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Strategy > Final Exam > Flashcards

Final Exam Flashcards

1
Q

Two Business Strategies

A
  1. Low cost –> economies of scale, standardization, functional
  2. Differentiation –> customization, adaptation, decentralized
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2
Q

Four Organizational Structures

A

Simple
Functional
Divisional
Matrix

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3
Q

Pros/Cons of Functional Structure

A

+Efficiency
+consolidation, control
-difficult to establish uniform standards of performance

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4
Q

Pros/Cons of Divisional Structure

A

+Effectiveness

-Duplication of activities

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5
Q

Pros/Cons of Matrix Structure

A

+Efficient utilization of resources
+Improved communication, flexibility
-Confusion of leadership, conflicts of power

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6
Q

Cost-Adaption Framework: Low cost, Low Adaption

A

International Strategy

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7
Q

Cost-Adaption Framework: High cost, Low Adaption

A

Global Strategy

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8
Q

Cost-Adaption Framework: Low cost, High Adaption

A

Multi-domestic Strategy

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9
Q

Cost-Adaption Framework: High cost, High Adaption

A

Transnational

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10
Q

Four Reasons to Outsource

A
  1. Reduce costs
  2. Access supplier core competency
  3. Focus on high value-add activities
  4. Flexibility
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11
Q

Two ways to reduce costs when outsourcing

A
  1. Lower cost structure (wages)

2. Supplier economies of scale

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12
Q

Focus on high value add activities (2)

A
  1. Smile curve

2. Economic profit vs. accounting profit, opportunity cots

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13
Q

Four Transaction Costs

A
  1. Search
  2. Negotiation
  3. Monitoring
  4. Enforcement
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14
Q

Seven Administrative Costs

A
  1. Differences in optimal scale
  2. Developing distinct competencies
  3. Managing Strategically different businesses
  4. Incentive problem
  5. Competitive affects of VI (HTC)
  6. Compounding risk
  7. Flexibility
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15
Q

Why Vertically Integrate? (6)

A
  1. Transactions costs > Admin costs
  2. Create market power, raise barriers to entry
  3. Market failure
  4. Counter market power
  5. Develop a market (new, or there is exiting happening)
  6. Strategy (Apply in retail)
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16
Q

Three Market Failures

A
  1. Small number of buyers and sellers
  2. Asset specificity (location, technical, human capital)
  3. Frequent transactions
17
Q

High Frequency, Low Asset Specificity

A

Structured Transaction

18
Q

Low Frequency, Low Asset Specificity

A

Standardized Contracts

19
Q

High Frequency, High Asset Specificity

A

Vertically Integrate

20
Q

Low Frequency, High Asset Specificity

A

Unique Contract

21
Q

BCG Matrix Limitations/Assumptions (5)

A
  1. That there is a correlation between market share and profit (Livenation)
  2. Growing industries are easy (HTC, Sony)
  3. Ignores interdependencies between SBUs
  4. Is subjective
  5. Balanced portfolio of internal cash flows
22
Q

Operational Economies of Scope (2)

A
  1. Sharing activities

2. Transferring skills, part of competitive advantage

23
Q

Two sharing activities

A
  1. Reduce costs, economies of scale

2. Increased revenue: bundling, reputation spillover

24
Q

Financial Economies of Scope (3)

A
  1. Risk reduction
  2. Tax advantages
  3. Internal capital allocation
25
Q

Anti-competitve Economies of Scope (2)

A
  1. Multi-market competition, mutual forbearance

2. Market power, cross-subsidation, predatory pricing

26
Q

Managerial Economy of Scope (1)

A

Firm size drives manager compensation, agency theory, primary reason for many mergers

27
Q

Porter Three Tests for Diversification

A
  1. Attractiveness, 5 forces analysis
  2. Cost of Entry, must not capitalize future profits
  3. Better Off, operational economies of scope?
28
Q

Reasons for Mergers that usually lead to competitive advantage (4)

A
  1. Revenue enhancements
  2. Cost savings
  3. Transferring skills/technology
  4. Market Power
29
Q

Reasons for Mergers that usually do NOT lead to competitive advantage (5)

A
  1. Ensuring survival
  2. Tax benefits
  3. Defensive
  4. Financial engineering
  5. Managerial pay increase
30
Q

Why do mergers often fail?

A
  1. Overpay
  2. Integration failure
  3. Wrong motivation
31
Q

Why did Coke want to buy its bottlers? (3)

A
  1. Stop negotiating
  2. faster introduction of new products, flexibility
  3. Reconfigure distribution channel and reduce redundancies

Strategy (2 decks)

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