BUSA 4980 EXAM 1 VERIFIED STUDY GUIDE
Strategy - Answers - an action plan (initiatives, commitments), involving resource
allocation
an integrated and coordinated set of actions designed to exploit core competencies and
gain a competitive advantage
must consist of a central, integrated, externally-oriented concept of how the business
will achieve its objectives
5 elements: arena, vehicles, differentiators, staging and economic logic
Strategic Competitiveness - Answers - involves formulating and implementing a value-
creating strategy
a strategy is competitive when it creates value for consumers
often entails a unique market position
requires a core competence ie resources that are valuable, rare, costly to imitate and
non-substitutable
Competitive Advantage - Answers - results when buyers have a lasting preference for
the company's products or services over rivals'
rivals are unable to duplicate or find too costly to imitate the value offered to consumers
achieved through lower costs or differentiation (ie unique features)
Above-Average Returns - Answers - returns in excess of what investor expects in
comparison to other investments with similar risk
main metric = performance (profitability, financial strength, and market standing)
other metrics = goodness to fit, competitive advantage, consistency and risk
Major Elements of Strategy - Answers - Arena, Vehicles, Differentiators, Staging, and
Economic Logic
Strategy - Arenas - Answers - Where will we be active?
product categories
market segments
geographic areas
core technologies
value creation stages
it is important to be as specific as possible
Strategy - Vehicles - Answers - How will we get there?
internal development
joint ventures
licensing/ franchising
acquisitions
, the means for attaining the needed presence in a particular product category, market
segment, geographic area, or value-creation stage should be the result of deliberate
strategic choice
Strategy - Differentitators - Answers - How will we win?
price
image/ styling
customization
product reliability
sometimes having the best combination of differentiators confers a tremendous
marketplace advantage
Strategy - Staging - Answers - What will be our timing?
speed of execution
sequence of initiatives
some initiatives must come first, followed only then by others, and then still others
Strategy - Economic Logic - Answers - How will we obtain our returns?
lowest costs through scale, scope and/or replication advantages
premium prices due to unmatchable service, proprietary product features, etc
the most successful strategies have a central economic logic that serves as the fulcrum
for profit creation
4 basic approaches to building competitive advantage - Answers - low cost leadership
differentiating features/attributes
market niche
distinct enterprise
Low cost Leadership - Answers - competitive advantage arises from a cost structure
rivals cannot match
** does NOT mean lowest price
Differentiating features/attributes - Answers - advantage stems from products that
provide higher quality, wider selections, attractive styling, technological superiority
Market Niche - Answers - advantage results by doing a better job than rivals of serving
the preferences of buyers comprising a narrow market
Distinct expertise - Answers - advantage arises from developing expertise, resource
strengths, and capabilities not easily imitated by rivals
Criteria for assessing strategy
Strategy - Answers - an action plan (initiatives, commitments), involving resource
allocation
an integrated and coordinated set of actions designed to exploit core competencies and
gain a competitive advantage
must consist of a central, integrated, externally-oriented concept of how the business
will achieve its objectives
5 elements: arena, vehicles, differentiators, staging and economic logic
Strategic Competitiveness - Answers - involves formulating and implementing a value-
creating strategy
a strategy is competitive when it creates value for consumers
often entails a unique market position
requires a core competence ie resources that are valuable, rare, costly to imitate and
non-substitutable
Competitive Advantage - Answers - results when buyers have a lasting preference for
the company's products or services over rivals'
rivals are unable to duplicate or find too costly to imitate the value offered to consumers
achieved through lower costs or differentiation (ie unique features)
Above-Average Returns - Answers - returns in excess of what investor expects in
comparison to other investments with similar risk
main metric = performance (profitability, financial strength, and market standing)
other metrics = goodness to fit, competitive advantage, consistency and risk
Major Elements of Strategy - Answers - Arena, Vehicles, Differentiators, Staging, and
Economic Logic
Strategy - Arenas - Answers - Where will we be active?
product categories
market segments
geographic areas
core technologies
value creation stages
it is important to be as specific as possible
Strategy - Vehicles - Answers - How will we get there?
internal development
joint ventures
licensing/ franchising
acquisitions
, the means for attaining the needed presence in a particular product category, market
segment, geographic area, or value-creation stage should be the result of deliberate
strategic choice
Strategy - Differentitators - Answers - How will we win?
price
image/ styling
customization
product reliability
sometimes having the best combination of differentiators confers a tremendous
marketplace advantage
Strategy - Staging - Answers - What will be our timing?
speed of execution
sequence of initiatives
some initiatives must come first, followed only then by others, and then still others
Strategy - Economic Logic - Answers - How will we obtain our returns?
lowest costs through scale, scope and/or replication advantages
premium prices due to unmatchable service, proprietary product features, etc
the most successful strategies have a central economic logic that serves as the fulcrum
for profit creation
4 basic approaches to building competitive advantage - Answers - low cost leadership
differentiating features/attributes
market niche
distinct enterprise
Low cost Leadership - Answers - competitive advantage arises from a cost structure
rivals cannot match
** does NOT mean lowest price
Differentiating features/attributes - Answers - advantage stems from products that
provide higher quality, wider selections, attractive styling, technological superiority
Market Niche - Answers - advantage results by doing a better job than rivals of serving
the preferences of buyers comprising a narrow market
Distinct expertise - Answers - advantage arises from developing expertise, resource
strengths, and capabilities not easily imitated by rivals
Criteria for assessing strategy
