Summary: Strategy In Context

Read the summary and the most important questions on Strategy in context

• 1 Week 1

• 1.2 Chapter 1

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• High quality objectives

  Are tightly connected to elements of the firm's mission and are relatively easy to measure and track over time

• What are 4 things you need before making a strategy?

  1. It supports the firm's mission
  2. It is consistent with a firm's objectives 
  3. It exploits opportunities in a firm's environment with a firm's strengths
  4. It neutralizes threats in a firm's environment while avoiding a firm's weaknesses 

• What three organizational policies are important when implementing a strategy?

  1. Formal structure 
  2. Formal and informal management control systems
  3. Employee compensation policies

• A firm's accounting performance

  A measure of its competitive advantage calculated by using information from a firm's published profit and loss and balance sheet statements

• Measures of firm accounting performance can be grouped into four categories, name them

  1. Profitability ratios
  2. Liquidity ratios 
  3. Leverage ratios 
  4. Activity ratios 

• 2 Week 2

• 2.1 Chapter 2

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• Five forces framework

  Identifies the five most common threats faced by firms in their local competitive environments and the conditions under which these threats are more or less likely to be present

• 4 ways of cost advantages independent of scale

  1. Proprietary technology
  2. Managerial know how
  3. Favorable access to raw materials
  4. Learning-curve cost advantages

• What are 4 attributes of an industry that increase the threat of rivalry?

  1. Large number of competing firms that are roughly the same size
  2. Slow industry growth 
  3. Lack of production differentiation 
  4. Capacity added in large increments 

• Backward vertical integration

  When a buyer has a strong incentive to enter into its supplier's business

• What are the 5 indicators of the threat of suppliers in an industry?

  1. Suppliers industry is dominated by small number of firms
  2. Suppliers sell unique or high differentiated products
  3. Suppliers are not threatened by substitutes
  4. Suppliers threaten forward vertical integration 
  5. Firms are not important customers for suppliers