Ch. 5 Learning Review Questions Flashcards
How does the work done in the functional areas support the creation of a competitive advantage?
As the employees in various functional areas do their work and use organizational resources, they develop capabilities and core competencies. Through learning and experience, distinctive core competencies may begin to arise that can become a source of competitive advantage. Especially if a company can match those strengths with the opportunities in the environment.
What happens after the SWOT analysis is completed?
After the SWOT, strategic decision makers have information about the positive and negative aspects of the internal and external environments.
The decision makers need to then develop functional strategies that can apply an organization’s internal strengths to external opportunities. Or strategies to mitigate internal weaknesses and counteract external threats.
What are the three functional concerns of organizations?
- product (design, operations, marketing)
- people (HR)
- support processes (information systems & financial-accounting systems)
What strategies are important to each of those functional concerns?
- product
- R&D
- how and where to produce products?
- how to get them to customers? - people
- HR strategies (planning, recruiting, staffing)
- Make sure they have the KSAs needed to perform their jobs
- help them do their jobs better (training, onboarding)
- assessing performance
- motivating high levels of effort
- rewards & compensation - Information & financial-accounting systems
- choosing a system technology
- choosing types of information needed
- collecting/using financial data
- evaluating financial performance
- doing forecasting/budgeting
- determining financing mix
Is competition an issue for all organizations? Discuss.
Except organizations in a monopoly market, all organizations deal with competition to some extent. Competition can be mild, moderate or intense depending on the environmental and market conditions. Some companies consistently are able to develop distinctive capabilities and leverage them as sustainable competitive advantage. Others never do.
What is competitive advantage?
That what makes the organization unique and sets them apart from competitors. It’s derived from distinct capabilities and core competencies
Compare and contrast the three approaches to defining competitors.
- industry perspective
- market perspective
- strategic groups perspective
- organizations make/sell the same or similar products
- competitors are organizations who are able to satisfy the same consumer needs
- competitors are groups of firms competing in an industry with similar strategies, resources and customers
What role do resources and distinctive capabilities play in gaining competitive advantage?
They are the basis of competitive advantage, especially when exploited and matched with opportunities in the external environment.
Define competitive strategy. What’s the connection between competitive advantage and competitive strategy?
Competitive strategies are goal-directed plans and actions to exploit their current resources and capabilities to gain desired outcomes (e.g. market share, customer base, raw materials etc.)
Competitive advantage is the basis for competitive strategy.
Describe each of Miles and Snow’s four adaptive strategies.
- Prospector
- continually seeks innovation
- successfully scans environment and develops products to fit the market opportunities - Defender
- Protects market share, has limited product line
- Searches market stability
- protects its turf - Analyzer
- analysis and imitation strategy
- watches prospectors - Reactors
- no coherent strategic plan
- reacts to environment when necessary
Describe each of Porter’s generic competitive strategies.
- Cost leadership
- Lowest cost and pursue broad customer base
- Limited product line for ‘average’ consumer. no frills.
- Seeks efficiency - Differentiation
- unique products, features that customers value
- understanding market segments
- Brand loyalty is important - Focus
- Can be either cost or differentiation, but narrow scope
- niche: geographical, product line, type of customer
What does it mean to be “stuck in the middle”?
It means an organization has not chosen to pursue neither cost leadership or a differentiation strategy. Instead its costs are too high to compete with the cost leader and its products too generic to compete with the differentiator.
What is the integrated low cost-differentiation strategy, and how does it contradict the concept behind Porter’s generic competitive strategies?
It is pursuing both a low cost and a differentiation strategy (i.e. combining both).
Porter’s generic strategies holds that you cannot achieve both a cost leadership and a differentiation strategy. However, through technology this is possible.
Describe each of the competitive strategies in Mintzberg’s generic strategy typology.
- Price
- pursing cost leadership and offering product below market price - Marketing image
- creates an image in customers’ minds and uses that as a competitive weapon - Product design
- offering desirable product features & design configurations - Quality
- higher performance and reliability at a comparable price - Product support
- providing superior customer service - Undifferentiated
- no dinstinct differentiation basis or copycat
