive advantage when it provides buyers with superior value compared to rival sellers or offers buyers the same value as its rivals but at a lower cost to the firm. What's the difference with sustainable competitive advantage? - The basis for its advantage persists despite the best efforts of competitors to match or surpass its advantage. - Example: Apple (smartphone industry) Sustainable competitive advantage over Samsung Has lasted over a decade What is vision, mission, and value? - A strategic vision describes management's aspirations for the company's future and the course and direction charted to achieve them. The Mission Statement: Uses specific language to give the firm its own unique identity Describes the firm's current business and purpose—"who we are, what we do, and why we are here" Should focus on describing the firm's business, not on "making a profit"—earning a profit is an objective not a mission The Ideal Mission Statement Identifies the firm's product or services Specifies the buyer needs it seeks to satisfy Identifies the customer groups or markets to serve Specifies its approach to pleasing customers Sets the firm apart from its rivals Clarifies the firm's business to stakeholders - Mission: "to be our customers' favorite place and way to eat and drink" - Vision: "to move with velocity to drive profitable growth and become an even better X serving more customers delicious food each day around the world." (was "become a modern, progressive burger company delivering a contemporary customer experience") - UWEC - A strategic vision portrays a firm's aspirations for its future ("where we are going"). - A firm's mission describes the scope and purpose of its present business ("who we are, what we do, and why we are here"). - A firm's core values are the beliefs, traits, and behavioral norms that the firm's personnel are expected to display in conducting the firm's business and pursuing its strategic vision and mission. Strategic plan= strategic vision+mission+Object+strategy - A company's strategic plan lays out its future direction, performance targets, and strategy. - A Strategic Plan=A Strategic Vision + Mission + Objectives + Strategy - Provides direction: "where we are going" - Sets out the compelling rationale (strategic soundness) for the firm's direction - Uses distinctive and specific language to set the firm apart from its rivals What is pestel analysis? Why study? How do we use? - PESTEL analysis focuses on the six principal components of strategic significance in the macro-environment. Political Economic Social Technological Environmental Legal Are you able to determine which factor happened in external environment? What is industry and what is industry analysis? - Industry: Group of companies Relatively similar suppliers and buyers Similar products and services - Industry analysis, a method to: Identify an industry's profit potential Derive implications for a firm's strategic position - Michael porter Jr's five forces? What are five forces and how do we use? The profit potential of different industries How to position the firm to gain and sustain competitive advantage Threat of Entry (1 of 2) The risk that potential competitors will enter an industry Lowers industry profit potential:Incumbents lower prices Incumbents spend more to satisfy existing customers. Entry barriers:Obstacles blocking others from enteringA significant predictor of industry profit potential Threat of Entry (2 of 2) Entry barriers:Economies of scale (cost advantages)Customer switching costsCapital requirementsGovernment policy Power of Suppliers Pressures that industry suppliers put on an industry's profit potential Lowers industry profit potential if:Suppliers demand higher prices for their inputsSuppliers reduce quality Power of Buyers (Customers) Pressure customers put on an industry Lowers industry profit potential if:Buyers obtain price discountsReduces revenueBuyers demand higher quality / serviceRaises production costs Threat of Substitutes Meet the same basic customer needBut in a different wayAvailable from outside the given industry Examples:Energy drinks vs. coffeeVideoconferencing vs. business travelE-mail vs. traditional mail service Competition from Competitors The intensity with which companies in the same industry jockey for market share and profitability Examples of tactics: • Price discounting • After sales service Entry barriers-significant predictor of industry profit potential - Entry barriers: Economies of scale (cost advantages) Customer switching costs Capital requirements Government policy What determines the competition from competitors? The intensity with which companies in the same industry jockey for market share and profitability Examples of tactics: • Price discounting • After sales service - 1,2,3,4 The intensity of rivalry among competitors is largely determined by: 1. Competitive industry structure 2. Industry growth 3. Strategic commitment 4. Exit barriers