| ★ | Mock Exam Flashcards
Competetive Advantage
We distinguish between four levels of competitive advantages.
- Please identify different levels and explain what we mean by the repective level.
Disadvantage ➔ Parity ➔Temporary Advantage ➔ Sustained Competetive Advantage
A company can only outperform its rivals if it can establish a difference it can perserve (Sustained competetive advantage) eg. RBV ➔ VRI/O
Industry vs. Firm Effects
Please describe shorly what we mean by industry and firm effects.
- Explain how large these respective effects are
- Explain what the meaning of the relative importance of these factors is for strategic management.
Industry effects ,
overall performance of an industry & how it affects the performance of all firms within that industry
→ an industry with high barriers to entry, high level of competition or low profit margins is likely to have poor overall performance
- less control over performance
- must focus on adapting to the industry environment.
Firm effects,
specific characteristics (resources, capabilities, strategy & management) of a firm that affects its performance
→ a firm with strong brand, skilled workforce and well-defined strategy will outperform its competitors
- more control over performance
- focus on developing own unique advantages.
Resource-based view of the firm
The recource-based view of the firm is based on two fundamental assumptions.
- Please explain what these assumptions are and what their implications are.
Firms sustained competetive advantage ist derived from VRIO resources and capabilites. Key assumptions, ..
Heterogenity of Resources
A firm is a bundle of productive recources and different firms possess different bundles of resources. It implies that for a fiven business activity, some firms may be mor skilled in accomplishing this activity than other firms.
Imperfect imitability / Immobility of Resources
Some of the recources are very costly to acquire or copy.
Implications of the RBV
- Develop and leverage unique resources and capabilities.
- Protect valuable recources form imitation.
- Develop strong corporate culture to support
- Be aware of the competetive dynamics and adapt accordingly
Knowledge-based view of the firm
Nonaka and Takeuchi (1995) developed a model of how knowledge is created.
- Please explain each step of the knowledge creation process as described by the authors with an example, including the type pf knowledge, which is processed as input and output.
You can only enable knowledge creation by providing the right context. The SECI model expains how tycit and expicit knowledge are converted into organizational knowledge.
- Socialization: An apprenticeship programm in which a master craftsman teaches an apprentice how to use a tool. (sharing tacit)
- Exernalization: A scientist writes a paper to descirea new discovery. (tacit to explicit)
- Combination: A company combines the reasearch of different departments to develop a new product. (combinde explicit)
- Internalization: A student learns howto drieve a car by practicing driving. (explicit to tacit)
Michael Porter identified four generic competetive strategies
Please name and explain these generic competitive strategies and provide for each strategy an example of a firm which builds on it.
Positioning requires trade offs
- The essence of strategy is
choosing to perform activities differently or to perform different activities than rivals. - Perform an industry analysis to understand the factors that shape profitability at the industry level.
Michael Porter identified four generic competetive strtegies
We discussed in class the concept of “hybrid strategies”.
- What does that mean and how does this concept differ from Porter`s concept of “stuck-in the-middle”?
- Provide an example of a firm following a hybrid strategy.
Employed in industries where it is difficult to achieve a sustainable competitive advantage.
- needs to be carefully planned & executed
- By combining technologies companies try to achieve both differentiation and at the same time reduce costs across the value chain.
Examples
mass customization,
data analytics and new technologies
- Starbucks: large numbers of stores and standardized prosesses and offering permium product experience (high-quality coffe, comfortable environment)
”Stuck In The Middle” = When firms fail to implement a specific strategy
- they fall into competitive disadvantage compared to their competitors.
- Because trying to do too much
- lead to a blurring of the companies focus and lack of clear differentiation from the competitors.
Jobs to Be Done (JTBD) Framework
A theory for understanding customer needs by focusing on the jobs customers hire products or services to accomplish.
- customers hire products
”When [situation], I want to [motivation], so I can [desired outcome].” - important in innovation
Key Concepts
- Functional Jobs: Practical tasks (e.g., commuting to work).
- Emotional Jobs: Feelings or experiences (e.g., feeling secure).
- Social Jobs: Interactions and perceptions (e.g., being seen as successful).
Benefits
- Customer-Centric Innovation: Develop relevant solutions.
- Differentiation: Stand out from competitors.
concept of “hybrid strategies”
Dual Transformation Approach
A strategic framework guiding organizations to transform their existing business (Transformation A) while simultaneously creating new growth opportunities (Transformation B).
Key Components:
-
Repositioning the Core
(Transformation A):
Focus: Improve and adapt the current business.
