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MBA Strategy Ch 1-5 > MBA Strategy > Flashcards

MBA Strategy Flashcards

1
Q

What is the balanced scorecard tool?

A

Tool to help a company achieve its financial objectives by linking them to specific strategic objectives

e.g. x percent increase in annual sales

&

x percent market share

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2
Q

What are key success factors?

A

strategy elements, product and service attributes, operational approaches, resources, and competitive capabilities with the greatest impact on competitive success in the marketplace

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3
Q

What is competitive intelligence?

A

being informed about rivals’ strategies’, actions and announcements, their financial performance, their strengths and weakness etc. to avoid damage to sales and profits

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4
Q

What is a strategic group?

A

Cluster of industry rivals that have similar competitive approaches and market positions

Strategic group mapping is a technique for displaying different market or competitive positions that rival firms occupy in the industry

Reveals which companies are close competitors and distant competitors

e.g. y-axis of price/quality (low to high) & x-axis geographic coverage (few to many)

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5
Q

List some drivers of change

A
  • changes in long term industry growth rate
    • increasing globalization
    • changes in who buys product and how they use it
    • technological change
    • emerging new internet capabilities and applications
    • product and marketing innovation
    • entry or exit of major firms
    • diffusion of know-how across companies and countries
    • improvements in efficiency in adjacent markets
    • reductions in uncertainty and business risk
    • regulatory influences and government policy changes
    • changing societal concerns, attitudes and lifestyles
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6
Q

What are Michael Porter’s 5 Forces?

A

Competitive pressures from

  • Supplier
  • Buyer
  • New Entrants
  • Substitues
  • Rivalry Among Competing Sellers
  • Supplier bargaining power
  • Buyer bargaining power
  • Threat of entry of new rivals
  • Substitute products
  • Rivalry Among Competing Sellers (other firms in the industry)
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7
Q

What is the macro-environment?

A

broad environmental context in what a company’s industry is situated
e.g.

Demographics
Natural Environment
Political/Regulatory/Legal Factors
Technological Factors
Social Factors
Global Forces
General Economic Conditions

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8
Q

What is benchmarking?

A

comparing how different companies perform various value chain activities - learning how other companies perform activities and borrowing their “best practices”

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9
Q

What is a company’s value chain?

A

It identifies the primary activities that create customer value and the related support activities.
e.g. PRIMARY ACTIVITIES:
supply chain management
operations
distribution
sales and marketing
service

SUPPORT ACTIVITIES AND COSTS:
General Administration
HR Management
Product R&D, Technology and Systems Development

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10
Q

What are a company’s strengths and weaknesses?

A

A company’s strengths are its competitive assets.

Its weaknesses are shortcomings that constitute competitive liabilities.

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11
Q

What is a distinctive competence?

A

A competitively important activity that a company performs better than its rivals - it thus represents a competitively superior internal strength.

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12
Q

What is a core competence?

A

an activity that a company performs proficiently that is also central to its strategy and competitive success

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13
Q

What is a competence?

A

an activity that a company has learned to perform with proficiency - a capability in other words.

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14
Q

What is a dynamic capability?

A

capacity of a company to modify its existing resources and capabilities or create new ones
e.g. 3M upgrading its R&D continuously
Pfizer and its acquisition capabilities

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15
Q

4 tests of a resource’s competitive power?

A

Is the resource:

Valuable?Rare?

Hard to copy?

Not substitutable? (no good substitutes available)

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16
Q

What is a sustainable competitive advantage?

A

an advantage over market rivals that persists despite efforts of rivals to overcome it

is the advantage durable?

17
Q

What is a resource bundle?

A

a linked and closely integrated set of competitive assetscentered around one or more cross-functional capabilities

18
Q

What is the difference between a resource and a capability?

A

Resource: competitive asset that is owned or controlled by a companye.g. a brand is a resource (Cola-Cola or Kleenex)

Capability: capacity of a firm to perform some activity proficiently

e.g. Apple’s product innovation capability
Pepsi for its marketing and brand management capabilities

Tangible resources:

  • physical resources
  • financial resources
  • technological assets
  • organizational resources

Intangible resources:

  • human assets and intellectual capital
  • brands and reputational assets
  • relationships (strategic alliances, joint ventures)
  • company culture and incentive system
19
Q

What are competitive assets?

