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4490 Capstone > Exam/Quiz 1 > Flashcards

Exam/Quiz 1 Flashcards

1
Q

Business strategy

A

How to build a sustainable competitive advantage in a discrete and identifiable market

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2
Q

Corporate strategy

A

Overall plan for creating value in a diversified company

Resources united in one firm, not necessarily one market

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3
Q

Strategy

A

Choosing to perform activities differently or to perform different activities than rivals
Creation of a unique and valuable position, involving a different set of activities
Choosing what not to do
Creating fit among a company’s activities

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4
Q

Hallmarks of bad strategy (4)

A

Failure to frame problem appropriately
Mistaking goals for strategy
Bad (fuzzy) strategic objectives
Fluff (superficial abstraction)

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5
Q

Competitive parity

A

Performance of two or more firms at the same level

Measured on meaningful criteria, looks at lagging and leading indicators

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6
Q

Competitive disadvantage

A

Underperformance relative to other competitors in the same industry or relative to industry average

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7
Q

Sustained competitive advantage

A

Outperforming competitors or the industry average over a prolonged period of time

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8
Q

Temporary competitive advantage

A

Outperforming competitors or potential rivals over a relatively short period of time
Requires more emphasis on innovation and change

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9
Q

2 of Porter’s generic strategies

A

Differentiation

Cost leadership

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10
Q

Strategic positioning

A

Creation of a unique and valuable position, involving a different set of activities

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11
Q

3 strategic positions that Porter recommends

A

Variety based
Needs based
Access based

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12
Q

Variety based strategic positioning

A

Producing a subset of an industry’s products or services

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13
Q

Needs based strategic positioning

A

Serving most or all of the needs of a particular group of customers

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14
Q

Access based strategic positioning

A

Segmenting customers who are accessible in different ways

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15
Q

Strategic management

A

An integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage

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16
Q

Elements of effective strategy (3)

A

Analysis (diagnoses)
Formulation (guiding policies)
Implementation (coherent actions)

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17
Q

Analysis

A

Diagnosis of the competitive challenge

Accomplished through analysis of firm’s external and internal environments with a bias toward the future

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18
Q

Formulation

A

Guiding policy to address the competitive challenge

Accomplished through strategy formulation, resulting in firm’s corporate, business, and functional strategies

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19
Q

Implementation

A

Set of coherent actions to implement the firm’s guiding policy

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20
Q

Stakeholder strategy

A

Integrative approach to managing a diverse set of stakeholders effectively in order to gain and sustain competitive advantage and meet desired objectives

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21
Q

Stakeholder has power when

A

It can get the company to do something it wouldn’t otherwise do

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22
Q

Stakeholder has legitimate claim when

A

It is perceived to be legally or morally valid, or otherwise appropriate

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23
Q

Stakeholder has urgent claim when

A

It requires a company’s immediate attention and response

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24
Q

Porter’s 5 Forces

A 
Barriers to entry/ potential entrants
Suppliers
Customers
Substitute products
Established industry rivalry 
(Complements)
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25
Q

Barrier to entry

A

Something that creates an obstacle for a new entrant to come into the industry profitability

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26
Q

7 barriers to entry

A 
Supply side Econ of scale
Demand side Econ of scale
Customer switching costs
Capital requirements
Incumbency advantages independent of size
Unequal access to distribution channels
Restrictive government policy
27
Q

Supply side economies of scale

A

Produce larger volumes –> decrease cost per unit

28
Q

Demand side economies of scale

A

Network effects

Number of users of a product go up –> increase buyer’s willingness to pay for product

29
Q

Customer switching costs

A

Additional costs when customer switches products

30
Q

Capital requirements

A

Cash or debt needed to start things up

31
Q

Incumbency advantages independent of size (3)

A

Better location
Established brand
Cumulative experience

32
Q

Unequal access to distribution channels

A

Better access to distribution

33
Q

Power of suppliers

A

Suppliers have power to hurt industry profitability

34
Q

Power of buyers

A

Negotiate lower prices, drive down profits

35
Q

Threat of substitutes

A

Perform roughly same or similar functions

36
Q

Rivalry among existing competion

A

Price war BAD

Other dimensions less destructive

37
Q

PESTEL framework

A 
Political
Economic
Sociocultural
Technological
Ecological
Legal
38
Q

Political (government influence) (ex2)

A

Subsidies

Political pressure on companies

39
Q

Economic (economy wide phenomena) (ex5)

A 
Growth rates
Interest rates
Employment levels
Price stability
Exchange rates
40
Q

SCP model

A

Structure conduct performance
Industry structure affects how firms behave
Perfect comp; monopolistic comp; oligopoly; monopoly

41
Q

6th force: complements

A

Product, service or competency that adds value to original product offering when the two are used in tandem

42
Q

Industry dynamics

A

Repeat 5 forces to account for industry evolution

43
Q

Strategic group

A

Set of companies that pursue a similar strategy within an industry
Differ by important dimensions, can use generic strategies as a rough cut.

44
Q

Strategic group insights (4)

A

Rivalry strongest within group
Strategic group affected differently by macro forces
Strategic group affected differently by 5 forces
Some groups more profitable than others

45
Q

Why not switch strategic groups

A

Mobility barriers = industry specific barriers that separate one group from another

46
Q

Value chain

A

Activity template that describes the internal activities a firm engages in when transforming inputs into outputs

47
Q

Primary activities (value chain)

A

Firm activities that add value directly by transforming inputs into outputs as the firm moves a product or service horizontally along the internal value chain

48
Q

Support activities (value chain)

A

Activities that add value indirectly, but are necessary to sustain primary activites

49
Q

Strategic activity system

A

Conceptualization of the firm as a network of interconnected activities

50
Q

SWOT

A

Strengths (I)
Weaknesses (I)
Opportunities (E)
Threats (E)

51
Q

Resources and capabilities

A

All of the financial, physical, human and organizational assets used by a firm to develop, manufacture and deliver products or services to its customers
Resources are what firms HAVE; capabilities are what firms DO

52
Q

4 main types of resources

A

Financial
Physical
Human
Organizational

53
Q

Tangible resources

A

Resources that are visible, have physical attributes

54
Q

Intangible resources

A

Resources that are invisible, have no physical attributes

More likely to lead to competitive advantage

55
Q

VRIO - Questions of …

A

Value
Rareness
Imitability
Organization

56
Q

Question of value

A

Do a firm’s resources and capabilities add value by enabling it to exploit opportunities and/or neutralize threats?

57
Q

Question of rareness

A

How many competing firms already possess these valuable resources and capabilities?

58
Q

Question of imitability

A

Do firms without a resource or capability face a cost disadvantage in obtaining it compared to firms that already possess it?

59
Q

2 main ways imitation can occur

A

Duplication

Substitution

60
Q

Barriers to imitation (4)

A

Better expectations of future resource value
Importance of history (path dependence)
Importance of numeral hard to understand small decisions (causal ambiguity)
Importance of socially complex resources (social complexity)

61
Q

Question of organization

A

Is a firm organized to exploit the full competitive potential of its resources and capabilities?

62
Q

2 key assumptions underlying resource based view (RBV)

A

Resource heterogeneity

Resource immobility

63
Q

Core competencies

A

Unique strengths, often embedded deep within the firm, that allow a firm to differentiate its products and services from those of its rivals, creating higher value for the customer or offering products and services of comparable value at lower cost

64
Q

Dynamic capabilities

A

A firm’s ability to create, deploy, modify, reconfigure, upgrade, or leverage its resources in its quest for competitive advantage

4490 Capstone (2 decks)

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