Summary: The Economic Foundations Of Theories In Strategy

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• 1.1 The economic foundations of theories in strategy

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• How can the Neoclassical theory of perfect competition inform theories of competitive advantage?

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• What can you infer from the theories discussed by Conner (1991) about:a. The nature of the firmb. The causes of differences in performance among firms?c. The role of managers in improving the firm's performance?

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• What is meant with the analytical skills of strategic management?

  1. unstructured problems
  2. Double 'T-profile'

• What is the definition of CA of Rumelt, 2003?

  • Has something to do with advantage over competitors
  • Has something to do with differential performance
  • Has something to do with creating value

• What are the 6 PIMS principles?

  1. In the long run, the most important factor affecting performance is the relative quality of an SBU's products and services.
  2. Market share and profitability are strongly related
  3. High investment intensity acts as a powerful drag on profitability.
  4. Many 'dogs' and 'question marks' generate cash while many 'cash cows' are dry.
  5. Vertical integration  is a profitable strategy for some businesses, but not for others.
  6. Most of the factors that boost ROI (=return on interest) also contribute to long- term value.

• What does Porter's 5 forces model looks like?

  Potential entrants (threats of new entrants)

  Buyers ( Bargaining power of buyers)

  Substitutes ( threat of substitute products or services)

  Suppliers (Bargaining power of suppliers)

  Middle position: Industry competitors and Rivalry among existing firms

   

  --> This model isn't a theory, it is a framework/tool. There is still a lot of theory behind it.

• Peters and Waterman (1982): What do they consider as CA due to their tekst in "In search of excellence"?

  1. A bias for action
  2. Close to the customer
  3. Autonomy and entrepreneurship
  4. Productivity through people
  5. Hands-on, value driven
  6. Stick to the knitting
  7. Simple form, lean staff
  8. Simultaneous loose-tight properties

• Which three layers of theory do we have?

  1. Management
  2. Strategic Management
  3. Economics

• Which five school of thoughts are there?

  1. The Design School - 1960s
  2. The Planning School - 1970s
  3. The Positioning School - 1980s
  4. The Resource-Based School - 1990s
  5. The Process School - 1980s and onwards.

• Which two types of strategies are there?

  1. Corporate strategy
  2. Competitive strategy --> main focus of the course