Open Response Questions Flashcards
What is the purpose of a strategy?
The method by which an organization can reach objectives and grow the business in the market. Basically an approach to competing in the marketplace. It is a work in progress, not a matter of fact. The creation of a unique and valuable position
How is strategy execution different from strategy formulation?
The formulation of a strategy deals with identification of an opportunity and assessing the risks associated with it, whereas execution deals with the organizational structure and governance structures implementing said plan
How can a company / rival, particularly one that is weaker, change the game to gain a competitive advantage?
Several methods to do this: cost-based advantage (get cheaper products), differentiation (make markedly different products that can be construed as better than others), focus on a narrow market type (niche), develop unmatched resources (durable competitive advantage in production)
Why is it important to compare and analyze firms within their industry?
If firms do not compare themselves closely (internally and externally) to their competitors, they can lose their competitive advantages and as a result lose their standing in their industry
What are three ways in which firms can establish a competitive advantage?
Cost-based advantage, differentiation, narrow market type, unmatched resources
How are cost drivers used to assess competitive advantage?
Cost driver is a structural factor which causes the change in the cost of an activity . This changes the value chain, and whichever competitor controls their cost drivers better can have a competitive cost advantage.
How does a value proposition help a firm analyze its competitive advantage?
Once a firm has a defined value proposition, its success directly informs a firm as to their position in the market. Then, price and quality must be weighed against each other to have a balance for a company, as a competitive advantage is gained.
Which has a greater impact on profitability: variations in levels of cost or in willingness to pay? Why?
Willingness to pay will prove to be more profitable because by understanding customer value of a product you can more accurately gauge the price which customers are willing to pay and charge up to the point where the customers marginal benefit equals their marginal cost
Explain why the concept of strategic advantage is central to the study of strategic management.
Having a central organizational strategy that is superior to that of your competitors will allow for a business to be more successful than others (i.e. Apple)
Name two ways Andrews’ ideas link to other strategic frameworks / themes we have discussed in class.
Andrews=sustained competitive advantage. Similar to five forces, always need to be vigilant of competitive atmosphere and changing to conditions in order to maintain your advantage.
Describe the role / use of Hambrick and Frederickson’s strategy diamond. Why / how is it useful?
It uses economic logic as the central force behind strategy, which is key as it should be the driving force behind how a firm will compete in an industry. Furthermore, it uses economic logic as a base to address the other 4 key components: staging (speed/sequence of delivery), differentiation (how will we make ours better), vehicles (how are we going to deliver it to market), and arenas (where will we be active)
Business Model – describe elements and explain how it relates to other readings and frameworks (i.e., Strategy Diamond by Hambrick and Frederickson, Five Forces Model (Porter), Resource Based View, and innovation / entrepreneurial readings).
- Key partners relatable to the five forces model: how does the bargaining power of suppliers, and the threat of their substitute product change how we approach our product?
- Key activities-What does our value proposition require us to do? Relatable to economic logic
o Key resources- Relatable to resource based view: what are our most important resources that help us create a competitive advantage? (Tangible/intangible resources)
o Cost structure- Relateable to economic logic in Hambrick and Fredrickson’s diamond, what about our product makes economic sense to a consumer? lower cost thru a scaled advantage or a differentiation that makes the price difference worth it (porter)
o Value propositions- relates to economic logic that is the backbone in Hambrick and Fredrickson’s diamond, what about our product provides value to the consumer? What need of the customer are we satisfying? How will returns be gained through the delivery of our product
o Customer relationships- who are we creating value for/understanding the customer: relatable to buyer bargaining power, how do their needs shape our product specifications (price, value)
o Channels- how do we transmit our value proposition to our segmented customers? Vehicles in Hambrick/Fredrickson- what is the best manner in which we can deliver a product to the market?
o Revenue streams- relatable buyer bargaining power in Porter. How much force can the buyers exert on a producer to provide lower costs/higher value? How do they shape the reality for the seller?
o Customer segments- arenas in Hambrick and Fredrickson’s diamond: how do we divvy up our target market? Identify which consumers value what in our product
Key Partners
relatable to the five forces model: how does the bargaining power of suppliers, and the threat of their substitute product change how we approach our product?
Key Activities
Relatable to economic logic
Key Resources
Relatable to resource based view: what are our most important resources that help us create a competitive advantage? (Tangible/intangible resources)
