3.1.2 Theories of Corporate Strategy

• Corporate Strategy defines an organisation's overall scope, direction, and how it will achieve its objectives
• Corporate strategy focuses on competing in a specific market.

  False
• What does the Resource-Based View (RBV) consider as the primary drivers of competitive advantage?

  Internal resources and capabilities
• Sustained competitive advantage requires resources that are valuable, rare, inimitable, and non-substitutable, also known as VRIN
• Intangible resources are easily valued and copied.

  False
• Steps involved in strategic choice based on feasibility, suitability, and acceptability.

  1️⃣ Identify strategic options

  2️⃣ Evaluate feasibility

  3️⃣ Evaluate suitability

  4️⃣ Evaluate acceptability

  5️⃣ Select the best option
• What is the purpose of Porter's Five Forces Model?

  Analyze competitive forces
• Match each of Porter's Five Forces with its description:

  Threat of new entrants ↔️ How easily new competitors can enter the market

  Bargaining power of suppliers ↔️ Ability of suppliers to influence prices

  Bargaining power of buyers ↔️ Ability of buyers to negotiate prices

  Rivalry among existing competitors ↔️ Competition among firms in the industry
• Porter's Five Forces Model is used to analyse the competitive forces within an industry
• The threat of new entrants is influenced by barriers to entry
• Match the competitive force with its description:

  Bargaining Power of Suppliers ↔️ Supplier influence on input prices

  Bargaining Power of Buyers ↔️ Buyer influence on output prices

  Threat of Substitutes ↔️ Availability of alternative products

  Competitive Rivalry ↔️ Intensity of competition among firms
• Understanding the five forces helps businesses achieve a competitive advantage.
• Strategic capability refers to the resources and capabilities that enable an organisation to compete and achieve its objectives
• Match the resource with its description:

  Tangible Assets ↔️ Physical equipment or finances

  Intangible Assets ↔️ Skills and processes
• Competitive advantage arises from unique resources, capabilities, or market position
• Corporate strategy focuses on overall direction and scope of an organisation.
• Match the strategy type with its focus:

  Corporate Strategy ↔️ Overall direction and scope

  Business Strategy ↔️ Competing in a specific market
• Strategic choice involves evaluating options based on feasibility, suitability, and acceptability
• Acceptability in strategic choice refers to whether stakeholders are willing to support the decision.
• Strategic choice requires evaluating options based on three criteria: Feasibility, Suitability, and Acceptability
• Feasibility in strategic choice considers financial resources and operational capacity.
• Match the criteria with their key factors:

  Feasibility ↔️ Financial resources, technology

  Suitability ↔️ Market trends, strategic goals

  Acceptability ↔️ Stakeholder support, risk tolerance
• Steps to assess a strategy using the three criteria of strategic choice

  1️⃣ Evaluate if the strategy can be implemented with available resources (Feasibility)

  2️⃣ Determine if the strategy aligns with objectives and environment (Suitability)

  3️⃣ Assess if stakeholders accept the risks and rewards (Acceptability)
• Strategic choice involves selecting the best option from strategic alternatives to achieve organisational objectives.
• The Resource-Based View (RBV) posits that an organisation's internal resources and capabilities drive its competitive
• Sustained competitive advantage requires resources that are valuable, rare, inimitable, and non-substitutable (VRIN).
• Match the resource type with its example:

  Tangible ↔️ Physical assets, equipment

  Intangible ↔️ Knowledge, reputation, culture
• Steps for a company to achieve sustained competitive advantage using RBV

  1️⃣ Identify unique resources and capabilities

  2️⃣ Leverage these resources and capabilities effectively

  3️⃣ Ensure they are valuable, rare, inimitable, and non-substitutable (VRIN)
• Porter's Five Forces Model helps businesses understand the competitive forces within an industry
• The threat of new entrants is lower when barriers to entry are high.
• Match the competitive force with its impact:

  Bargaining Power of Suppliers ↔️ Higher input costs

  Bargaining Power of Buyers ↔️ Lower sales revenue

  Threat of Substitutes ↔️ Lower demand

  Competitive Rivalry ↔️ Lower profitability
• By understanding the five forces, businesses can develop strategies to mitigate threats and achieve a competitive advantage
• Strategic capability refers to the resources and capabilities that enable an organisation to compete and achieve its objectives.
• Match the capability with its example:

  Resources ↔️ Equipment, finances, employees

  Capabilities ↔️ Innovation, efficiency, customer service
• Competitive advantage allows an organisation to perform better in the market
• Competitive advantage can be measured by assessing profitability, market share, and customer satisfaction relative to competitors.
• Match the component of competitive advantage with its key factor:

  Unique Resources ↔️ Patents, brand reputation

  Superior Capabilities ↔️ Efficient processes, innovative R&D

  Effective Positioning ↔️ Distinct market niche, high-quality products
• Diversification strategies involve expanding into new products or markets
• Related diversification involves expanding into businesses linked by technology, operations, or markets.
• Match the diversification strategy with its relationship to the current business:

  Related Diversification ↔️ Linked by technology, operations, markets

  Unrelated Diversification ↔️ No operational or strategic connection