Exam Flashcards

1
Q

Industry definition

A

same sources of supply, goods/services satisfy same need, same geographic market

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2
Q

Market entry barriers

A

capital requirements, specialised resource requirements, competitive barriers, administrative barriers

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3
Q

Reasons for fragmented industries

A

low entry barriers, diverse market needs, diverse product lines, local content requirements, local policies prohibiting concentration

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4
Q

Competing in fragmented industry

A

enhance product differentiation, specialisation (product, customers, geography), reduce costs where possible, make acquisitions to grow MS

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5
Q

Reasons for concentrated industries

A

high entry barriers, economies of scale, experience curve effects, size –> bargaining strength

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6
Q

Strategic vision vs. mission

A

Vision: long-term course / future state of company, challenging, inspirational
Mission: current business activities and value creation for customers

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7
Q

Strategic thinking process

A

i) recognising opportunities/threats early, ii) analyse –> plan –> implement strategic plan, iii) respond to changing goals, vision, environment etc.

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8
Q

Strategic management tasks

A

i) develop strategic vision / mission, ii) set objectives,

iii) craft strategy, iv) implement/execute strategy, v) evaluate and make corrections

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9
Q

Triggers for strategy changes

A

changing market conditions, competitor moved, technological development, changing customer needs/preferences, legal changes etc.

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10
Q

Strategy implementation

A

resources, capabilities, best practises, process improvement, communication, motivation/rewards

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11
Q

Competitive environment vs. macro-environment

A

Comp: economic entities that have direct relationship with company
Macro: framework conditions that company has to operate within

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12
Q

Experience curve vs. economies of scale

A

Experience curve: cost benefits through experience, cumulative output increases (all yrs)
Economies of scale: cost benefits gained through increased level of production for period

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13
Q

Analysing industry attractiveness

A

dominant economic traits (profitability, market size, growth, risk/uncertainty), competitive rivalry, product characteristics, customer needs

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14
Q

Strategic group

A

rival firms with similar competitive approach + industry positions

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15
Q

Strong substitutes

A

readily available, attractively priced, perceived comparable / better by buyer, high propensity to switch

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16
Q

Promoting substitution

A

target early switchers, reduce switching costs, building brand/product awareness, use multiple distribution channels, improve offer in areas most important to customers

17
Q

Protective strategies (substitution)

A

cost reduction, performance improvement, improve product image, raise switching costs/barriers, aggressive sales strategy to deter switching

18
Q

Failing against substitution

A

not considering threat, not recognising substitute, wrong understanding of why customers switch, not reacting to value-price decrease, fighting substitute instead of joining

19
Q

Purpose of analysing industry value chain

A

Assessing cost competitiveness all along industry value chain

20
Q

Primary vs. supporting activities

A

Primary activities: most value creation

Support activities: facilitating primary activities

21
Q

Internal cost structure

A

Combined costs of all activities in value chain, compare activity by activity against competitors, pinpoint cost advantages/disadvantages

22
Q

Differences btw. own and competitor value chain

A

Different strategies, operating practises, technology use, degree of vertical integration

23
Q

Qualitative vs. quantitative assessment of strategy

A

Qualitative: is the strategy well-conceived (complete, consistent, appropriate)?
Quantitative: what are the results (financial/strategic objectives, above industry avg.)?

24
Q

Core competence vs. distinctive competence

A

Core: well-performed activity central to competitiveness and profitability
Distinctive: competitively valuable activity; superior, rare, hard to copy and surpass

25
Q

3 main generic strategies

A

Low-cost, broad differentiation, best-cost

26
Q

2 generic market niche strategies

A

Focused low-cost, focused differentiation

27
Q

When to apply low-cost strategy

A

vigorous price competition, standardised products, few differentiation opportunities, low switching costs, strong bargaining power of buyers

28
Q

When to apply differentiation strategy

A

diverse buyer needs and uses, few rivals with similar differentiation approach, fast technological change + product innovation

29
Q

When to apply best-cost strategy

A

buyer diversity –> product differentiation the norm, many buyers sensitive to price/value

30
Q

Pitfalls of low-cost strategy

A

easily imitated, profit deterioration, ignoring changing customer preferences/needs

31
Q

Pitfalls of differentiation strategy

A

over-differentiating –> exceed buyers’ needs, price premium > perceived value

32
Q

Risks of best-cost strategy

A

getting squeezed between low-cost/differentiation competition – low-cost leaders stealing customers / customers willing to pay more for high-end differentiators’ products