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Strategic Management > 438 Exam 2 > Flashcards

438 Exam 2 Flashcards

1
Q

What are the two biggest factors in distinguishing competitive strategy?

A

Company’s Market target is broad or narrow

Competitive advantage linked to lower costs or differentiation

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2
Q

Five Generic Competitive Strategies

A

Low-cost provider strategy
Broad differentiation strategy
Best-Cost provider
Focused (Market Niche) strategy based on low cost
Focused (Market Niche) strategey based on differentiaton

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3
Q

Successful low-cost leards are:

A

Exceptionally good at finding ways to drive costs out of their business

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4
Q

A low-cost Leader’s basis for competitive advantage is

A

lower overall costs than competitors

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5
Q

Two options for low-cost advantage

A

Use the lower-cost edge to underprice competitors

Content with market share, keep price

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6
Q

Two avenues for achieving a cost advantage

A

Do a better job performing value chain activities more cost effectively

Revamp firms overall value chain to eliminate or bypass cost-producing activities

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7
Q

How companies can revamp their value chain

A

Selling direct to consumers, cut out costs for distributors/retailers
Use Technologies/information systems that cut out value chain activities
Streamline operations by cutting low value-added work activities
Reduce shipping costs by locating supplier warehouses near facilities

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8
Q

Success in achieving a low-cost edge over rivals comes from

A

Out-managing rivals in finding ways to perform value chain activities faster, more accurately and more cost effictiantly

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9
Q

Reducing price does not lead to higher total profits unless

A

the incremental gain in total revenues exceeds the incremental increase in total costs

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10
Q

How do companies achieve a differentiating-based competitive advantage

A

Product or service whose attributes differ significantly from your rivals

Set of capabilities for delivering customer value that rivals do not have
lower buyer’s cost, raise product performance

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11
Q

Differentiation works best when

A

Many ways to differentiate and buys perceive the differences as having value
Buyers needs and uses are diverse
Few rival firms are following a similar differentiated approach
Technogical change is fast-paced

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12
Q

Best-cost provider stategies

A

Aim at giving customers value for the money by satisfying buyers expectations
Target market is value-conscious buyer

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13
Q

Best cost provider strategies work best when

A

Markets where product differentiation is normal and value-conscious buyers purchase midrange products

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14
Q

Risk of best-cost provider strategy?

A

Being squeezed between firms using low-cost and differentiation strategies

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15
Q

Focused Low-cost strategy

A

Serves buyers in the target market niche at a lower cost and price than rivals
Lowers cost by limiting customer base

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16
Q

Difference between low-cost and focused low-cost strategies is

A

The size of the buyer group the company is trying to appeal

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17
Q

Focused differentiation strategy

A

Securing a competitive advantage with a product designed to appeal to the unique preferences and needs of a narrowly defined group of buyers

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18
Q

Focused differentiation strategy: success depends on?

A

the existence of a buyer segment looking for special product attributes and firm’s ability to stand apart from rivals.

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19
Q

Four distinct facets of corporate strategy

A

Picking new industries to enter and how to enter
Boost combined performance
Leverage cross-business value chain relationships
Establishing investment priorities

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20
Q

Companies should diversify when?

A

Can expand to industries that complement its present business
Can leverage existing competencies
Can lead to decreased cost
Powerful brand name that can be transferred to the new products

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21
Q

In regards to diversification, how is success measured?

A

By adding long-term economic value

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22
Q

Attractiveness Test

A

Competitive conditions in industry will produce a profit

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23
Q

Cost of entry test

A

Costs less to enter industry than potential profits

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24
Q

Better-off Test

A

New business improves performance of existing businesses

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25
Q

Unrelated diversification

A

Contain no useful cross-business relationships, done through acquisitions

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26
Q

Related Diversification

A

Posses valuable cross-business value chain similarities
Perform better under corporate umbrella than alone
Strategic Fit: One or more activities of the value are similar

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27
Q

Combination of unrelated and related diversification

A

Dominant-Business enterprises
Narrowly diversified
Broadly diversified
Unrelated businesses

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28
Q

Evaluating Strategy of diversified company

A

Evaluate industry attractiveness and business-unit competitive strength
Check for cross business-unit competitive strength and cross-business strategic fits
Rank business units on performance and priority for resources
Craft new strategic moves

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29
Q

Five Strategies for strategic moves

A 
Stick with present lineup
Broaden the diversification base
Retrench to narrow base
Restructure
Pursue multinational diversification
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30
Q

Stick with present lineup

A

When present businesses have growth potential

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31
Q

Broaden the diversification base to:

A

Acquire more businesses and build new positions

32
Q

Retrench to narrow base when

A

Diversification strategy is too large

Focus resources on industry areas that are stronger performers

33
Q

Restructure to

A

Sell off competitively weak businesses
Use cash from divestitures to make acquisitions in promising industries
Adjust internal strategies by altering organizational structure

