Sevi Exam 1 Flashcards

1
Q

Understand what is meant by strategy and strategic management.

A

i. Strategy: A set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors.

ii. An integrative management field that combines analysis, formulation, and implementation for competitive advantage.

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2
Q

What are the three elements that provide the basis of a good strategy?

A

i. Analysis of internal and external environment.

ii. Formulation of corporate business and functional strategies.

iii. Strategy implementation and a set of coherent actions to guide policy.

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3
Q

What are the elements of Tesla’s strategy? Competitive Challenge? Guiding policy? Coherent actions?

A

i. Competitive Challenge:
1. Manufacture attractive and affordable vehicles with new technology and build the required tools and facilities to help.

ii. A guiding policy:
1. Building cost-competitive mass-market vehicles and making significant investments in lithium-ion batteries,

iii. Coherent Actions:
1. Ramping up productions to help economies of scale.
2. Outsource production in different countries like Shanghai.
3. Make technology available to the public.

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4
Q

What is meant by competitive advantage? Competitive parity? Competitive disadvantage?

A

i. Competitive Advantage: When a firm’s performance exceeds the other competitors or industry average.

ii. Competitive Parity: When two or more firms perform at the same level.

iii. Competitive disadvantage: When a firm underperforms its rivals or the industry average.

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5
Q
  • Understand sustainable competitive advantage.
A

i. Sustainable competitive advantage means a firm can outperform its competitors or the industry average over a long time.

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6
Q
  • What actions can a firm take to gain competitive advantage?
A

i. Provide goods or services that consumers value more highly than competitors.

ii. Provide value at a lower price.

iii. Have rewards for that are superior in value creation.
1. Example: Profitability and Market share.

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7
Q
  • Why is it important for a firm to establish a unique strategic positioning?
A

i. This allows firms to provide value to customers while effectively managing costs. The better value creation, the greater the economic contribution and likelihood of competitive advantage.

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8
Q
  • Who are the stakeholders of a firm? What are the interests/claims of different stakeholder groups? What role do stakeholders play in strategic decision-making?
A

i. Stakeholders are organizations, groups, or individuals who can affect or are affected by a firm’s actions.

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9
Q
  • Understand the difference between internal and external stakeholders. What are the three characteristics of stakeholders that need to be assessed in developing a stakeholder strategy?
A

i. Internal Stakeholders: Employees, Stockholders, Board Members.

ii. External Stakeholders: Customers, suppliers, creditors, anyone outside the business.

iii. Power, Legitimacy, Urgency. (Do something it might not want to do, must be legally valid, and must require immediate attention.

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10
Q
  • Be able to articulate the steps in a stakeholder impact analysis, and how this analysis is used by strategic decision-makers.
A

The stakeholder analysis analyzes just how important each of our stakeholders are and helps us assess the needs and risks that they each pose.

 5 total steps. (Who are stakeholders, What interest they have, What opportunities, What responsibilities? What should we do?)

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11
Q
  • Understand the pyramid of social responsibility, and the expectations for firms at each level in the pyramid.
A

i. 5 LEVELS, From bottom to top, Economic  Legal  Ethical  Philanthropic.

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12
Q
  • What is meant by vision? Mission? Values? What should each of these statements convey to employees, managers, and other stakeholders of the firm?
A

i. Vision: Captures an organization’s purpose and aspirations. Conveys a sense of purpose and motivates / inspires managers and employees. Captures the hearts and minds of key stakeholders.

ii. Mission: Describes what the organization does: Communicates how the firm will achieve its objectives, the products it will provide, markets it will compete in, and customers they want to serve.

iii. Values: Principal guidelines of behavior as employees work to achieve a firm’s vision and fulfill the mission. Helps employees understand company culture and provides ethical standards.

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13
Q
  • What is the role of vision, mission, and values for strategic management? Why are they important?
A

i. They lay the groundwork and foundation for a firm’s direction and goals. This is important because they determine how a firm will achieve it’s goals and helps create a groundwork to employ a winning strategic process.

