1. How is a strategy different from a business model? How is it similar?
Strategy is a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors. A business model describes the rationale of how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts. Strategy is action while business model is explanation. A business model can be part of a strategy even though both are created to bring revenue/profit to the shareholders and business owners.
2. As noted in the chapter, research found that firm effects are more important than industry effects. What does this mean? Can you think of situations where this might not be true?
Firm effects are firms’ resource and capacities, or any effects caused by strategies or policies undertaken by the management of the firms. Firm effects are more important than industry effects means that management actions and firms’ capacities have more effects on firm’s performance than other factors caused by the industry. This might not be true in the short run. For example, slot machines manufacturing is an industry that requires heavy capital commitment. In the short run, this industry factor will have a bigger effect on firm’s performance.
3. This chapter introduces three different levels for strategic considerations. In what situations would some of these levels be more important than others? How should the organization ensure the proper attention to each level of strategy as needed?
Strategy can be formulated on three different levels
- Corporate level
- Business unit level
- Functional or departmental level
If a business is a conglomerate corporation with different business segments, it’s very important to look at business unit level to find out which product lines are not doing good and come up with proper solutions. The organization