©THEBRIGHTSTARS 2024
SGMA 591 Chapter 4 Exam Study Guide.
Competitive advantage - answer✔distinct advantage a firm has over its competitors in an
industry that allows it to generate greater profits than its competitors
External sources of change - answer✔customer demand
price
tech
The more turbulent an industry's environment, the greater the number of sources of change, and
the greater the differences in firms' resources and capabilities, the greater the dispersion of
profitability within the industry.
responsiveness - answer✔speed and ability to anticipate changes in the external environment
time based competition - answer✔(boston consulting group) The notion of speed as a source of
competitive advantage
internal source of change - answer✔Innovation
strategic innovation - answer✔creating value for customers from novel products, experiences or
modes of product delivery tend to involve pioneering along one or more dimensions of strategy =
blue ocean strategy
isolating mechanism - answer✔(Rumelt) the barriers that protect a firm's profits from being
driven down by the competitive process.
why is competitive advantage difficult to sustain - answer✔disruptive entrants with new
business models products or technologies
identitfication - answer✔The firm must be able to identify that a rival possesses a competitive
advantage. Obscure superior performance
incentive for imitation - answer✔the firm must believe that by investing in imitation it too can
earn superior returns
deterrence - answer✔signal aggressive intentions to imitators
, ©THEBRIGHTSTARS 2024
pre-emption - answer✔occupying existing and potential strategic niches to reduce the range of
investment opportunities open to the challenger.
proliferation - answer✔can leave new entrants and smaller rivals with few opportunities for
establishing a market niche.
patent proliferation - answer✔can protect technology-based advantage by limiting competitors'
technical opportunities
diagnosis - answer✔The firm must be able to diagnose the features of its rival's strategy that
give rise to the competitive advantage. Rely on multiple sources of competitive advantage to
create causal ambiguity
causal ambiguity and by who - answer✔hard to identify which differences are the critical
determinants of superior profitability.(Lipman and Rumelt)
uncertain imitability - answer✔where there is ambiguity associated with the causes of a
competitor's success, any attempt to imitate that strategy is subject to uncertain success.
resource acquisition - answer✔The firm must be able to acquire through transfer or replication
the resources and capabilities necessary for imitating the strategy of the advantaged firm. Base
competitive strategy on resources and capabilities that are immobile and difficult to replicate
first mover advantage - answer✔the initial occupant of a strategic position or niche gains access
to resources and capabilities that a follower cannot match
cost adantage - answer✔similar product lower price
key strategy: scale efficient plants, design for manufacture, control of overheads and R&d
process innovation outsourcing avoid marginal customer accouts
resoure: access to capital, eng skills, frequent report, tight cost control, specialization of jobs and
functions, incentive linked to quantitative targets
differentiation - answer✔price premium unique product
emphasis on branding adertisng quality and new product development
resource: marketing, product engineering sklls, cross functional coordination, creativity,
incentive to qualitative, performance targe, research capabilities
SGMA 591 Chapter 4 Exam Study Guide.
Competitive advantage - answer✔distinct advantage a firm has over its competitors in an
industry that allows it to generate greater profits than its competitors
External sources of change - answer✔customer demand
price
tech
The more turbulent an industry's environment, the greater the number of sources of change, and
the greater the differences in firms' resources and capabilities, the greater the dispersion of
profitability within the industry.
responsiveness - answer✔speed and ability to anticipate changes in the external environment
time based competition - answer✔(boston consulting group) The notion of speed as a source of
competitive advantage
internal source of change - answer✔Innovation
strategic innovation - answer✔creating value for customers from novel products, experiences or
modes of product delivery tend to involve pioneering along one or more dimensions of strategy =
blue ocean strategy
isolating mechanism - answer✔(Rumelt) the barriers that protect a firm's profits from being
driven down by the competitive process.
why is competitive advantage difficult to sustain - answer✔disruptive entrants with new
business models products or technologies
identitfication - answer✔The firm must be able to identify that a rival possesses a competitive
advantage. Obscure superior performance
incentive for imitation - answer✔the firm must believe that by investing in imitation it too can
earn superior returns
deterrence - answer✔signal aggressive intentions to imitators
, ©THEBRIGHTSTARS 2024
pre-emption - answer✔occupying existing and potential strategic niches to reduce the range of
investment opportunities open to the challenger.
proliferation - answer✔can leave new entrants and smaller rivals with few opportunities for
establishing a market niche.
patent proliferation - answer✔can protect technology-based advantage by limiting competitors'
technical opportunities
diagnosis - answer✔The firm must be able to diagnose the features of its rival's strategy that
give rise to the competitive advantage. Rely on multiple sources of competitive advantage to
create causal ambiguity
causal ambiguity and by who - answer✔hard to identify which differences are the critical
determinants of superior profitability.(Lipman and Rumelt)
uncertain imitability - answer✔where there is ambiguity associated with the causes of a
competitor's success, any attempt to imitate that strategy is subject to uncertain success.
resource acquisition - answer✔The firm must be able to acquire through transfer or replication
the resources and capabilities necessary for imitating the strategy of the advantaged firm. Base
competitive strategy on resources and capabilities that are immobile and difficult to replicate
first mover advantage - answer✔the initial occupant of a strategic position or niche gains access
to resources and capabilities that a follower cannot match
cost adantage - answer✔similar product lower price
key strategy: scale efficient plants, design for manufacture, control of overheads and R&d
process innovation outsourcing avoid marginal customer accouts
resoure: access to capital, eng skills, frequent report, tight cost control, specialization of jobs and
functions, incentive linked to quantitative targets
differentiation - answer✔price premium unique product
emphasis on branding adertisng quality and new product development
resource: marketing, product engineering sklls, cross functional coordination, creativity,
incentive to qualitative, performance targe, research capabilities
