WPC 480 Exam #1 2023 with verified questions and answers

Strategy An integrated set of goal-directed actions a firm takes to gain and sustain competitive advantages. Vision What do we want to accomplish? Mission How do we accomplish our goals? And what do we do to accomplish our goals? Stakeholders organizations, groups, and individuals. They can affect or are affected by a firm's actions. Competitive Advantage superior performance relative to other competitors in the same industry or the industry average. Sustainable Competitive Advantage outperforming competitors or the industry average over a prolonged period of time. Competitive Parity performance of two or more firms at the same level Strategic Management Process -Environmental scanning -Strategy formulation -Strategy implementation -Strategy evaluation Intended strategy the outcome of a rational and structured top-down strategic plan Emergent strategy any unplanned strategic initiative, bubbles up from the bottom of the organization and can influence and shape a firm's overall strategy. Realized strategy combination of intended and emergent strategy PESTEL Framework Political factors: processes and actions of government bodies. Lobbying, public relations, contributions, litigations. Economic factors: macro economic climates. Growth rates, employment, interest rates, price stability, currency exchange rates. Sociocultural factors:demographic trends,cultures, norms, and values. Technological factors: innovations in process and product technology Ecological factors:involve environmental issues (e.g., Natural environment, global warming, sustainable economic growth). Legal factors:official outcomes of political processes (e.g., (de)regulations, court decisions, laws) Competitive Industry Structure -Perfect competition -Oligopoly -Monopolistic competition -Monopoly Strategic Groups companies in a specific industry that pursue similar strategies. Ex. wal-mart, target, fry's, bashas Ex. costco, sam's club 5 Forces Model -Power of suppliers -Intra-industry rivalry -threat of substitutes -threat of entrants -Power of buyers Core Competencies Unique strengths allowing a firm to differentiate its products and services from those of its rivals. Ex. Facebook IT capabilities Data mining Firm bundle of resources -financial -human -organizational/societal -physical VRIO Framework -Value-- lower cost/increase value -Rarity -Imitability -Organizational-- supportive of product to be successful *contain all aspects for sustainable competitive advantage Resource-based view firms have different resource/capabilities that are costly for other firms in the industry to acquire -immobility-- not easily copied Isolating mechanisms(barriers to imitate) -Better expectations of future resource value (ex. real estate properties) -Path dependence: choice sets depend on choices you've already made -Causal ambiguity: don't know what causes the effect -Social complexity: more people, interactions become more complicated -Intellectual property protection (ex. patents) Core Rigidity a firm that doesn't change, will fall behind Ex. Kodak film, blockbuster w/ netflix, Sears w/ catalog sales, Nokia SWOT -strengths -weaknesses -opportunities -threats Dynamic Capabilities emphasizes a firm's ability to modify and leverage its resource base Firm Performance Measurements -Accounting profitability ROI ROIC ROE ROA -Shareholder value creation Marketing Capitalization (# of shares x share price) Stock prices are highly volatile -Economic value creation Willingness to Pay - Firm's Cost Must be done for every product -Opportunity Cost Value of the best forgone alternative use of the resources employed -Producer surplus (profit) difference between the price charged (P) and the cost to produce (C). Consumer surplus difference between what you are willing to pay (V) and what you paid (P). Economic value created difference between customer's WTP and cost Triple Bottom Line social, environmental (or ecological), and financial Business-Level Strategy How a firm competes in a given industry 1. cost leadership 2. differentiation Cost-Leadership Strategy 1. Cost of input factors: Raw materials, capital, labor, IT services Ex. airline industry -Access to cheap fuel -Interest free government loans -Nighttime take offs/landings 2.Economies of scale: Per unit cost decreases as output increases *Diseconomies: opening more factories to produce more, increases cost 3. Learning Curve Effects: Becoming more efficient over time Less time, less money 4. Technology Improvement Differentiation Unique features that increase value of goods and services. Allows firm to increase price and increase WTP Value Increase Drivers 1. Product Feature Increase perceived value 2. Customer Service Zappos→ free shipping, no predetermined scripts 3.Complements Apple iOS→ apps, other apple products Blue Ocean Strategy Successfully combining differentiation & cost-leadership. Untapped market space Ex. Trader Joes Paradox to differentiation -greater the differentiation, smaller the market segment -Increased consumption can reduce value Ex. coach, michael kors *Can diversify into different brands to expand market share Industry Life cycle 1. Introduction High price Few competitors Tech enthusiasts buy 1st Ex Google Glasses 2. Growth Falling price Many competitors Early adopters 3. Shakeout Moderate price Fewer competitors Early majority 4. Maturity Low price Late majority 5. Decline Low to high price Laggards Types of Innovation 1. Incremental Existing tech Existing markets Ex. Gillette razor 1 to 6 blades, new iPhone releases 2. Disruptive New tech Existing market Ex. online retailers, hybrid cars, Netflix, food delivery services 3. Architectural Existing tech New markets Ex. Apple watch, Uber eats 4. Radical New tech New market ex. air conditioning in fan industry Loss of Innovation Causes 1. Capabilities Dynamic capabilities→ deal with changes 2. Inertia Firms get "stuck" by falling into routines 3. Good management paradox Current customers are late adopters of new technology Constrain the firm Innovation A novel and useful idea that is successfully implemented and commercialized. Innovations can lead to new industries, and drive competition. -drives strategy -temporary monopoly