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Management Bocconi > Management First Semester 2nd Partial > Flashcards

Management First Semester 2nd Partial Flashcards

1
Q

What is Strategy?

A

The set of goal-oriented actions a firm takes to gain and sustain superior performance relative to competitors

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2
Q

What 3 elements does good strategy consist of?

A

Diagnosis, Guiding Policy, Coherent Actions

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3
Q

What is Diagnosis?

A

Identifying competitive challenge through analysis of firm’s external and internal environment

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4
Q

What is Guiding Policy?

A

Addressing competitive challenge through formulation of firm’s corporate/business/functional strategies

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5
Q

What does Coherent Actions refer to?

A

Implementing a firm’s guiding policy through strategy implementation

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6
Q

What is strategy not?

A

grandiose statements, failure to face competitive challenge, Operational effectiveness/Competitive Benchmarking/other tactical tools

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7
Q

What is competitive advantage?

A

Superior performance relative to other competitors in sme industry or industry average

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8
Q

How do firms gain competitive advantage?

A

Combining value and cost through strategic positioning by differentiation or cost leadership

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9
Q

What does good strategy do?

A

Creates value for shareholders and other stakeholders

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10
Q

What is value creation?

A

when companies with good strategy are able to provide products/services to customers at a price point tht they can afford while keeping their costs in check, thus making profits at the same time. Both parties benefit from this trade as each captures a part of value created

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11
Q

What is a continuous variable?

A

Variables that can take on a value in a range (e.g. height, weight, temperature) Unlike discrete can take decimals and are measurable

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12
Q

What is a qualitative/categorical variable?

A

Variables that do not come from measuring or counting

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13
Q

Whar are dichotomous or binary variables?

A

Variables that can only take two values

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14
Q

What is uniform distribution?

A

Every value has the same probability (rolling fair die)

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15
Q

What is normal distribution?

A

Outcomes tend to distribute around a central value (the mean) for example population heights

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16
Q

What does Left-skewed mean? (analogous for right)

A

Values of ovservations cluster more around right side of distribution

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17
Q

What is the mean?

A

Where the center of the distribution of a data set is positioned

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18
Q

What is variance?

A

A measure of how spread out the values of a data set are around the mean. (high variance means more widely dispersed, low means more clustered around mean)

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19
Q

What is standard deviation?

A

Square root of variance, measures how much values deviate from mean. high -> more spread out

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20
Q

What is conditional probability?

A

The probability of an event ocurring given that another event has already taken place (px given y)

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21
Q

What is a contingency table?

A

shows the values of a variable x contingent on another value y (for conditional probability). The total rows and columns are marginal frequencies (the last row/column)

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22
Q

What is conditional expectation?

A

The expected value of a random variable given that another event has already taken place

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23
Q

How do you find the conditional expectation?

A

multiply all the values by their respective conditional probabilities (contingent on Y) and then sum

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24
Q

What is joint probability?

A

The probabolity that two events take place together at the same time. It is the probabiliy that Y happens multiplied by the probability that X happens once we know Y has happened. ( P(X,Y) = P(X|Y)*P(Y) )

25
Q

What is independence in statistics?

A

When the outcome of one variable does not affect the second (e.g. flippping coin twice)

26
Q

What is a theory?

A

A series of logical steps linking antecedents to consequences

27
Q

Why are theories important?

A

They rell you what data/factors to examine where the factors improve your ability to make an accurate prediction and the data provides signals for conditional probabilities

28
Q

What steps should you take when predicting events?

A

Theory (set prior probability) -> Look for more info and update prior ability multiple times based on this info -> define expectations (decide when to stop collecting data/signals and finalize probability what cannot be further improved)

29
Q

Why do we predict events?

A

Events are associated with outcome of an action and you want to decide whether or not to take that action.

30
Q

What are the sources of learning Economies?

A

Enhanced human skills, Simplification of Products and Processes, Better selection of Materials, Higher Coordination, Higher programmability of Activities

31
Q

What are economies of scope?

