Strategic Management (Fach) / Theories, definitions, comparisons (Lektion)

Principles of strategic management

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• What are HRN's? Mention four independent characteristics! "High-Reliability Networks" 1. All participating organizations in the network rely on each other to provide error free contributions to the overall performance.2. Not all organizations participating in the network are necessarily high-reliability organizations used to dealing with high-risk environments.3. The failure of one participant may thwart the reliability of the whole network’s performance.4. Reliable combination of all organizational contributions to the overall performance of the network is supported via specific cooperation structures and practices that aim at integration, also of a cultural nature, at the network level.
• What are HRO's? "High Reliability Organizations" “are complex” “are organizations that have been successful in avoiding disasters” “Describe a subset of hazardous organizations that enjoy a high level of safety over long periods of time.” “are organizations which have fewer than normal accidents”
• Define the concept of interorganizational networks (4) developed in the area of sociology used as a metaphor for interpersonal and/or interorganizational relationships (particularly within and among non-profit organizations) Network as an analytical tool rather than a pure metaphor Network as a purposeful and conscious arrangement among distinct but related profit-seeking organizations  -->  Organizations within networks are free to choose their counterparts, so the market force plays a role in a network. On the other hand, operational dependencies still exist between the members.
• What are the Reasons for uncertainty in general? Big amount of players Different areas of responsibility Missing of an early warning system Unknown source of the infection Missing or false communication à bad reporting system Missing experience, treatment options Insufficient food control Fear of becoming infected
• What are the five principles for HRO's? 1. Track small failures: Any failure can be important; Focus on close calls and near misses 2. Resist oversimplification: Analyse and reject simple diagnoses 3. Sensitivity to operations: Situaitonal awareness amd carefully designed change management processes 4. Maintain capabilities for resilience: Identify a failure and find a solution at the same time 5. Take advantage of shifting locations of expertise: Listen to your experts on the front line; Workung together is necessary
• Describe the current view of interorganizational networks Interorganizational networks can be seen as a mechanism to improve a company’s competitive advantage to maintain flexibility while reducing costs arise because of economical or social interactions, voluntarily or because of pressureof third organizations Features: Members of an interorganizationalnetwork are still independent what separates them from vertically integrated organizations The network is a hybrid of market price mechanisms and hierarchal relationships
• Describe Dynamic Capability "Dynamic Capabilies represent an organization's ability to renew and recreate its strategic capabilities to meet the needs of changing environments!" They are the extension of the core competences --> through reconfiguration, integration and assimilation of the core competences, the firm can react on the changing environment and achieve competitive advantages
• What are Core Competences? Core Competences are the fundamental resource structure of a firm: --> based on VRIN --> static approach (Can lead into stagnation)
• Describe the different types of resources of the resource-based-view Tangible resources: (physical + visible) capital land buildings plant equipment Intangible resources:(not physical + invisible) culture knowledge brand equity reputation patents, copyrights, trademarks, trade secrets --> it is very dependent on these resources how dynamic a firm can act with them!
• How dynamic capabilities can be, depends on: ..... structure of the company resources of the company financial power of the company
• Mention and describe Porter's Five Forces An industry's attractiveness can be identified by means of Porter's five forces: In the centre: Competitive Rivalry Potential entrants: (Threat of entry) --> can reduce the market share of a company --> high level of threat, if there are low barriers for entry of the market Substitutes: (threat of substitutes) --> low profitability if there are many substitutes Suppliers: (Bargaining power) --> can raise prices for delivering goods, which reduces the profitability of an industry --> high power if there are only a few suppliers, if essential for the industry Buyers: (Bargaining power) --> asking for: services, better quality of service/products, lower prices --> high power if there are only a few customers and if it's easy to use substitutes
• What are the limitations of Porter's five forces? --> the model is useful to identify the status quo, but lacks reflecting upon interactions and strategic behavior that is non-competitive: economic focus (no welfare considered) competitive focus lack of competitive dynamics potentially indefinite variables fictitious objective (fiktives Ziel) and unanimous (einstimmig) analysis of the industry across players collaboration ist neglected
