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MGMT 471 > Exam 1 > Flashcards

Exam 1 Flashcards

1
Q

(S) Hypercompetition

A

Dramatic increase in competitive actions and reactions

time between actions and reactions has decreased

time it takes to act and react has decreased

No advantages are expected to last very long

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2
Q

(S) Shumpeterian view of advantage

A

firms achieve advanage through entrepreneurial discovery and innovative competitive action

inspired literature on first mover advantage

desire for profits spur the manager/entrepreneur to discover and take action on opportunities

some firms chose to lead and some firms choose to follow and immitate

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3
Q

(S) Characteristics of disruptive competiton

A

Shortened response times (reactions are quicker)

frequency of actions are increasing

types of actions: price cuts, new products and patents are on the rise

more competitors, more failures, and generally more hostile rivalry

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4
Q

(S) Reasons for hypercompetition

A

Globalization

Technology increases

Overall deregulation of industries

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5
Q

(S) S-C-P

A

Structure-Conduct-Performance

Porters 5 forces framework

competitive advantage is primarily driven by the industry structure and exhibits how a firm is positioned within and influenced by that structure

structure- refers to the number of firms (monopoly at one end perfect come at other end)

Conduct- intensity of rivalry among firms (includes pricing behavior, product strategy, and advertising)

performance- profitability measured at the industry level

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6
Q

(S) monopolistic competition

A

variation on perfect competition that allows for some differentiation among firms

this successful differentiation gives long run profits

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7
Q

(S) perfect competition

A

many small firms selling homogeneous products

firms have perfect information

no barriers to entry or market imperfections

Prices are determined by a market equalibrium

little profit margins

if firms do make a positive economic profit new entrants emerge and prices go back down

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8
Q

(S) oligopolistic

A

Small number of firms

highly interdependent and aware of eachothers actions

high competiton and rivalry

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9
Q

(S) Value Net

A 
With the firm at the center it recognized the effects of the 
customers
competitors
complementors
suppliers

to be analyzed from both eh suppliers side and the customers side

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10
Q

(S) intraindustry advantage

A

competitive position within the industry

Strategic groups are part of this

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11
Q

(S)Pairwise advantage

A

Compared to another player in the industry

analyzes interdependence and fine grained complexity

examines rivalry and how firms actually compete against eachoter

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12
Q

(S) Steps for pairwise analysis

A

Select a rival firm

List major product and geographic markets of the focal firm

compare market overlaps with competitor firm

assess attractiveness (how important the market is to the focal firm

assess reactiveness (how much incentivee the selected rival has to compete of those shared markets

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13
Q

(S) Stages of product life cycle

A

Introduction

Growth

Maturity

Decline

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14
Q

(S) generic value chain

A

Primary activities - technology>design>mfg>marketing>distribution>service

Support activities - HR MGMT R&D

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15
Q

(S) Entrepreneurial Actions

A

Shumpeteresque

Combining new ore existing resources in a new way to gain a competitive advantage

They Exploit uncertainty and blind spots to cause a competitor delay in response giving a competitive advantage

Good for firms that have an internal and external resource disadvantage — in this case they are avoiding head on competition with someone more powerful than them

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16
Q

(S) Ricardian Actions

A

Exploit scarce superior resources that are owned by the firm

you need a relative resource advantage

resources must be scarce and heterogeneous among firms

competitor will be blocked from imitation by the inability to secure the resources necessary in a timely manner
examples
Pepsi challenge

caterpillar’s 48 hour parts delivery anywhere int the world

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17
Q

(S) Deterrent actions

A

evolve from external market power and market leadership

delay response by exploiting market power and intimidation

ex
limit pricing, price predation, extensive advertising and promotion, investing in excess capacity, product proliferation, preemptive patenting

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18
Q

(S) Co-optive actions

A

actions designed to limit or reduce rivalry

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19
Q

(S) Intangible internal resources

A

Firm culture, structure, processes, procedures

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20
Q

(S) Tangible Internal resources

A

financial assets, physical assets including PP&E, and raw materials

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21
Q

(S) Action Based model of competitive advantage

A

Competitive advantage is determined in the context of competitive resources, action and reaction.

The effectiveness of an action is largely dependent on the competitors ability to respond and the speed of that response

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22
Q

(S) What are some key resources leading to entrepreneurial actions?

A

• Variation in knowledge among managers
○ People will see and identify different opportunities
§ Opportunity specific
□ See new product/ service that others don’t see
§ Competitor specific
□ You know the skills of your competitors and they are not going to respond to you
§ Implementation specific

You know this is the right time and right place to provide this service

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23
Q

(S) What are some factors that can predict the competitive response to entrepreneurial actions?

A

• Scope
○ How many of the competitors customers you reach
• Threats
○ The extent of the threat to the competitors (how much it affects the customers)
• Radicality
○ Extent to which the action differs from other actions in the industry
○ (how different is the entrepreneurial action)

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24
Q

What are some key resources leading to ricardian actions?

A
  • Low cost

* Differentiation

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25
Q

What are some factors that can predict the competitive response to ricardian actions?

