Midterm 1

Question 1

Strategy 1

Answer 1

Pattern of objectives, purposes, or goals and the major policies and plan of achieving these goals, stated in such a way as to define what business the company is in or is to be, and what kind of company it is or is to be

Question 2

Strategy 2

Answer 2

Integrated and coordinated set of commitments and activities designed (fit) to exploit core competencies and gain sustainable competitive advantage

Question 3

Porter’s perspective on strategy

Answer 3

Operational effectiveness is about achieving excellence in individual activities and strategy is about combining activities

Question 4

Economies of Scale

Answer 4

Cost advantages that companies obtain due to size, scale operation or output.
Underlying mechanism is the decreasing average cost per unit of output with increasing scale

Question 5

Price sensitivity

Answer 5

Price of the product affects the consumers buying behaviors

Question 6

Switching cost

Answer 6

Impediment (su ngan cho) when we change business partners (sellers or buyers)

Question 7

Barriers to entry

Answer 7

Obstacles that make it difficult to enter a given market

Question 8

Market concentration

Answer 8

Extent or degree to which small number of firms account for large % of the market.
An industry in which market share is “concentrated” in the hands of a few firms is likely to be less competitive than one in which market share is disperses among many small firms

Question 9

Hirschman-Herfindahl Index (HHI)

Answer 9

Measure market concentration

Question 10

Five Forces framework

Answer 10

understand how to get bigger slice of profit portion by putting the company in the part of the market where there is less competition

Question 11

What unit of Five Forces framework?

Answer 11

industry

Question 12

Benefit of examining Five Forces framework

Answer 12

understand how we can create/capture value in the market
It is important to define industry boundary

Question 13

What if a company’s businesses are involved in several industries?

Answer 13

One Five Forces analysis for an industry may not completely give insights for diversified company
=> Company may need > 1 industry analyses to use in strategy formulation

Question 14

Limitations about Five Forces framework?

Answer 14

1. The framework views other parties in the firm’s environment as a potential threats not as potential allies
2. The framework analyzes industries. It tells almost nothing about the specific firm
3. It provides no guidance on relative weights for the 5 factors or interaction between them
4. There should be other factor such as “the role of Government, or “the role of complements.” They can affect the industry structure
5. Industry boundaries are rarely clear and also can shift

Question 15

Overall cost leadership

Answer 15

Company creates competitive advantages by pursuing high efficiency.
Achieve by driving scale economies, tight cost and overhead control, cost reduction from experience, cost minimization in areas like R&D, sales forces, advertising
This strategy provide substantial entry barriers

Question 16

Differentiation strategy

Answer 16

Charging higher margin (premium) by providing differentiated value
Company can differentiate themselves in design, brand image, tech, features, cus service
Strategy can insulate higher margin because it increases brand loyalty by customers and lowers price sensitivity

Question 17

Focus strategy

Answer 17

Related to targeting customer
Comp focus on particular buyer group, segment of product line or geographic market
Do not attempt to appeal all normal cus in market
Focus strategy implies some limitations on the overall market share achievable

Question 18

Resource-based view (RBV)

Answer 18

views company as collection of resources.
resources are productive assets owned by firm and capabilities are what firm can do
Individual resources do not confer (grant) competitive advantage alone; they must work together to create organizational capabilities

Question 19

Capability

Answer 19

Essence of superior performance

Question 20

Resources that are distributed heterogeneously (unlike) across companies

Answer 20

cannot be transferred from company to company without cost bc resources are sticky

Question 21

When resources are valuable, rare, inimitable and non-substitutable

Answer 21

company can create sustainable competitive adv in the market

Question 22

Resource do not guarantee what?

Answer 22

sustainable competitive advantage

Question 23

Value chain analysis

Answer 23

Set of activities that firm operating in specific industry to deliver valuable product or service for the market

Product pass through activities of a chain in order, and at each activity product gain some value

Question 24

Primary activities

Answer 24

• Inbound Logistic: arranging inbound movement of materials, parts, or finished inventory from suppliers to manufacturing, assembly plants, warehouse and retail store
• Operation: managing the process that convert inputs (in form of raw materials, labor, energy) into outputs (in form of finished goods or services)
• Outbound Logistics: process related to the storage and movement of final product and related info flows from the end of production line to end user
• Marketing & Sales: selling a product or service and processes for creating, communicating, delivering, and exchanging offerings that have value for cus, clients, partners and society
• Service: activities required to keep product/service working effectively for buyer after it is sold and delivered

Question 25

Support activities

Answer 25

• Procurement (thu mua): acquisition of goods, service, work from outside external source
• Human Resources Management: activities involved in recruiting, hiring, training, developing, compensating, and dismissing or laying off personnel
  *Technological Development: equipment, hardware, software, procedure and technical knowledge brought to bear in firm’s transformation of input into output
• Infrastructure: accounting, legal, finance, control, public relation, quality assurance and strategic management

Question 26

Vertical integration

Answer 26

corporate strategy that company includes another stage of production in industry value chain.
It can be back integration or forward integration

Question 27

Advantages of VI

Answer 27

Company have more control over
1) transaction-partner decision
2) transaction-specific investment
3) information flow
4) production timing across stages
Company can capture margin from both stages (double margin)

Question 28

Disadvantages

Answer 28

Costly to enter
Can make exit barriers higher
Reduce flexibility to choose alternative transaction partners
Sometimes when company relies on excess debt, it may increase risk of bankruptcy

Question 29

Two-sided markets (Two-sided networks)

Answer 29

Economic platforms having two distinct user groups that provide each other network benefit

Question 30

What is the platform of two-sided markets?

Answer 30

Platforms are service and product that bring together groups of users in two-sided networks

Question 31

Cost and revenue of two-sided networks?

Answer 31

Both to the left and right
In traditional value chain, to the left of the company is cost; to the right is revenue

Question 32

Network effect

Answer 32

Phenomenon when value of good or service increases with the number of users

Question 33

When does network effect become significant?

Answer 33

After certain subscription percentage has been achieved called critical mass

Question 34

What happen at critical mass point?

Answer 34

Value obtained from good or service is greater than or equal to the price paid for the good or service

Question 35

Traditional business vs digital age business

Answer 35

In traditional business, growth beyond some point usually leads to diminishing returns

In digital age successful platforms enjoy increasing return to scale

Question 36

Winner takes all

Answer 36

Mature two-sided network industries are usually dominated by handful of large platforms

Question 37

First-mover advantages

Answer 37

Ability of pioneering firms to earn positive economic profits
Primary sources include 1) technological leadership
2) preemption (mua tay tren) of asset
3) buyer switching cost, and reputation/brand awareness by customers