Final Flashcards
Macro-environment
includes all relevant factors and influences outside its boundaries
strategically important factors
Direction
Objectives
Strategy
Business model
Industry
a group of firms producing products that are close substitutes
Driving Forces
major underlying causes of changing industry and competitive conditions.
Industry’s Dominant Economic Traits
Market size and growth rate Number of rivals Scope of competitive rivalry Buyer needs and requirements Degree of product differentiation Product innovation Supply/demand conditions Pace of technological change Vertical integration Economies of scale Learning and experience curve effects
Learning/experience effects
when a company’s unit costs decline as its cumulative production volume increases because of Accumulating production know-how, Growing mastery of the technology
The bigger the learning or experience curve effect,
the bigger the cost advantage of the firm with the largest cumulative production volume
How to find how strong competitive forces are
identify main sources of competitive forces and strength of these forces, use five forces model of competition
porters five forces model
bargaining power of suppliers, threat of new entrants, bargaining power of buyers, and threat of substitute products
Strategy
an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage
Enterprise-level strategy
what do we stand for?
corporate level strategy
what businesses do we hold in our portfolio
business-level strategy
an integrated and coordinated set of commitments and actions designed to provide value to customers and gain a competitive advantage by exploiting core competencies in specific, individual product markets
asks how do we compete in this business?
Cost Leadership
Integrated set of actions aimed at attaining low cost (relative to competitors) with acceptable features
Differentiation
Integrated set of actions aimed at producing products that customers view as different in way(s) that are significant to them
Focused low cost and differentiation
Integrated set of actions aimed at meeting the needs of a particular competitive segment
Integrated Low-Cost/Differentiation Strategy
Integrated set of actions aimed at attaining both low cost and products that customers view as different in way(s) that are significant to them
Competence
an activity that a company has learned to perform well
Core Competence
a competitively important activity that a company performs better than other internal activities
Distinctive Competence
a competitively important activity that a company performs better than its rivals and therefore represents a competitively superior resource strength
4 Criteria of Sustainable Competitive Advantage
Rare
Valuable
Costly to Imitate
Nonsubstitutable
Value Chain Analysis
Identify which resources and capabilities add value
Strength
something a firm is good at doing or a characteristic that gives it an important capability (skills, expertise, resource, capability, or achievement)
Weakness
something a company lacks or does poorly (in comparison to others) or a condition that puts it at a disadvantage
opportunity
something in the environment that may be exploited to the firm’s advantage
Threat
something in the environment that has the potential to reduce a firm’s performance or destroy its competitive advantage.
