MBA 634 - Strategic Management - Test 1 (Ch. 1-7)

Strategic competitiveness Answer- Achieved when a firm successfully formulates and implements a value creating strategy Strategy Answer- An integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage Competitive advantage Answer- A strategy that creates superior value for customers and that competitors are unable to duplicate or find it too costly to try to immitate Above Answer- average returns - Returns in excess of what an investor expects to earn from other investments with a similar amount of risk Risk Answer- An investor's uncertainty about the economic gains or losses that will result from a particular investment Average returns Answer- Returns equal to those an investor expects to earn from other investments with a similar amount of risk Strategic management process Answer- The full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns Hypercompetition Answer- Competition that is excessive such that it creates inherent instability and necessitates constant disruptive change for firms in the competitive landscape Global economy Answer- One in which goods, services, people, skills, and ideas move freely across geographic boarders What is the opening case about in chapter 1? Answer- Alibaba is growing in china. Most shopping is done online in China. Alibaba is working on increasing their credibility in the US to expand their reach. Strategic flexbility Answer- A set of capabilities used to respond to various demands and opportunities existing in a dynamic uncertain competitive environment The Industrial Organizational model of above Answer- average returns focusses on the ___________________ environment - External Resources Answer- Inputs into a firm's production process, such as capital equipment, the skills of individual employees, patents, finances, and talented managers Capability Answer- The capacity for a set of resources to perform a task or an activity in an integrative manner Core competencies Answer- Capabilities that serve as a source of competitive advantage for a firm of it's rivals Vision Answer- A picture of what the firm wants to be and, in broad terms, what it wants to ultimately achieve Mission Answer- Specifies the businesses in which the firm intends to compete and the customers it intends to serve Stakeholders Answer- The individuals, groups, and organizations that can affect the firm's vision and mission, are affected by the strategic outcomes achieved, and have enforceable claims on the firm's performance The resource Answer- based model of above-average returns focusses on the __________________ environment - Internal Strategic leaders Answer- People located in different areas and levels of the firm using the strategic management process to select strategic actions that help the firm achieve its vision and fulfill its mission Organizational culture Answer- Refers to the complex set of ideologies, symbols, and core values that are shared throughout the firm and that influence how the firm conducts business All strategy is ___________ Answer- local What does the research Answer- based model assume? - Each organization has a unique collection of resources and capabilities A strong _________________________ is necessary for creating innovations Answer- knowledge-base AAR Answer- Above average returns - Focusses on risk and returns Stakeholders are classified into what three groups? Answer- Capital market stakeholders Product market stakeholders Organizational stakeholders Achieve _______________ and fulfill ________________ Answer- Achieve vision Fulfill Mission ASP Answer- Analysis Strategies Performance What was the opening case about? Answer- McDonalds has seen a decline in sales because they haven't done a good job at analyzing the external environment, which is becoming more heal conscious A firm's competitive actions and responses are influenced by what? Answer- The general environment Industry environment Competitor analysis General environment Answer- Composed of dimensions in the broader society that influence an industry and the firms within it Industry environment Answer- The set of factors that directly influences a firm and its competitive actions and responses Competitor analysis Answer- How companies gather and interpret information about their competitors Opportunity Answer- A condition in the general environment that, if exploited effectively, helps a company reach strategic competitiveness Threat Answer- A condition in the general environment that may hinder a company's efforts to achieve strategic competitiveness What are some samples of the general environment? Answer- Demographic Economic Political/legal Sociocultural Technological Global Sustainable physical environment What are the four parts of the external environment analysis? Answer- Scanning Monitoring Forecasting Assessing Demographic segment Answer- Concerned with a population's size, age structure, geographic distribution, ethnic mix, and income distribution Economic environment Answer- Refers to the nature and direction of the economy in which a firm competes or may compete Political/legal segment Answer- The arena in which organizations and interest groups compete for attention, resources, and a voice in overseeing the body of laws and regulations guiding interacting among nations as well as between firms and various local governmental agencies Sociocultural segment Answer- Concerned with a society's attitudes and cultural values Technological segment Answer- Includes the institutions and activities involved in creating new knowledge and translating that knowledge into new outputs, products, processes, and materials Global segment Answer- Relevant new global markets, existing markets that are changing, important international political events, and critical cultural and institutional characteristics of global markets Sustainable physical environment segment Answer- Refers to potential and actual changes in the physical environment and business practices that are intended to positively respond to those changes with the intent of creating a sustainable environment What are the five forces of the competitive model? Answer- The threat of new entrants The