A

• The degree of resource imbalance between the acting firm and potential responders, the degree to which the action threatens one or more competitors, and the degree to which competitors are interdependent for the same customer and resources will influence extent of competitive response

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26
Q

Multimarket Contact

A
  • Competing in multiple markets
  • Ex Lawry entering steak sauce market to compete with A1 in the marinade market
  • Keeping each other honest by entering small in each others market they will each decide to play nice so the other won’t increase market share in their home turf
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27
Q

PESTEL Framework

A 
○ Political 
○ Economic
○ Socio Cultural 
○ Technological
○ Ecological
○ Legal

way to analyze the broad economic environment

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28
Q

How do most companies respond

A

Most companies continue with the same strategy they already have or the next logical step

even when companies persue new strategies few introduce them to the market without warning

Two-thirds of respondents say their company’s largest strategic initiative in the past five years that was not driven by economic crisis or competition was undertaken as a
result of some other external challenge or opportunity—and most of those challenges or opportunities result from factors that should be equally visible to companies paying attention to the external events affecting their industry

29
Q

What companies should you be worried about making strategic maneuvers

A

Companies that say they met their financial targets and are doing well

This usually means that they have the capabilities and the luxury of making new strategic initiatives

30
Q

Symmetric Competition

A

Companies that resemble each other in resources and positions tend to make similar moves

31
Q

Asymmetric Competition

A

When companies have different assets, resources, capabilities, and market positions, they will probably react to the same market opportunities and threats in different ways

Mc Donalds vs Burger king on high fat menu items

32
Q

Types of resources and capabilities in determining types of competitionq

A

Resources:
Tangible
Intangible
and Current Market Positions – access to customers, economies of scale, scope, and experience

Capabilities:
The ability to identify
and exploit opportunities better than others do

33
Q

Nintendo Microsoft and Sony and types of competition

A

Microsoft and sony are both competing to be home entertainment systems (symmetric) while nintendo who has a completely different resource position has created its own niche in the market because it is bound by different goals.

Microsoft is afraid of losing market in the computing industry because sony can become a home entertainment system and sony is afraid to lose ground to microsoft in the home audio and video category. Therefore they both compete to become home entertainment systems where they won’t lose ground to eachother.

34
Q

Who makes the decisions can be important in determining a competitors strategy because…

A

Someone like richard branson might do things for a different reason than some top management official who is governed by corporate financial goals or someone who is responsible to share holders or other stake holders

35
Q

Onslaught

A

Attack directly to force rivals retreat

36
Q

Contest

A

Focus more narrowly and subtly

Disrupt marketshare with breakthrough product strategy

Focus on highly attractive arenas where rivals have less clout

Attack in ways that rivals can’t match

to beat blockbuster warner brothers slashed the prices of its new movie releases to make buying look more attractive than renting

37
Q

Guerrilla Campaign

A

Drive wedge into target market

target underserved niche market segments – highly attractive arenas where competitors have clout but lack reactiveness

Progressive offers car insurance to high risk affluent drivers but charges a higher premium

38
Q

Feint

A

Distract competitors from real target

Attack somewhere where the competitor is highly reactive to distract them into responding while you spend real time and resources in another more important arena

39
Q

Gambit

A

Withdraw from focal arena to lure the competitor in and then focus efforts in another arena where the real target is

40
Q

Competiting Under Strategic interdependence Model

A

Competitor attractiveness and reactiveness model

Create a table with different arenas you compete in and the different regions that they exist in where you overlap with your competitor

Assign values for attractiveness to you reactiveness of your competitors and clout in the industry

make a bubble chart

Things to consider when doing this analysis
–what makes the arena attractive to you is not always the same could be financial personal or other same goes for your competitor

41
Q

Harvesting

A

both parties focus on extracting profits from an arena that they don’t find attractive

42
Q

Bounded rationality
or
Information Processing Limitations

A

Strategic decisions often involve significant complexity and uncertainty and often end up exacerbating the problem

People usually end up using heuristics or rule of thumb

43
Q

Representativeness Bias

A

People base decisions based on limited observations that are similar in nature

People tend to underestimate the error and unreliability of data in small sample sizes

44
Q

Overconfidence Bias

A

firms often overestimate the own abilities and likelihood of success

45
Q

Confirmation Bias

A

decision maker seeks out information to confirm their opinions

46
Q

Endowment Effect

A

You value goods more than you have them then when you don’t

not earning $10 is worse than $10 being taking from you

47
Q

Justify past decision

A

Throw good money after bad

don’t want past decisions to look bad so you continue with them

48
Q

Non rational escalation of commitmentq

A

Persistance and amplification of commitment to a strategy that is failing

49
Q

Parts of a competitor analysis

A

• Competitor Goals
○ What are competitor’s current goals?
○ Is performance meeting their goals?
○ How are its goals likely to change?
• Competitor Vision/ Assumptions
○ What assumptions does the competitor hold about the industry, competitors, and its self?
• Competitor strategy
○ How is the firm currently competing?
○ Analyze past competitive actions
• Competitor Capabilities
○ Identify key competitors
○ Analyze each rivals’ resources and capabilities in relation to the focal firms
• They all help make better predictions
○ What strategy changes will the competitor initiate?
○ How will the competitor respond to our strategic initiatives?
○ Left(what drives competitors)
○ Right (what competitors are doing and can do)

