MBA 6180
What are the multiple roles of strategy?
- Decision support - Coordinating device - Setting targets
What are the four common characteristics of successful strategy?
1. Goals that are simple, consistent, and long-term. 2. Profound understanding of the competitive environment. 3. Objective appraisal of resources. 4. Effective implementation.
How to identify a company's strategy?
1. Mission statement, "why we exist". 2. Value statement, "what we believe in and how we will behave." 3. Vision statement, "what we want to be." 4. Strategy statement, "what our competitive gameplay will be: objectives, scope, and advantage." Look at "investors page" of company websites and annual reports. Check explicit statements against decisions and actions such as: where is the company investing its money (found in notes of capital expenditures in financial statements), what technologies is the company developing, what new products and services have been released, major investment projects announced, and top management hired.
What is the difference between corporate and business strategy?
Corporate strategy is the "where do we compete" and business strategy is the "how do we compete." Corporate strategy includes diversification, vertical integration, acquisitions, and new ventures.
What are the two types of real options?
Growth options - small investments in a number of future business opportunities but without committing to them. Flexibility options - the design of projects and plants that permit adaptation to different circumstances
What is the difference between intended, realized, and emergent strategy?
Intended strategy is that conceived by senior management. Realized strategy is the strategy that is actually implemented. Emergent strategy is the primary driver of realized strategy as it is made up of decisions emerging from the complex processes in which individual managers interpret the intended strategy and adapt to changing external circumstances.
What is free cash flow?
Net operating profit + depreciation - taxes - investment in fixed and working capital
What is economic value added?
Net operating profit after tax (NOPAT) less cost of capital, where cost of capital is calculated as capital employed multiplied by the weighted average cost of capital (WACC).
What types of growth options might a company pursue?
Platform investments - investments in core products or technologies that create a stream of additional business opportunities. Strategic alliances and joint ventures. Organizational capabilities.
What is static and dynamic strategy?
Static strategy is competing for the present and dynamic strategy is competing for the future.
What is strategic fit?
The alignment of the firm's internal goals, abilities, and systems to the external environment.
What is strategy?
The link between firm's goals, resources, and systems and it's competitive environment. It is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.
What is value?
The monetary worth of a product or service.
What is shareholder capitalism?
The overriding duty of the firm to produce profits for the owners.
What's economic profit?
The pure surplus available after all inputs (including capital) have been paid for.
Wha is the purpose of business?
To create customer value and extract some of the customer value in the form of profit to create value to the firm. Done through production and commerce.