Mind Map by a01220251, updated more than 1 year ago
Created by a01220251 about 6 years ago



Resource summary

  1. Strategy Formulation
    1. External Analysis
      1. Sector
        1. Group of closely related industries
          1. Industry
            1. Group of companies offering products or services that are close substitutes for each other
              1. Satisfy the same basic customer needs
              2. Opportunities (profitable)
                1. Threats (endanger)
                  1. Life-cycle (not always followed)
                    1. 1. Embryotic Stage
                      1. Industry just beginning to develop
                      2. 2. Growth
                        1. Demand for the industry’s product begins to increase
                        2. 3. Shakeout
                          1. Growth slows, demand approaches saturation levels
                          2. 4. Maturity
                            1. The market is totally saturated, demand is limited to replacement demand, and growth is low or zero
                            2. 5. Decline
                              1. Growth becomes negative for a variety of reasons, including technological substitution, social changes, demographics, and international competition
                            3. FIVE FORCES MODEL (static picture and no individual company differences)
                              1. Risk of new entry by potential competitors
                                1. Function of the height of barriers to entry (the higher the barriers, the lower is the risk and the greater the profits)
                                  1. Economies of scale (Reductions in unit costs attributed to a larger output)
                                    1. Massproducing a standardized output
                                      1. Discounts on bulk purchases of raw material
                                        1. Spreading fixed production costs over a large production volume
                                          1. Distributing marketing and advertising costs over a large volume of output
                                          2. Brand loyalty
                                            1. Preference of consumers for the products of established companies
                                            2. Absolute Cost Advantage
                                              1. Superior production operations and processes due to accumulated experience, patents, or trade secrets
                                                1. Control of particular inputs required for production
                                                  1. Access to cheaper funds
                                                  2. Switching Costs
                                                    1. Government Regulations
                                                  3. Extent of Rivalry among established firms
                                                    1. Function of an industry’s competitive structure, demand conditions, cost conditions, and barriers to exit (Strong demand conditions moderate the competition, weak demand conditions intensive competition can develop)
                                                      1. Macro-environments that affect rivalry intensity (macroeconomic, global, technological, demographic and social, and political and legal)
                                                    2. Bargaining power of buyers
                                                      1. Threat if the company depends on buyers and they don´t
                                                      2. Bargaining power of suppliers
                                                        1. Threat if the company depends on buyers and they don´t
                                                        2. Threat of substitute products
                                                          1. Products serving customer needs similar to the needs served by the industry
                                                          2. 6th Power of complement providers
                                                            1. Powerful and vigorous complementors may have a strong positive impact on demand in an industry
                                                  4. Internal Analysis
                                                    1. Weaknesses
                                                      1. Strengths
                                                        1. Distinctive competencies (firm-specific strengths that allow a company to differentiate its products and/or achieve substantially lower costs to achieve a competitive advantage)
                                                          1. Resources (its financial, physical, human, technological, and organizational assets)
                                                            1. Tangibles
                                                              1. Intangibles
                                                              2. Capabilities (its skills at coordinating resources and putting them to productive use)
                                                                1. COMPETITIVE ADVANTAGE
                                                                  1. Build on its existing resources and capabilities and formulate strategies that build additional resources and capabilities
                                                                    1. Superior value creation
                                                                      1. Low Costs
                                                                        1. Differentiate Product
                                                                          1. Both
                                                                          2. Building blocks
                                                                            1. Efficiency (enables a company to lower its costs)
                                                                              1. Quality (allows it to charge a higher price and lower its costs)
                                                                                1. Innovation (can lead to higher prices or lower unit costs ... product/process)
                                                                                  1. Responsiveness to customers (allows it to charge a higher price)
                                                                                  2. Durability depends on the height of barriers to imitation, the capability of competitors, and environmental dynamism.
                                                                              2. Analyze the financial performance (ROE, ROI, etc)
                                                                                1. Absortive Capacity
                                                                                  1. The ability of an enterprise to identify, value, assimilate, and use new knowledge.
                                                                              3. Strategic Groups
                                                                                1. Groups of companies pursuing the same or a similar strategy
                                                                                  1. Its members constitute its immediate competitors
                                                                                    1. Switching strategic group may improve a company´s performance
                                                                                      1. Feasibility depends on the height of mobility barriers
                                                                                  2. ULTIMATE GOAL GENERATE VALUE
                                                                                    1. Failure factors: organizational inertia in the face of environmental change, the nature of a company’s prior strategic commitments, and the Icarus paradox
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