Goal: Maintain relevance and profitability. -
Creating the New
(Transformation B):
Focus: Develop new, innovative business models or markets.
Goal: Build new revenue streams. -
Capabilities Link:
Represents shared resources and capabilities between Transformations A and B.
Goal: Create synergies and enhance overall transformation.
Michael Porter identified four generic competetive strtegies
Explain the Structure-conduct-performance paradigm
1. Structure
refers to the characteristics of the market, including:
-
Number of Buyers and Sellers:
Whether the market is a monopoly, oligopoly, or perfectly competitive. -
Product Differentiation:
The degree to which products are differentiated from each other. -
Barriers to Entry:
The ease or difficulty for new firms to enter the market. -
Cost Structure:
Including economies of scale and the proportion of fixed to variable costs. -
Distribution of Market Information:
How information is shared among participants.
2. Conduct
describes the behavior of firms in the market. This includes:
-
Pricing Strategies:
How firms set prices, including price discrimination, predatory pricing, etc. -
Product Strategy:
Decisions about product differentiation -
Research and Development:
Investment in innovation and new technology. -
Collusion and Competition:
Whether firms compete aggressively or engage in cooperative behaviors like cartels. -
Advertising:
The extent and nature of marketing efforts.
3. Performance
relates to the outcomes of market structure and conduct, both for individual firms and the market as a whole. Key aspects include:
-
Efficiency:
How effectively resources are used, including productive, allocative, and dynamic efficiencies. -
Profitability:
The level of profits firms are able to generate. -
Innovation:
The rate and effectiveness of new product or process development. -
Consumer Welfare:
How well the market serves the needs of consumers, including prices, quality, and variety of goods and services
Innovation can enable firm strategy.
What is an innovation?
- How does innovation relate to competitive strategy?
- Please explain using an example of innovation and explain how it has affected a firm`s conduct or industry dynamics.
A novel and useful idea that is successfully implemented.
It is associated with patterns of conduct and changes in competitive strategy. Typical areas include:
product, service, process and social
(administrative and organizational).
Examples:
- Apples iPhone (2007), the smartphone market disrupted mobile phone industry.
- Netflix (2000), the streaming video service changed the pay-TV industry
- Amazon (1990), online book sales disrupted the brick-and-mortal bookselling industry.
Acc. KBV, combinative & integrativ capabilities drive firm performance
Distinguish between these two concepts.
- Can a firm tradeoff between these two capabilities?
- Illustrate with an example.
The capabilities are complementary, meaning that they work together to create value.
-
Combinative = create new knowledge
innovation need to emphazise combinative capabilities,
➔ it requires breaking down silos between different departments
➔ ecouraging experimentation.
_ -
Integrative = use that knowledge to achieve strategic goals
efficiency need to emphasize integrative capabilities,
➔ it requires streamlining processes
➔ aligning departments around common goals.
Example:
Bitcoin. Combined existing knowledge in a new way.
➔ combined crypto currencies
(transactions between individuals without need of financial institutions),
➔ with blockchain
(prevent double spending, p2p network).
Accorting to M. Porter, firm profitability is driven by five forces
Please analyze the attractiveness of the video-streaming industry using P. 5 Forces.
- Please make a separate assessment of each force with a one-paragraph reasoning.
- Draw an overall conclusion.
Overall its an attractive industry and competetive industry. Companies in the industry & new entrants must adapt price & quality continously.
Threat of New Entrants - high, must be monitored
- low barriers to entry for established organizations in the entertainment industry - can launch service, have customer base
- high barrier to entry for new entrant who doesn`t produce video content, due to high investment to produce new or aquireing content
Power of Suppliers - low
- are the content creators and its many of them
Threat of Substitutes - moderate
- TV channels and cable networks still popular
- video streaming is more convenient and has more original content
Intensity of Rivalry - high
- many competitors competing for same customers
- customer expects low Price & high-quality conent
Christensen (2015) coined the term disruptive technologies
What is a disruptive technology?
- Please explain whether the emergence of video-streaming constitutes a disruptive technology.
New product or service that, ..
- target new or underserved markets
- are simpler and more affordable than existing solutions
- initially meet restistance from established players
- eventually displace established competitors
Video Streaming is a disruptive technology, cause ..
- initially target consumers who were not satisfied with pay-TV service
- offers more convenient and affordable way to watch movies
- the video game industry initially resisted the rise of mobile gaming
- over time it became increasingly popular and havedisplaced traditional services in many markets
