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strategic management > final exam prep > Flashcards

final exam prep Flashcards

1
Q

competitive success factors

A

1) market/customer needs oriented
2) make effective use of valuable competencies
3) new products/services + innovative
4) entrepenarial/opportunisitic mindset

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2
Q

why is a strategy important ?

A

1) define the org
2) focus effort
3) consistency (efficiency + focus, be careful of too much consistency)
4) position or set the direction within the firm’s environment

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3
Q

key strategic questions + process

A

1) strat formulation : analyze the current context
2) analysis : evaluate capabilities + distinctive competence
3) Strat implementation : formulate strategy and implement
4) Performance : control/monitor along the way

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4
Q

when rivalry intensifies

A

numerous equally balanced competitors
slow industry growth
high fixed costs/high storage costs
lack of diff. /low switching costs
high strategic stakes
high exit barriers

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5
Q

buyer powers intense

A

high buyer concentration
available substitute products
buyer well- informed
industry’s products are standardized
buyer is a significant customer
buyer is sensitive to price
low switching costs
supplier’s brand identity is more important

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6
Q

supplier power is powerful

A

high supplier concentration
satisfactory substitute products not available
suppliers products are critical to buyers
high switching costs
buyer is not a significant customer

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7
Q

industrial environment analysis

A

1) understanding key competitive forces that shape competition
2) identify key success factors
3) predict future industrial profitability
4) find strategy

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8
Q

threat of new entrants are affected by

A

econ of scales
product differentiation
capital requirements
access to distribution channels
cost disadvantages independent of scale
gov policy

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9
Q

threat of substitutes strong

A

customers face low switching costs
substitutes price is lower
susbstitutes perf/quality =better
service after sale
location

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10
Q

attractive industry

A

moderate/weak rivalry
high entry barriers
few threat of substitutes
suppliers/buyers weak

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11
Q

tangible ressources

A

financial
organizational
technological
physical

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12
Q

untangible ressources

A

human
reputational
innovation

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13
Q

core competencies arise from

A

1) collective learning/expertise within the business
2) ability to integrate skills and technologies
3) ability to deliver superior products and services
4) ways business is differentiated

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14
Q

4 criteria of sustainable advantage

A

VRIO

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15
Q

for value chain to be competitive advantage need

A

1) perform activity that provides value superior to competitors
2) perform value creating activities competitors cant

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16
Q

outsourcing benefits

A

higher flexibility, reduce capital investment, mitigate risks

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17
Q

outsourcing rational

A

improve business focus
sharing risks
freeing resources for other purposes
performing fewer capabilities

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18
Q

classification of stakeholder

A

1) capital market shareholder
shareholders + major suppliers
2) product-market stakeholder
primary customers, unions, host communities ,suppliers
3) organizational stakeholder
employees, leaders

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19
Q

social responsability 2 sides

A

milton friedman : as much money
Byron : profit is a means not and end, should focus on legal, econ, ethical, discretiionary org

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20
Q

corporate gov

A

set of mechanisms to manage the relationship among stakeholders

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21
Q

4 mechanisms to mitigate risks of seperation ownership/man control

A

1) ownership concentration
diffuse : weak monitoring
high degree ownership
instutional owners
2) boards of directors
insiders, related outsiders, outsiders
3) executive compensation
4) market for corporate control

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22
Q

drivers of competitive behavior

A

awareness, motivation, ability

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23
Q

competitive rivalry

A

ongoing sets of actions and responses ocurring between competitors and influences an individual firm’s ability to gain and sustain competitive advantages

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24
Q

competitive behavior

A

set of comp action and responses the firms takes to build or defend its competitive advantage and improve its market position

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25
Q

competitive dynamics

A

total set of action and responses taken by all firms competing withing a market

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26
Q

how to know the type of competition ?