power of suppliers The power of buyers The threat of product subsititues The intensity of rivalry among competing firms Industry Answer- A group of firms producing products that are close substitutes Strategic group Answer- A set of firms emphasizing similar strategic dimensions and using a similar strategy Competitor intelligence Answer- The set of data and information the firm gathers to better understand and anticipate competitors' objectives, strategies, assumptions, and capabilities Complementors Answer- Companies or networks of companies that sell complementary goods or services that are compatible with the focal firm's good or service The purpose of the five forces industry analysis is to what? Answer- Measure the attractiveness of entering an industry What percent of a firm's profitability is explained by the industrial organizational model? Answer- 20% What percent of a firm's profitability is explained by the resource based model? Answer- 36% What percent of a firm's profitability is unexplained? Answer- 44% What does BDA stand for? Answer- Big Data Analysis What does BDA seek to accomplish? Answer- Uncover hidden patterns to make better decisions What was the opening case about Answer- Pharmaceutical companies adapting BDA, as well as Ford All competitive advantages have a _______________ life Answer- limited Because any competitive advantage will eventually be copied by competitors Competitive advantage's sustainability is a function of what three factors? Answer- 1. The rate of core competence obsolescence of environmental changes 2. The availability of substitutes for the core competence 3. The imitability of the core competence The main challenge for core competencies Answer- Managing current core competencies, while simultaneously developing new ones Global mind Answer- set - The ability to analyze, understand, and manage an internal organization in ways that are not dependent on the assumptions of a single country, culture, or context Value Answer- Measured by a product's performance characteristics and by its attributes for which customers are willing to pay Creating ___________ for a customer is ultimately a source of above Answer- average returns - value ________% of all organizational decisions fail Answer- 50 What are the three conditions affecting managerial decisions about resources, capabilities, and core competencies Answer- Uncertainty Complexity Intraorganizational conflicts Judgement Answer- The capability of making successful decisions when no obviously correct model or rule is available or when relevant data are unreliable or incomplete Individuals with key decision Answer- making positions are called ___________ _____________ - Strategic leaders Tangible resources Answer- Assets that can be observed and quantified Intangible resources Answer- Assets that are rooted deeply in the firm's history, accumulate over time, and are relatively difficult for competitors to analyze and imitate. What are the four categories of tangible resources Answer- 1. Financial resources 2. Organizational resources 3. Physical resources 4. Technological resources What are the three categories of intangible resources? Answer- 1. Human resources 2. Innovation resources 3. Reputational resources Examples of functional areas of firms Answer- Distribution Human resources MIS Marketing Management Manufacturing R&D Core competencies Answer- Capabilities that serve as a source of competitive advantage for a firm over its rivals What are the four criteria of sustainable competitive advantage? Answer- 1. Valuable capabilities 2. Rare capabilities 3. Costly-to-Imitate Capabilities 4. Non-substitutable Capabilities Valuable capabilities Answer- Allow the firm to exploit opportunities or neutralize threats in its external environment Rare capabilities Answer- Capabilities that few, if any, competitors possess Costly Answer- to-Imitate Capabilities - Capabilities that other firms cannot easily develop 1. Historical conditions 2. Causally ambiguous 3. Social complexity Non Answer- substitutable Capabilities - Capabilities that do not have strategic equivalents Value chain activities Answer- Activities or tasks the firm completes in order to produce products and then sell, distribute, and service those products in ways that create value for customers Supporting functions Answer- Include the activities or tasks the firm completes in order to support the work being done to produce, sell, distribute, and service the products the firm is producing What are the two things a capability must allow? Answer- 1. Perform an activity in a manner that provides value superior to that provided by competitors 2. Perform a value-creating activity that competitors cannot perform Outsourcing Answer- Purchase of a value-creating activity or a support function activity from an external supplier What was the opening case about? Answer- Hain Celestial Group is focussing on purchasing natural and organic foods companies and growing them from there. They are now the largest natural foods company in the world. A big part of this has to do with the natural and organic trend that larger companies have failed to get in bored with. What is the fundamental objective of using any type of strategy Answer- gain strategic competitiveness and earn above average returns What is a business Answer- level strategy? - An integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets What is the core strategy? Answer- Business-level strategy Core strategy Answer- The strategy that the firm forms to describe how it intends to compete in a product market Who are the foundations for business Answer- level strategies? - Customers What three things does the firm determine when selecting a business Answer- level strategy? - 1. WHO will be served 2. WHAT needs those target customers have that it will satisfy 3. HOW those needs will be satisfied The five strategies used are called ___________ because any organization can use them Answer- Generic What is the life Answer- blood of all organizations? - Returns earned from relationships with customers What are the three dimensions of relationships with customers? Answer- Reach Richness Affiliation What is reach? Answer- A