MGT 400 EXAM #1 QUESTIONS AND ANSWERS
Competitive Advantage
Example: Google has a competitive advantage over Microsoft, Yahoo, and others
competing in the online search and advertising business. - Answers -A firm that
formulates and implements a strategy that leads to superior performance relative to
other competitors in the same industry average
Sustainable Competitive Advantage
Example: Google has a sustainable competitive advantage because it has outperformed
its rivals consistently over time. Past performance is no guarantee of future
performance. Google's competitors are working hard to neutralize Google's competitive
advantage. - Answers -A firm that is able to outperform its competitors or the industry
average over a prolonged period of time
Competitive Disadvantage - Answers -A firm underperforms its rivals or the industry
average.
Competitive Parity - Answers -Two or more firms perform at the same level.
Strategy
The firm that possesses competitive advantage provides superior value to customers at
a competitive price or acceptable value at a lower price. The important point here is that
strategy is about creating superior value, while containing the cost to create it. -
Answers -Describes the goal-directed actions a firm intends to take in its quest to gain
and sustain competitive advantage.
Co-Opetition - Answers -When competitors cooperate with one another to achieve
strategic objectives.
Strategy as a theory of how to compete
In the competitive world, managers yet their theories in the marketplace. Ex: Apple
Netwon flops, iPhone a huge success, Sam Walton's assumptions about low prices and
high volume, and auto industry differences between U.S. and Japan. - Answers -
Provides managers with a roadmap to navigate the competitive territory. The more
accurate the map, the better strategic decisions managers can make.
Firm Effects - Answers -The results of managers' actions to influence firm performance
Industry Effects - Answers -The results attributed to the choice of industry in which to
compete
, Firm effects - Answers -What is more important? Firm effects or industry effects?
30-45% - Answers -Superior firm performance is explained by ____% of firm effects.
20% - Answers -Superior firm performance is explained by ____% of industry effects.
35-50% - Answers -Superior firm performance is explained by ____% of other effects.
Business Model - Answers -Organizational plan that details the firm's competitive
tactics and initiatives; in short, how the firm intends to make money.
Razor-Razor-Blade business model - Answers -What model is the idea to give away or
sell for a small fee the product and make money on the replacement part needed.
Subscription Model - Answers -What model recoups the subsidy provided for a
smartphone by rehiring customers to sign up for lengthy service plans.
Strategic Management Process - Answers -Describes the method by which managers
conceive of and implement a strategy that can lead to sustainable competitive
advantage.
1. Strategic Planning
2. Scenario Planning
3. Strategy as Planned Emergence - Answers -What does the strategic management
process consist of?
- what is our vision?
- what is our mission?
- what are our values? - Answers -What three things should managers ask themselves
to begin the strategic management process?
Vision
One day, all children in this nation will have the opportunity to attain an excellent
education - Answers -Statement about what an organization ultimately wants to
accomplish.
Mission
Eliminate educational inequality by enlisting our nation's most promising future leaders
in the effort - Answers -Describes what an organization actually does - the products
and services it plans to provide and the markets in which it will compete
Values
Competitive Advantage
Example: Google has a competitive advantage over Microsoft, Yahoo, and others
competing in the online search and advertising business. - Answers -A firm that
formulates and implements a strategy that leads to superior performance relative to
other competitors in the same industry average
Sustainable Competitive Advantage
Example: Google has a sustainable competitive advantage because it has outperformed
its rivals consistently over time. Past performance is no guarantee of future
performance. Google's competitors are working hard to neutralize Google's competitive
advantage. - Answers -A firm that is able to outperform its competitors or the industry
average over a prolonged period of time
Competitive Disadvantage - Answers -A firm underperforms its rivals or the industry
average.
Competitive Parity - Answers -Two or more firms perform at the same level.
Strategy
The firm that possesses competitive advantage provides superior value to customers at
a competitive price or acceptable value at a lower price. The important point here is that
strategy is about creating superior value, while containing the cost to create it. -
Answers -Describes the goal-directed actions a firm intends to take in its quest to gain
and sustain competitive advantage.
Co-Opetition - Answers -When competitors cooperate with one another to achieve
strategic objectives.
Strategy as a theory of how to compete
In the competitive world, managers yet their theories in the marketplace. Ex: Apple
Netwon flops, iPhone a huge success, Sam Walton's assumptions about low prices and
high volume, and auto industry differences between U.S. and Japan. - Answers -
Provides managers with a roadmap to navigate the competitive territory. The more
accurate the map, the better strategic decisions managers can make.
Firm Effects - Answers -The results of managers' actions to influence firm performance
Industry Effects - Answers -The results attributed to the choice of industry in which to
compete
, Firm effects - Answers -What is more important? Firm effects or industry effects?
30-45% - Answers -Superior firm performance is explained by ____% of firm effects.
20% - Answers -Superior firm performance is explained by ____% of industry effects.
35-50% - Answers -Superior firm performance is explained by ____% of other effects.
Business Model - Answers -Organizational plan that details the firm's competitive
tactics and initiatives; in short, how the firm intends to make money.
Razor-Razor-Blade business model - Answers -What model is the idea to give away or
sell for a small fee the product and make money on the replacement part needed.
Subscription Model - Answers -What model recoups the subsidy provided for a
smartphone by rehiring customers to sign up for lengthy service plans.
Strategic Management Process - Answers -Describes the method by which managers
conceive of and implement a strategy that can lead to sustainable competitive
advantage.
1. Strategic Planning
2. Scenario Planning
3. Strategy as Planned Emergence - Answers -What does the strategic management
process consist of?
- what is our vision?
- what is our mission?
- what are our values? - Answers -What three things should managers ask themselves
to begin the strategic management process?
Vision
One day, all children in this nation will have the opportunity to attain an excellent
education - Answers -Statement about what an organization ultimately wants to
accomplish.
Mission
Eliminate educational inequality by enlisting our nation's most promising future leaders
in the effort - Answers -Describes what an organization actually does - the products
and services it plans to provide and the markets in which it will compete
Values