A

market commonality (multimarket competition)
ressource similarity

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27
Q

1st mover benefits

A

loyalty of customers, market share, proprietary technology

must : invest in r&d, rapidly successfully market a stream of innovative products

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28
Q

2nd mover benefits

A

studies customers reaction + get feedback
more efficient and need to find additional value

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29
Q

slow cycle market

A

markets in which competitors lack the ability to imitate the focal firm’s comp advantage

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30
Q

fast cycle market

A

markets in which competitors can imitate the focal firm’s capabilities that contribute to its comp advantage

31
Q

business level strategy

A

Integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets

32
Q

types of business model

A

franchise model
freemium model
advertising model
subscription model
peer-to-peer model

33
Q

types of business level strategy

A

1) cost leadership
2) differentiation strategy
3) focus strategy
4) integrated cost/differentiation strategy

34
Q

cost leadership strategy

A

commonly standardized goods
process innovations critical
provide some protection against powerful customers
oprates with greater margin then competitors (absorb supplier’s price)
profit margins high so barriers to entry
cost leader has more flexibility than its competitors with product substitution

risks:
loss of comp advantage to newer technology,fail to assess change in customers’ needs, ability to imitate cost leader

process engineering is emphasize, formalized procedure guide actions, structure is mechanical, jobs roles are highly structures, operations is the main function

35
Q

differentiation strategy

A

non standardized products, when value differentiated products more than costs

customer more loyal and less price sensitive, able to charge higher prices, differentiatior is insulated it is not affected by suppliers power, customer loyalty + uniqueness makes it difficult to enter, less switching subsitute

risk : when uniqueness of product does not justify price, competitors can reporduce it and sell at lower price, failure of a firm to meet expectation

marketing is the main function, new product R&D is empahsize, functions are decentralized, formalization is limited, structure is organic

36
Q

focus strategies

A

must complete various primary and support activities in a competitively superior manner
opportunities:

large firms may overlook a niche market
firm may lack the resources needed to compete in the broader market
focusing allows the firms to direct its resources to a certain value chain activities to build a com advantage
firm is able to serve a narrow market segment more effectively

risks:
competitors ability to use its core competencies to outfocus
an industry wide company might decide the market segment is attractive
reduction in differences of the needs between customers in a narrow market segment and the indsutry wide market over time

37
Q

integrated cost leadership/differentiation strategy

A

increase the number of primary value chain activity and support functions (flexibility is required)
sources of flexibility :
flexible manufacturing systems
information networks
total quality management systems

but often not best nor lowest

38
Q

corporate level strategy

A

Specifies action a firm takes to gain a competitive advantage by selecting and managing a group od different business competing in different product markets

39
Q

corporate level strategy concerned with 2 key issues

A

in what product markets and business the firm compete ?
how corporate headquarters should manage those businesses

40
Q

product diversification

A

deals with the scope of the the industries markets in which the firm will compete (broad/narrow)
how managers buy/create/sell different business to match skills and strengths with opportunities presented to the firm

41
Q

low -level diversification

A

single business : 95%
main business: 70-95%

42
Q

moderate-high level diversification

A

related constrained: dominant business, product/tech/distribution linkage
related linked: <70%, limited links between businesses

43
Q

very high diversification level

A

unrelated: <70%, no common links between businesses

44
Q

role of diversification

A

horizontal
vertical : backward/upstream, forward/downward
International expansion

45
Q

corporate relatedness

A

Corporate relatedness in transferring skills or corporate core competencies among units.

46
Q

operational relatedness

A

Achieved when the firm’s businesses successfully share resources and activities to produce and sell their products

47
Q

related constrained

A

high operational relatedness, low corporate relatedness

48
Q

unrelated diversification

A

low operational relatedness
low corporate relatedness

49
Q

operational + corporate relatedness

A

both high

50
Q

related linked

A

low operational relatedness
high corporate relatedness

51
Q

how to create operational relatedness

A

sharing:
primary activities
support activities

52
Q

activity sharing

A

costly to implement and coordinate
may create unequal benefits for the division involved
can lead to fewer managerial risk-taking behavior

52
Q

activity sharing

A

costly to implement and coordinate
may create unequal benefits for the division involved
can lead to fewer managerial risk-taking behavior

53
Q

corporate-level core competencies

A

complex set of resources and capabitlies that link deifferent business primarily through man/tech knowledge, experience and expertise

54
Q

related-linked strategy create value by

A

transferring core competences
- expense of developing core competencies already incurred
- intangible resources => immediate advantage

