Final Exam Flashcards
What are the 2 paradoxes in Strategy?
- Competitive Advantage is sustained through changing strategy (Fail to Change)
- You only have 10% to succeed (Change to Fail)
What are Porter’s 5 Forces?
- Rivalry among existing competitors
- Threat of substitute products
- Threat of new entrants
- Bargaining power of buyers
- Bargaining power of suppliers
What are the PESTEL elements of the macro environment?
- Political
- Economic
- Social
- Technological
- Environmental
- Legal
What are the generic strategies in the matrix?
- Cost Leadership Strategy
- Focused Cost Leadership
- Differentiation Strategy
- Focused Differentiation
What are the key takeaways for the Airborne Express case?
Firms with clear, hard-to-imitate product differentiation or cost leadership positions gain higher operating margins than firms that are stuck in the middle, however, such strategies come at a higher risk of failure. Figuring out what consumer value is difficult, consumer preference may change, and the system is too intricate to adapt to the new environment.
Solving the strategy paradox: How to reach for the fruit without going out on a limb?
Explain the Strategy Palette.
2 Dimensions: Unpredictability and Malleability
5 scenarios:
- Adaptive
- Classical
- Shaping
- Visionary
- Renewal/Survival
What are the key takeaways for the REC case?
In an industry where it is technologically progressive and has a scale-based cost-competitive market, the viable strategy is mass-cost-leadership or niche-differentiation strategy. REC adopts the niche-differentiation strategy by charging premium prices and adopting activities to increase the WTP. REC focuses on quality control, but needs to balance between the short-term and long-term goals.
Since this is also the industry with high technological unpredictability and some malleability, it is necessary for REC to be agile and adaptive. REC focuses on the consistency in their core competence on manufacturing, and let go of other businesses — maintaining the consistency of something that is less vulnerable to the changing environment.
What are the different growth paths?
- Building new core competencies to protect and extend current market position
- Leveraging core competencies to improve current market position
- Building new core competencies to create and compete in markets of the future
- Redeploying and recombining core competencies to compete in markets of the future
What are the main takeaways for the Amazon case?
The growth strategy here is more likely to succeed if it is consumer-driven rather than competence-driven or competition-driven. Amazon will succeed if it can improve its value loop to create value for consumers.
Amazon’s eco-system benefits from the “systems advantage” that makes itself more adaptive to the changing environment.
Explain the Hotelling Model.
Nash equilibrium is in the middle side by side facing each other (demand effect). Balance between transportation cost and price. (P* = t + MC)
Maximum profits are at the extreme ends.
What are the main takeaways for Airbus & Boeing?
Product scope and choice is one of the most important strategic decisions. When 2 companies’ business model is similar, one firm’s strategic move will influence the other significantly in terms of market share and profitability. In the oligopoly market, the malleability of both firms is very high.
What are the main takeaways for HSC and NS?
High-priced monopolists attract new entrants like magnets, but you need to reason back — slightly lower annual returns may product higher long-term returns.
NS could have built a plant in Europe prior to HSC’s entry, been more aggressive in lowering prices.
More importantly, once HSC entered, it had no added value. Since HSC’s entry shifts the division of value but creates NO value, then get paid to play. (Pepsi made use of HSC to lower the market price)
What are the main takeaways for Wintel?
Based on Game Theory, if Intel does not release, MS will not release. If Intel releases, it will have to depend on complementaries for MS. MS is always resistant to releasing since they can already benefit from their own system — free-riding on Intel since they do not need to release but Intel does.
It is the co-opetition in which players have to balance the conflicting and common interests carefully.
Explain the Corporate Renewal Model.
Stage 1: Simplification
- Discipline
- Support
Stage 2: Integration
- Trust
- Stretch
Stage 3: Regeneration
- Balancing D S T S
How do you solve strategic paradox of Uncertainty and Commitment?
It is a paradox because you cannot increase both sides at the same time. But you can solve it with hierarchy in your organization. The BOD should think more of uncertainty. Operations should then focus on commitment instead to get maximum efficiency/productivity.