A

a company’s resources and capabilities

20
Q

What are functional strategies?

A

HR strategyFinance strategy
IT strategy
Sales, Marketing and Distribution
Production
Supply Chain
R&D, technology and product design

21
Q

Define Broad Differentiation

A

offer unique product attributes that appeal to a wide range of buyers

offer something rivals can’t in terms of satisfaction (innovation or persuasive advertising)

e.g. Apple, Rolls-Royce, Ralph Lauren, Tiffany, Rolex, Prada
Avon, Mary Kay
Microsoft Office - hard to copy and difficult for users to switch away from

differentiating the company’s product offering from rivals’ with attributes that will appeal to a broad spectrum of buyers
differentiation is doomed if competitors are able to quickly copy most or all of the appealing attributes a company comes up with

22
Q

Name the 5 generic competitive strategies

A

Low-Cost (overall or focused)

Differentiation (broad or focused)

Best-Cost

  • Low-Cost Provider
  • Focused Low-Cost Provider
  • Broad Differentiation
  • Focused Differentiation
  • Best-Cost Provider

Overall low-cost

Focused low-cost

Broad differentiation

Focused differentiation

Best-Cost

  • Low-Cost Provider (Overall Low-Cost Provider)
  • Focused Low-Cost Provider (or Market Niche Low-Cost)
  • Broad Differentiation
  • Focused Differentiation (or Market Niche Differentiation)
  • Best-Cost Provider
23
Q

Define Best-Cost Provider

A

Middle ground between low-cost and differentiation advantage - targeting value conscious buyers looking for a very good product/service at an economical price.

giving customers more value for the money by offering upscale product attributes at a lower cost than rivals.
Hybrid strategy that blends elements of differentiation and low-cost strategies.

e.g. Toyota’s Lexus line - high quality like BMW/Mercedes, but more affordable

24
Q

Define Focused (or market niche) Low-Cost Strategy

A

low cost aim serving buyers in target niche at a lower cost and price than rival competitors

concentrating on a narrow buyer segment and outcompeting rivals on costs, thus being in position to win buyer favor by means of a lower-priced product offering

e.g. Vizio low-cost TVs - built close relationship with a major Taiwanese manufacturer

25
Q

Define Focused (or market niche) Differentiation

A

concentrating on a narrow buyer segment and outcompeting rivals with a product offering that meets the specific tastes and requirements of niche members better than the product offerings of rivals
e.g. Godiva Chocolates, Rolls-Roycem Haagen-Dazs, Trader Joe’s

Target market niche needs to be big enough to be profitable and offers good growth potential

26
Q

What is a uniqueness driver?

A

a factor that can have a strong differentiating effect

8 uniqueness drivers are:

  • sales and marketing
  • employee skill, training, experience
  • input quality
  • technology and innovation
  • production R&D
  • customer services
  • product features and performance
  • quality control processes
27
Q

Define Overall Low-Cost Provider Strategy

A

overall lower costs than rivals

achieving lower overall costs than rivals on products that attract a broad spectrum of buyers

good at finding ways to drive costs out of their business

can result in better profitability than rivals can obtain

key to this strategy is scrutinizing each cost activity and then streamlining how activities are performed to pursue cost efficiencies

e.g. Walmart pursues lower cost provider strategy

Best position to win business from price-sensitive buyers

28
Q

When use low-cost provider strategy?

A
  • price competition among rival sellers is vigorous
    • products of rival sellers are essentially identical and readily available from many eager sellers
    • few ways to achieve product differentiation that have value to buyers
    • most buyers use the product in the same ways
    • buyers incur low costs in switching their purchases from one seller to another
    • buyers are large and have significant power to bargain down prices
    • industry newcomers use introductory low prices to attract buyers and build a customer base
29
Q

What is a cost driver?

A

a factor that has a strong influence on a company’s costs

10 cost drivers are:

  • bargaining power
  • communications systems and information technology
  • production technology and design
  • input costs
  • supply chain efficiencies
  • capacity utilization
  • learning and experience
  • economies of scale
  • incentive systems and culture
  • outsourcing or vertical integration

MBA Strategy Ch 1-5 (1 decks)

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