55
Q

simultaneous operational and corporate relatedness

A

ability to create economies of scope by sharing activities and transferring core competencies
- difficult for competitors to understand/imitate
- expensive to undertake (sometimes benefits do not offset the loss => diseconomies of scales)
- results in discounted assets by investors => :((

56
Q

unrelated diversification strategy

A

financials economies : cost savings realized through improved allocation of financial resources based on investments inside/outside the firm
can create value : efficient internal capital market allocation, asset restructuring
corporate headquarter office distributes capital to its businesses to create value for the overall corporation

57
Q

incentives to diversify

A

external: antitrust regulations, tax laws
internal: low perf, uncertain future cash flows, pursuit of synergy, reduction of risk for the firm

58
Q

simple structure

A

manager makes all decisions
for focus strategies and business level strat

59
Q

functional structure

A

chief executive officer and limited corporate staff with functional line managers in dominant org areas such as production, acc, marketing…
for business level strategies and some corporate level strategies (single/dominant with low diversification)
benefits: econ of scale/scope, performance standard are better maintained, specialized training and in depth skill dvp, clear decision making
disadvantages: hard to integrate, lack of common vision

59
Q

functional structure

A

chief executive officer and limited corporate staff with functional line managers in dominant org areas such as production, acc, marketing…
for business level strategies and some corporate level strategies (single/dominant with low diversification)
benefits: econ of scale/scope, performance standard are better maintained, specialized training and in depth skill dvp, clear decision making
disadvantages: hard to integrate, lack of common vision

60
Q

mutlidivisional structure

A

corporate office and operating division, each op division representing a separate business in which the top corporate officer delegates responsibilities to division manager for day-to-day op
appropriate when firm is highly diverse
benefits: corporate officers are able to more accurately monitor perf of each business (better control) , facilitates comparison between division (improve ressource allocation)
disadvantages: difficult to coordinate across product lines, replication of ressources, pressure to generalize

61
Q

strategic reason for acquisition

A

1) increased market power : horizontal, vertical, related acquisition
2) increase diversification
3) overcoming entry barriers
4) reshaping firm’s competitive scope : lessen market dependencies
5) learning + dev capabilities
6) lower risks than dev new products
7) cost of new product dvp + increase speed to market

62
Q

pbl with acquisitions

A

1) integration difficulty
2) inadequate evaluation of the target’s value
3) large debts that preclude adequate long-term investment
4) creating a firm that is too diversified
5) managers overly focused on acquisition
6) developing a firm too large (extensive bureaucracy)

63
Q

integration difficulties challenges

A

meld unique corporate cultures
link financial and info control system
build effective working relationship (mgmt style differ)
determine leadership structure

64
Q

joint venture

A

2 or more firms create a legally independent company to share some of their resources to create a competitive advantage
partners own an equal % and contribute equally to the venture’s operation
often formed to improve a firm’s ability to compete in uncertain environments
transferring tacit knowdlege => long-term relationship

65
Q

equity strategic alliance

A

alliance in which one company purchases equity in another business (partial acquisition) or each business purchase equity in each other (cross-equity transaction)

66
Q

non-equity strategic alliance

A

Alliance in which 2 or more firms develop a contractual relationship to share some of their resources to create a comp advantage
less formal, less commitment, no intimate relationship, not suitable for complex project

67
Q

business-level strategy cooperative strategy

A

strategy through which firms combine some of their ressources to create a competitive advantage by competing in 1 or more product markets

68
Q

4 business level cooperative strategy

A

1) complementary strategic alliances
2) competition response strategy
3) uncertainty-reducing strategy
4) competition-reducing strategy

69
Q

complementary strategic alliances

A

business-level alliances in which firms share some of their resources in complementary ways to create a competitive advantage
vertical
horizontal

70
Q

uncertainty-reducing alliances

A

used to hedge against the risks created by the condition of uncertain competitive environment (such as new product markets)

71
Q

competitive-reducing strategy

A

used to avoid excessive competition while the firm marshals its resources to improve its competitiveness
collusion is often used: collusive strategy (explicit, implicit)

72
Q

competitive risks of cooperative strategies

A

inadequate contracts
misrepresentation of competencies brought to the partnership
opportunistic behavior ( partner fail its part, 1 more involved)

strategic management (1 decks)

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