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Purchasing and business strategy - Purchasing's role in strategic management theory

4 important questions on Purchasing and business strategy - Purchasing's role in strategic management theory

Explain the growth share matrix of Boston Consulting Group.

The idea underlying this matix was to spread financial risks and be selective when investing in new products and markets. Products were categorized in four categories: stars, cash cows, dogs and question marks. Companies needed to pursue a balanced spread across each of these segments.

According which three strategies did you have to choose according to Porter?

In his view, in order to be sustainable profitable, companies needed to choose between three generic strategies:
1. cost leadership
2. product differentation
3. focus
If you did not choose between these three strategies, your profitability would suffer, since you would be stuck in the middle. Each of these strategies would involve a clear position of the company relative to its suppliers.

Explain what a resource - based of view is.

A resource - based view of the firm is a theory that business success is primarly achieved through deploying a company's unique resources.

What determines a firm's competitiveness?

- Companies should differentiate between core and non - core competencies (Quinn (1992) and Prahalad and Hamel (1990));
- Rather than internal resources, the way firms deal with their external resources (resource dependency theory) (pfeffer and salancik, 1978);