A

Decribe savings that come from producing two outputs at less cost than producing each output individually while using same resources and tech

32
Q

What are the drivers for economies of scope?

A

Complementaries in production/distribution (e.g. shared inputs), deployment of unique assets and capabilites across several products (e.g. brand recognition), Same advertising campaign for multiple products, Amortizing expenses related to generic R&D, Creation of exit barriers and lock-in effects for consumers

33
Q

What are the benefits of differentiation towards threat of entry?

A

Protection against entry due to intangible resources such as reputation for innovation, quality, or customer service

34
Q

What are the risks of differentiation towards threat of entry?

A

Erosion of margins, Replacement

35
Q

What are the benefits of differentiation towards the bargaining power of suppliers?

A

Protection against increase in input prices which can be passed on to customers

36
Q

What are the risks of differentiation towards the bargaining power of suppliers?

A

Erosion of margins

37
Q

What are the benefits of differentiation towards the bargaining power of buyers?

A

Protection against decrease in sales prices because well-differentiated products are not perfect imitations

38
Q

What are the risks of differentiation towards the bargaining power of buyers?

A

Erosion of margins

39
Q

What are the benefits of differentiation towards the Threat of Substitutes?

A

Protection against substitute products due to differential appeal

40
Q

What are the risks of differentiation towards the Threat of Substitutes?

A

Replacement especially when faced with innovation

41
Q

What are the benefits of differentiation towards the Rivalry Among Existing Customers?

A

Protection against competitors if product/service has enough differential appeal to command premium price

42
Q

What are the risks of differentiation towards the Rivalry Among Existing Customers?

A

Focus of competition shifts to price, Increasing differentiation of product features that do not create value but raise costs, Increasing differentiation to raise costs above acceptable threshold

43
Q

What are the benefits of Cost Leadership towards the threat of entry?

A

Protection against entry due to economies of scale

44
Q

What are the Risks of Cost Leadership towards the threat of entry?

A

Erosion of margins, Replacement

45
Q

What are the benefits of Cost Leadership towards the bargaining power of suppliers?

A

Protection against increase input prices which can be absorbed

46
Q

What are the risks of Cost Leadership towards the bargaining power of suppliers and buyers?

A

Erosion of Margins

47
Q

What are the benefits of Cost Leadership towards the bargaining power of buyers?

A

Protection against decrease in sales prices which can be absorbed

48
Q

What are the benefits of Cost Leadership towards the threat of substitutes?

A

Protection against substitute products through further lowering of prices

49
Q

What are the risks of Cost Leadership towards the threat of substitutes?

A

replacement especially when faced with innovation

50
Q

What are the benefits of Cost Leadership towards the Rivalry Among Existing Competitors?

A

Protection against price wars because lowest-cost firm will win

51
Q

What are the risks of Cost Leadership towards the Rivalry Among Existing Competitors?

A

Focus of competition shifts to non-price attributes, Lowering costs to drive value creation below acceptable threshold

52
Q

What is corporate strategy?

A

The decisions that senior management makes and the goal-directed actions it takes to gain and sustain competitive advantage across the industries and markets where they operate

53
Q

Why do firms need to grow?

A

Increase profitability, lower costs, increase market power, reduce risk, motivate management

54
Q

What three dimensions can firms grow along?

A

Vertical integration (along industry value chain), diversification (of products and services), geographic scope (in terms of regional/national/global markets)

55
Q

What concepts guide corporate strategic decisions?

A

Core competencies (unique strengths deep in firm that allow differentiation of products/services), Economies of scale, Economies of Scope, Transaction Costs

56
Q

What are transaction costs?

A

All internal and external costs associated with an economic exchange whether it takes place within the boundaries of a firm or in markets.

57
Q

What are internal costs?

A

Pertain to organizing economic exchange within the firm such as costs of recruiting and retaining employees

58
Q

What are external costs?

A

Costs of searching, negotiating, and enforcing contracts with firms or individuals in the open market

59
Q
A

Management Bocconi (1 decks)

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