50
Q

How to predict competitor behavior questions

A

Will They react?
What and how many responses will your rivals choose?
Which is the most likely that they will choose

51
Q

Strategic interdependence

A

○ The success of a focals competitive action (or strategy) depends greatly on the competitors reactions( or strategies)

52
Q

three ways to enter into well guarded markets

A

Leveraging your assets
Creating a niche
reconfigure the value chain

You need to combine two or more and should be an indirect assault

53
Q

How do new entrants in general perform in attractive industries

A

Not well 30% lower than new entrants in other industries

54
Q

Why do companies engage in price wars

A

Because it is quick and easy

55
Q

Cost Plus (types of pricing)

A

○ Calculate how much it costs to make and deliver each product and add a flat x percentage on top

56
Q

Matching or relative to competitors (types of pricing)

A

○ Rival sets price at X, focal sets price at X

57
Q

Dynamic or strategic pricing

A

setting prices at what people are willing to pay for them taking into account demand at given time or place

58
Q

when is it a good idea to start a price war

A
  • Threatens your core business
    • You have a cost advantage
    • Identify a large, growing market segment that is price sensitive
    • More resources( deeper pockets) than rivals to withstand
    • You can achieve economies of scale by increasing market share
    • Eliminate or neutralize a rival along with the presence of high entry barriers
59
Q

When To flee a price war

A
  • Afford to cede some market share
    • Afford to compete on differentiation and innovation
    • Afford to leverage opportunities in other market segments
60
Q

Ways to fight a price war non price methods

A

Reveal your strategic intentions and capabilities — lets them know your game and maybe they will avoid the price war too because it would hurt both of you or it could say that you have the upper hand and are willing to fight

Compete on quality —

Co-opt contributors — Form strategic parternerships by offering cooperative or exclusive deals with suppliers, resellers, or providers of related services

61
Q

ways to fight a price war price methods

A

Complex Pricing — This makes the prices much more difficult to determine and thus price wars less effective

Introduce new products — Use new brands to compete at the lower price point so that your main brand does not suffer

Deploy Simple Price Actions — respond by lowering prices

62
Q

Strategies for fighting low cost rivals

A

Differentiate your offerings
Add a low cost business
Switch to selling solutions
Become exclusively a low cost provider

63
Q

Why are low cost competitors so effective and tough to fight

A

They only lose business to people that are cheaper than them and they don’t have to worry about rivals differentiating

64
Q

When to differentiate your offerings

A

You can combine numerous differentiating factors (e.g. cool products and continuous innovation)

  • consumers want the benefits your new offerings would provide
  • you can reduce the costs of the benefits you would offer

EX— Computer maker HP’s restructuring has shrunk rival Dell’s cost advantage from 20% TO 10% and consumers appreciate the added benefits HP offers, such as instant delivery and the ability to see, feel, and tough computers in stores

65
Q

When to add a low cost business

A
  • Your traditional opedration will become more competitive as a result
  • your low-cost venture will make more money than it would have as an independednt entity
  • you can allocate adequate resources to the low-cost unit

Ex— Dow Cornings Xiameter unit —a low-cost provider of silicone products — sells only 350 of Dow’s 7000 offerings, so Xiameter doesn’t canabalize its parent’s sales. It schedules manufacturing when Dow’s factories are idle, sels only large orders, and offers no technical services. After launching Xiameter, Dow turned a $28 million loss in 2001 into a $500 million profit in 2005

66
Q

When to switch to selling solutions

A
  • There are nosynergies possible between tour existing enterprise and a low cost business
  • the integration of your products and services provides unique value to consumers

ex— Australian mining company Orica sold explosives to stone quarries. When low cost players emerged, Orica began providing a new service: laser profiling rock faces to identify the best places to drill holes for explosives. The service improved customers’ rock yields reducing downstream processing costs — and making customers dependent on the company. Orica’s average sales are bigger than when it sold only explosives.

67
Q

When to become exclusively a low cost provider

A
  • There are no synergies possible between your existing enterprise and a low cost business
  • a significant segment of your consumer market buys based on price
  • you are willing to acquire significant new business capabilities

ex — ryanair changed every aspect of it’s business model to become a low-cost player. it replaced its entire diverse fleet with just one type of plane, began operating from secondary airports and moved from travel agency bookings to direct booking through call centers and the internet. It also eliminated business class, free meals, seat assignments, and cargo carrying

68
Q

Determining Corporate espionage ethics frame work looks at (3)

A

Include one or more of the following

Are the TACTICS used to secure the information questionable since the appear to go beyond what is acceptable

The NATURE of the information being sought can be seen in some way as private or confidential

The PURPOSES for which the information is going to be used is against the publics interest

MGMT 471 (1 decks)

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