BADM 449 Exam 1 Questions with Verified Solutions Graded A+
Competitve Advantage - Answers superior performance relative to other competitors in the
same industry or industry average
Sustainable Competitve Advantage - Answers a firm implements a value-creating strategy of
which other companies are unable to duplicate the benefits or find it too costly to imitate
- an important basis is the development of resources and capabilities
Industry Effects - Answers The results attributed to the choice of industry in which to compete
(20%)
Firm Effects - Answers The results of the manager's actions to influence firm performance (30-
45%)
Corporate Level Strategy - Answers Typically involves the decision making by the top
management team that includes the CEO, senior, executives, the board of directors, and the
corporate staff. Decisions include vertical integration, diversification, strategic allainces,
acqustions, new ventures, and restructuring.
Business Level Strategy - Answers Includes the strategic choice of generic strategy (cost
leadership, differention, focus) and the benefits and costs of first-mover advantages. Often an
enterprise participating in multiple businesses will have different business strategies.
Functional Level Strategy - Answers Typically directed at improving the effectiveness of
functional operations within a company, such as manufacturing, materials management, human
resources, marketing, R&D and operations management
"Razor-blade model" - Answers Give away or sell for a small fee the product and make money on
the replacement part needed (ex: laser printers with cheap printers and expensive ink)
Multi-point Competition - Answers Google and Microsoft compete with one another for market
share in several different product categories through quite different business models.
- Google: benefits from network effects (increase of product value when more people use it);
give away products b/c business ads
- Microsoft: application software dominance; Bing provides countervailing power
Acceleration of technological change - Answers - Initial innovations like the car, plane, phone,
and electricity now provide the necessary infrastructure for newer innovations to diffuse more
rapidly
- Emergence of new business models that make innovations more accessible
- Internet, social networking sites, viral messaging
, Stakeholders - Answers Individuals or groups who can affect or are affected by the actions of
the firm; they have a claim or interest in the performance and continued survival of the firm
- Internal Stakeholders: stockholders, all employees, board members
- External Stakeholders: customers, suppliers, alliance partners, creditors, unions, communities,
and governments at various levels
Customer-Oriented Mission - Answers define the terms of solutions for customers
- Disney: "Make People Happy"
- Enhanced strategic flexibility
- Not the same as listening to customers
Product-Oriented Mission - Answers define the terms of products or services
- U.S. Railrods: "Safest..Northern American Railroad"
Fall of the U.S. Railroads - Answers - Lost customers b/c they assumed themselves to be in the
railroad business rather than the transportation business
- With the wide range of choices (trucks and planes), they missed the opportunity to move into
delivery like FedEx or UPS
Mission Statements - Answers - The results are mixed, (inconclusive) on if they help gain and
sustain competitive advantage; need strategic commitments to succeed (Boeing Dreamliner)
- Positive associations: visionary firms, like Merk
- Negative associations: Better World Books
- No associations: Intel
Strategic Planning - Answers a top-down, rational process management programs future
successes; concentrates strategic intelligence and decision-making responsibilities from the
CEO
- Define mission, vision, and goal (strategic intent)
- SWOT Analysis
- Formulate and implement appropriate strategy
- Modify performance and modify if necessary
Competitve Advantage - Answers superior performance relative to other competitors in the
same industry or industry average
Sustainable Competitve Advantage - Answers a firm implements a value-creating strategy of
which other companies are unable to duplicate the benefits or find it too costly to imitate
- an important basis is the development of resources and capabilities
Industry Effects - Answers The results attributed to the choice of industry in which to compete
(20%)
Firm Effects - Answers The results of the manager's actions to influence firm performance (30-
45%)
Corporate Level Strategy - Answers Typically involves the decision making by the top
management team that includes the CEO, senior, executives, the board of directors, and the
corporate staff. Decisions include vertical integration, diversification, strategic allainces,
acqustions, new ventures, and restructuring.
Business Level Strategy - Answers Includes the strategic choice of generic strategy (cost
leadership, differention, focus) and the benefits and costs of first-mover advantages. Often an
enterprise participating in multiple businesses will have different business strategies.
Functional Level Strategy - Answers Typically directed at improving the effectiveness of
functional operations within a company, such as manufacturing, materials management, human
resources, marketing, R&D and operations management
"Razor-blade model" - Answers Give away or sell for a small fee the product and make money on
the replacement part needed (ex: laser printers with cheap printers and expensive ink)
Multi-point Competition - Answers Google and Microsoft compete with one another for market
share in several different product categories through quite different business models.
- Google: benefits from network effects (increase of product value when more people use it);
give away products b/c business ads
- Microsoft: application software dominance; Bing provides countervailing power
Acceleration of technological change - Answers - Initial innovations like the car, plane, phone,
and electricity now provide the necessary infrastructure for newer innovations to diffuse more
rapidly
- Emergence of new business models that make innovations more accessible
- Internet, social networking sites, viral messaging
, Stakeholders - Answers Individuals or groups who can affect or are affected by the actions of
the firm; they have a claim or interest in the performance and continued survival of the firm
- Internal Stakeholders: stockholders, all employees, board members
- External Stakeholders: customers, suppliers, alliance partners, creditors, unions, communities,
and governments at various levels
Customer-Oriented Mission - Answers define the terms of solutions for customers
- Disney: "Make People Happy"
- Enhanced strategic flexibility
- Not the same as listening to customers
Product-Oriented Mission - Answers define the terms of products or services
- U.S. Railrods: "Safest..Northern American Railroad"
Fall of the U.S. Railroads - Answers - Lost customers b/c they assumed themselves to be in the
railroad business rather than the transportation business
- With the wide range of choices (trucks and planes), they missed the opportunity to move into
delivery like FedEx or UPS
Mission Statements - Answers - The results are mixed, (inconclusive) on if they help gain and
sustain competitive advantage; need strategic commitments to succeed (Boeing Dreamliner)
- Positive associations: visionary firms, like Merk
- Negative associations: Better World Books
- No associations: Intel
Strategic Planning - Answers a top-down, rational process management programs future
successes; concentrates strategic intelligence and decision-making responsibilities from the
CEO
- Define mission, vision, and goal (strategic intent)
- SWOT Analysis
- Formulate and implement appropriate strategy
- Modify performance and modify if necessary
