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Summary for Strategy and Organisation - Final Exam Material
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Summary for Strategy and Organisation – Final Exam Material:Strategy – long-term direction of organisation; measured over years; Three Horizons Framework
(current core activities, emerging activities, future possibilities); focusing on both present and future.
Strategic Direction – long-term direction over time; set towards objectives.
Stakeholders’ interests – it is important for organisations to consider both internal and external groups.
Corporate level – overall scope of organisation, how value is added; e.g. diversification.
Business level – how businesses compete in markets or industries; e.g. innovation.
Operation level – effective delivery of level strategies (corporate, business level) in terms of resources.
Strategy Statement – goals (mission, vision, objective); scope of activities (customers, location, internal
activities); competitive advantage.
Exploring Strategy model (intertwining factors) – position in external environment or industry, resources
and competences; choices for employed direction or method; action in implementing strategies.
Context – small businesses (profit or other goals); multinational corporations (international strategy
for location and market); public sector (non-profit, competing for funds and quality).
Strategy lenses – ways to look at strategy issues differently; generate insights; design (detached
approach to analysis, objectivity); experience (response to environment, diversity for new insights);
discourse (how managers frame problems, decisions, and interests).
PESTEL – analysis of macro-environment; politics (role of state), economics, social (culture and
demographics), technology (developments), ecological (‘green’ issues), legal (regulatory constraints).
External key drivers for change; impact on future success or failure.
Identifying change – megatrends (influence of PESTEL changes); inflexion points (direction shift of
trends); weak signals (signs of future trends).
Scenarios – uncertainty and change; test how environment impacts strategies; alternatives; to be alert
by building scenarios which are strong against change.
Scenario analysis – define scope (subject and time span); identify key drivers of change (PESTEL
impact on industry, mutual independence); develop ‘stories’ (incorporate drivers); identify impact
(alternative scenarios’ impact); establish early warnings (indicators).
Industry – group of firms producing essentially similar products or services.
Market – group of customers for essentially similar products or services.
Five Forces Framework – assess attractiveness of an industry; industry, influence, competitors;
Industry, Competitive Rivalry means more rivalry creates barriers for entrants; competitor balance (size);
industry growth rate; high fixed costs; high exit barriers; low differentiation (last three all increase rivalry
among firms in an industry or market).
Threat of new entrants (extent of entry barriers e.g. scale, supply, retaliation, and differentiation); threat
of substitution (switching to alternative); power of buyers (bargaining customers want lower price,
meaning lower profits); power of suppliers (switching cost and competition threat).
, FFF Issues – defining right industry (different levels and competitive forces); converging industries
(changing boundaries); complementary organisation (complementary rather than competitors).
Industry types – monopolistic (one firm dominates, no competition); oligopolistic (few firms
dominate); hypercompetitive (constant diquilibrium, change, increased competition); perfectly
competitive (low to no entry barriers, homogenous products, transparency and full information).
Industry Life Cycle – development (innovation, high differentiation, few rivals); high growth (growth
ability, low entry barriers, more entry); shake-out (financial strength, saturated, slow growth); maturity
(increasing barriers, economies of scale or market share); decline (exits, price or cost wars, extreme
rivalry).
Comparative Industry Structure Analysis – dynamic analysis of industries; five axes with the Porter
forces; larger area means greater profit potential.
Strategic groups (industry domain) – organisations in similar industry; similar strategies and
competition on similar basis; distinguishing factors are scope of activities and resource commitment;
top and low performers; to understand competition, analyse opportunities, and analyse mobility carriers.
Market segments (industry domain) – organisations in similar industry, groups of customers with
differing from other but similar needs; customer needs vary and reasons for variation can be used to
identify distinct segments; issue of specialisation (focus on particular segment for success, niche
strategy).
Strategy Canvas – compares competitors based on performance to establish extent of differentiation;
Critical Success Factors (valued by customers or cost advantage, CSF); value curves (competitor
performance across CSF); value innovation and Blue Ocean (creating new market space for factors in
which a firm is better than its competitors, low competition).
Resource-Based View (RBV) – competitive advantage and superior performance are explained by
distinctiveness of capabilities.
Strategic Capabilities – capabilities which contribute to long-term survival or competitive advantage of a
firm or organisation; resources (tangible or intangible assets); competences (effective use of assets);
in other words, whether an organisation can exploit opportunities with available resources.
Strategic capabilities include both dynamic (influence operational) and operational capabilities (dynamic
capabilities change these in case the environment changes).
Dynamic Capabilities – changing or renewing capabilities to meet needs of adapting environments.
Generic types of dynamic capabilities – sensing (exploring opportunities); seizing (address
opportunities through new activities or products); reconfiguring (change or renew capabilities in order
to seize).
Threshold capabilities – needed to meet necessary requirements to compete and achieve parity.
Distinctive capabilities – required to achieve competitive advantage; hard for competitors to imitate.
Capabilities are complex and involve internal linkages and external interconnectedness.
VRIO – criteria to assess competitive advantage and distinctive capabilities; value V (value to customer,
higher revenue or lower costs); rarity R (unique or immobile capabilities); inimitability I (being difficult
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