34
Q

Pursue multinational diversification

A

More businesses and more markets

Contains more competitive advantage potential

35
Q

Business Ethics

A

Application of ethical principles to business and personnel

36
Q

Ethical Universalism

A

Concepts of right or wrong are universal

37
Q

Ethical Relativism

A

Religion, culture create multiple sets of standards for what is right and wrong

38
Q

Integrative Social Contracts Theory

A

Middle Ground between universalism and relativism

Universal Ethical principles supersede local norms

39
Q

Ethical standards of company should be based on

A

Limited set of universal ethical principles that are widely recognized
Local cultures, shared traditions and values

40
Q

Three types of Managers

A

Moral Manager
Immoral Manager
Amoral Manager

41
Q

Moral Manager

A

Higher standards of ethical behavior

Govern Own actions and actions of employees

42
Q

Immoral Manager

A

No regard for ethical standards

Single Minded pursuit of company’s interests

43
Q

Amoral manager

A

Operate within legal standards, but may not be ethical

44
Q

Social Responsibility as it applies to business

A

Action to promote workforce diversity
Efforts to employ an ethical strategy & ethical principles
Making charitable donations
Actions to promote or enhance the Enviornment
Actions to create a workplace that enhances employee quality of life

45
Q

Social responsibility strategy

A

Socially responsible endeavors a company elects to pursue
Custom-tailored strategy
How they do business and how they fulfill duties to stakeholders and society

46
Q

Linking social performance targets to compensation

A

Incorporate measures to compensate emplotees for social responsibility
Builds culture of social responsibility
80% agree

47
Q

Business case for social responsibilty

A

Generate internal benefits
Reduces risk of damaged reputation
best interest of shareholders

48
Q

Offensive strategies

A

Improve market position or business performance

Use resource strengths to attack rival’s wekanesses

49
Q

Types of Offensive Strategies: Offer equal or better product at

A

lower cost

50
Q

Types of Offensive Strategies: Leapfrog by

A

Being first adopter of technology or first to market

51
Q

Types of Offensive Strategies: Focusing on Innovation to

A

draw sales away from less innovative rivals

52
Q

Types of Offensive Strategies: Adopting or Improving

A

on ideas of rivals

53
Q

Types of Offensive Strategies: Attacking market where

A

rival makes large profits

54
Q

Types of Offensive Strategies: Attack

A

Competitive weakness of rivals

55
Q

Types of Offensive Strategies: Go around

A

Competitors and capture unoccupied markets

56
Q

Types of Offensive Strategies: Hit and run Or

A

Guerrilla Tactics

57
Q

Types of Offensive Strategies: Launch preemptive strike to

A

discourage rivals

58
Q

Offensive Strategies: Choosing which rivals to attack

A

Market leaders that are vulnerable
Runner-up firms with weaknesses where challenger is strong
Struggling enterprises that are on the verge of going under
Small firms with limited capabilities

59
Q

Defensive Strategies

A

Purposes are to lower risk of being attacked, weaken impact of attack, have rivals attack other firms
Blocking Challengers
Likelihood of retaliation

60
Q

Website for distribution of information only

A

Used when distribution networks are strong

Reduce channel conflict

61
Q

Website as minor distribution channel

A

Used when profit from online sales is greater than retail sales
Encourages buyer’s to go on website
Enables build-to-order manufacturing

62
Q

One of several distribution channels

A

Bricks and Clicks

Expands geographic reach

63
Q

Primary distribution channel

A

Buying product online has strong appeal

Look at delivering value to buyers

64
Q

Outsourcing strategy

A

Farming out certain value chain activities to outside vendors

65
Q

Vertical integration strategies

A

Extends competitive and operating scope within the same basic industry

66
Q

Vertical Integration: Forward

A

Better access to end users
Better brand awareness
Direct sales and internet retailing may lower distribution costs
Costs advantage over rivals
Result in lower selling prices to end users

67
Q

Vertical Integration: Backwards

A

Generates costs savings

Enhance companies technological capabilities

68
Q

Vertical integration strategies: Disadvantages

A

Increase investment in industry= increase risk
Rely on own activities
Slower to meet preferences
Stuck with integration due to investment

69
Q

Collaborative partnerships where two or more companies join forces to

A

Achieve mutually beneficial strategic outcomes

70
Q

Strategic because:

A

Facilitate business objectives, build capabilities cover weaknesses, assist entry into markets, block threats

71
Q

Advantages of Strategic Alliance and Partnerships

A

Facilitates mutual learning, cooperation and adaptation to change
Alliance in value chain activities= competitive advantage
Ingrease global presence and build foundation in future industry

72
Q

Many strategic alliances and partnerships are short-lived or fail due to

A

Mutual learning ends, diverging objectives, can’t work together, better options, increased rivalry.

73
Q

Merger

A

Pooling of equals with a newly created company

74
Q

Acquisition

A

One company purchases and absorbs another company

75
Q

First mover strategies

A

Helps build firm’s image with buyers
Early commitments can produce cost advantages
First-Time consumers face high cost of switching products
Constitutes a preemptive strike making imitation hard
First time customers remain loyal to pioneering firms

Strategic Management (2 decks)

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