• Describe the different criteria of VRIN Valuable --> Costs allow for a realization of acceptable returns possible Rare --> Resources are unique to the organization; Conditions to be met: customers needs and sustainability Inimitable --> Conditions to be met: Superior performance and linked competences Non-substitutable
• Hypercompetition: Describe D'Aveni's view critique of Porter's five forces: static picture focus on competition as a dynamic process underlying assumption: stable, static competitive structures are expection sustainable competitive advantage through market condition impossible change of status quo more promising
• What are the characteristics of Hypercompetition? Intense and rapid competitive moves Competitors must move quickly to build (new) advantages and erode advantages of rivals Leads to significantly increased intensification of competition Superior profitability is transitory Superior performance through continuous recreating and renewing of competitive advantage Later: resource-based view
• Benefits and challenges of Hypercompetition? Competition based on costs (quality): --> Challenge: still making profit --> Benefits: generate high market share Market satisfied with goods at low price --> Challenge: reduce costs --> Benefits: higher sales (enlarge target group) Investment in new markets (timing/know-how) --> Challenge: identification of the groups and their actual needs, not loosing old target groups + considering seasons (e.g. Christmas) --> Benefits: higher sales (enter new market first) Erection of entry barriers --> Challenge: develop sth. unique (e.g. social platform) --> Benefits: unique selling proposition; Vendor lock-in Capital accumulation to destroy competitors(financial capacity) --> Challenge: be bigger than your competitors; avoid bad investments --> Benefits: higher market share by forcing competitors out of the market or buying competitors
• Describe the focus of the internal and external perspective of the SWOT analysis Internal focus and assessment: Strengths Weaknesses --> Current status External focus and assessment: Opportunities Threats --> Future
• Limitations of SWOT attributes of the SWOT analysis may be opportunities as well as risks attributes of the SWOT analysis are both internal and external based on subjective interpretation static model no specifying of a target state only historical perspective, lack of future references only listing of facts, no ranking, no weighting of the attributes only competition orientated, no social/ethical/… components
• Benefits of SWOT analysis • Easy to handle with little or no costs in many different areas (companies, departments…)• Considers positive and negative aspects• Provides a clear view of your strengths and weaknesses (internal analysis)• Provides a chance to identify current and future opportunities or threats (external analysis)• Helps to create matching and converting strategies• Offers a good all-around view of the companies current and forward-looking situation
• Corporate Strategies: What is Diversification? Diversification is a corporate strategy to enter into a new market or industry which the business is not currently in, whilst also creating a new product for that new market. It is similar to horizontal integration. It reaches a level of high performance, when there is a related limited diversification. If the products are undiversified or unrelated extensively diversified, the performance will be low.
• Compare Diversification to vertical integration While Diversification (horizontal integration) concentrates on extending the core businesses and entering a new market with new products, vertical integration means moving along the value chain, focussing on the primary activities and trying to find an optimum. Vertical integration is highly related to Outsourcing.
• Which are the two different types of vertical integration? backward vertical integration: --> concentrating on upstream value activities (Inbound logistics; Operations; Outbound logistics) forward vertical integration --> concentrating on downstream value activities (Outbound logistics; Marketing + Sales; Service)
• Strengths (+) and Weaknesses (-) of Diversification? (+) risk management (+) greater revenues through wide variety (+) independence from individual clients (-) incresing organizational tasks (-) higher financial requirements (-) possible loss of overview
• Which factors influence the selection of an internationalization strategy? Local responsiveness Implementation costs Economies of scale Leveraging core competencies IP expropriation Economies of location Product differentiation Exchange-rate exposure Economies of learning --> all directly / indirectly influence the financial performance !
• Internationalization: Which are the market entry strategies? Export Turnkey operations Acquisitions Alliances / Networks --> Commitment is getting bigger from 1. to 4. !
• Mintzberg's categories of differentiation (5) Price Image Service Design Quality
• Which are the strengths of firms, that succeed in differentiation? access to leading specific research highly skilled and creative product-development-team strong sales team corporate reputation for quality and innovation

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