firm's access and connection to customers What is richness? Answer- The depth and detail of the two-way flow of information between the firm and the customer What is affiliation? Answer- Facilitating useful interactions with customers - Seeing the world through the customer's eye Market segementation Answer- A process used to cluster people with similar needs into individual and identifiable groups Question of WHO Answer- Determining the customers to serve Question of WHAT Answer- Determining which customer needs to satisfy Question of HOW Answer- Determining core competencies necessary to satisfy customer needs What must a firm decide to position itself from competitors? Answer- Perform activities differently or perform different activities What are the five business Answer- level strategies? - Cost leadership Differentiation Focused cost leadership Focused differentiation Integrated cost leadership/differentiation Cost leadership strategy Answer- An integrated set of actions taken to produce goods or services with features that are acceptable to customers at the lowest cost, relative to that of competitors What are three examples of support functions? Answer- Finance Human Resources MIS What are examples of value chain activities? Answer- Supply-chain Management Operations Distribution Marketing Follow-up Service Differentiation strategy Answer- An integrated set of actions taken to produce goods or services that customers perceive as being different in ways that are important to them Focus strategy Answer- An integrated set of actions taken to produce goods or services that serve the needs of a particular competitive segment Examples of specific market segments that can be targeted by a focus strategy Answer- 1. A particular buyer group 2. A different segment of a product line 3. A different geographic market Integrated cost leadership/differentiation strategy Answer- Involves engaging in primary value-chain activities and support functions that allow a firm to simultaneously pursue low cost and differentiation What are three sources of flexibility for firms trying to balance the objectives of continuous cost reductions and continuous enhancements? Answer- Flexible manufacturing system Information networks Total quality management TQM Answer- Total quality management A managerial process that emphasizes an organization's commitment to the customer and to continuous improvement of all processes through problem-solving approaches based on empowerment of employees What was the opening case about in chapter 5? Answer- Google is seen to have a monopoly on search. However, they are using their expertise to branch out into other industries. Google is unique because part of their business they dominate, but other parts they are small players competing with many others in the space Competitors Answer- Firms operating in the same market, offering similar products, and targeting similar customers Competitive rivalry Answer- The ongoing set of competitive actions and competitive responses that occur among firms as they maneuver for an advantageous market position Competitive behavior Answer- The set of competitive actions and responses a firm takes to build or defend its competitive advantages and to improve its market position Multimarket competition Answer- Occurs when firms compete against each other in several product or geographic markets Competitive dynamics Answer- Refers to all competitive behaviors - that is, the total set of actions and responses taken by all firms competing within a market Model of competitive reality five factors Answer- Competitor Analysis Drivers of Competitive Behavior Competitive Rivalry Outcomes Feedback Market commonality Answer- Concerned with the number of markets with which the firm and a competitor are jointly involved and the degree of importance of the individual markets to each Resource similarity Answer- The extent to which the firm's tangible and intangible resources are comparable to a competitor's in terms of both type and amount Draw the framework of competitor analysis What are the two axis? Answer- Page 149 in book Market Commonality (Y-axis) -High -Low Resource similarity (X-axis) -Low -High Awareness Answer- The extent to which competitors recognize the degree of their mutual interdependence that results from market commonality and resource similarity Motivation Answer- A firm's incentive to take action or to respond to a competitor's attack Dissimilarity Answer- The more significant the difference between resources owned by the acting firm and those against whom it has taken action, the longer is the delay by the firm with the resource disadvantage Competitive action Answer- A strategic or tactical action the firm takes to build or defend its competitive advantages or improve its market position Competitive response Answer- A strategic or tactical action the firm takes to counter the effects of a competitor's competitive action Strategic action or strategic response Answer- A market-based move that involves a significant commitment of organizational resources and is difficult to implement and reverse Tactical action or tactical response Answer- A market-based move that is taken to fine- tune a strategy. It involves fewer resources and is relatively easy to implement and reverse First mover Answer- A firm that takes an initial competitive action in order to build or defend its competitive advantages or to improve its market position What are three benefits of being a first mover Answer- Earning above-average returns Loyalty of customers Market share Second mover Answer- A firm that responds to the first mover's competitive action, typically through imitation Late mover Answer- A firm that responds to a competitive action a significant amount of time after the first mover's action and the second mover's response Quality Answer- Exists when the firm's goods or services meet or exceed customer's expectations What are the eight product quality dimensions Answer- Performance Features Flexibility Durability Conformance Serviceability Aesthetics Perceived quality What are the six service quality dimensions? Answer- Timeliness Courtesy Consistency Convenience Completeness Accuracy