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14
Q
  • What is the difference between a vision statement and a mission statement?
A

i. Vision = What a firm wants to achieve.

ii. Mission = How the vision will be achieved. The steps that need to be taken.

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15
Q
  • Be able to distinguish between a customer-oriented vision statement and a product-oriented vision statement.
A

i. Customer-Orientated focuses on solving problems for customers.

ii. Product-Orientated focuses on the firm, and its products and services given.

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16
Q
  • Understand the role of core values in impacting employee behavior.
A

i. They define a guideline of legal, ethical, behavioral actions that encourage preferred behavior.

17
Q
  • What is meant by perceptual acuity? Why is this important?
A

i. Perceptual acuity is the ability to perceive changes and trends in society, but also knowing how to capitalize on these trends to grow and further the business. This is important because businesses must know how to grow and adapt.

18
Q
  • What is a SWOT analysis? How is it used?
A

SWOT is a basis technique to analyze the firm and industry. It helps identify strengths, weaknesses, opportunities, and threats that a firm faces in comparison to other firms, both internally and externally.

19
Q
  • Understand what is meant by environmental scanning, monitoring, and competitive intelligence: How are these tools used in assessing the external environment?
A

i. -Environmental Scanning: Detecting changes already underway. Helps predict changes to come.

ii. Monitoring: Tracking and identifying evolution of trends, activities, events, and facts outside of the organization.

iii. Competitive Intelligence: Understanding the industry and the strengths/weaknesses of competitors.

20
Q
  • What is environmental forecasting? How might forecasting impact the development of strategies for the firm?
A

i. Environmental Forecasting is used to help predict change in terms of direction, speed, scope, and intensity. They help us measure trends and responses to see how effectively we can act upon certain factors.

21
Q
  • What is scenario analysis? How is it used in strategy formulation?
A

i. Scenario Analysis is an assessment of alternative futures. It’s a way for us to determine how trends might affect an issue.

22
Q
  • What are the six areas of the general environment that should be analyzed in an external assessment? Be able to identify examples from each of these six areas that might impact the strategy of a firm.
A

i. Demographic, Sociocultural, Political/Legal, Technological, Economic, and Global.

23
Q
  • Be able to articulate how the growth of the digital economy has impacted businesses and industries.
A

i. -Increased Globalization. Disintermediation of markets. (Getting rid of the middleman).
ii. Reduced Assets. If I wanted to be a retailer, I had to buy or lease stores. Now I just need the internet.
iii. Increased collaboration – Zoom call.
iv. Increased customer expectations.

24
Q
  • Understand Porter’s Five Forces and its application. What are the key objectives of a Five Forces analysis? What factors impact the intensity of impact of each of the five forces on industry profitability?
A

I. Five forces = Competition intensity, threat of new entrants, power of suppliers, power of buyers, threat of substitution.

II. Helps firms analyze the competition, potential, and opportunities of an industry, market, or firm.

25
Q
  • Understand the difference between substitutes and complements. Be able to identify complements and substitutes for an industry’s products/services. Be able to distinguish between substitutes and competitors.
A

i. Substitutes are products that come from outside the industry. They limit the potential returns of an industry. For example, instead of buying a car, I could take the bus or walk.

ii. Compliments are products or services that are integral to a product / service’s usage. For example, Apps on an iPhone are integral to an iPhone’s success.

26
Q
  • What are strategic groups? How are they useful in understanding competitive dynamics in an industry?
A

i. Strategic groups are clusters of firms that can share similar strategies. This is useful in analyzing which competitors are utilizing the best practices and helps us identify how we need to differentiate.

27
Q
  • Understand the concept of value and how value is created within an organization.
A

i. Value = Amount buyers are willing to pay for the firm’s products and services.

28
Q
  • Be able to distinguish between primary activities in the value chain and support activities.
A

i. Primary Activities = Logistics, Operations, Marketing and Sales, Services.

ii. Support Activities = General Admin. HRM, Technology Development, Procurement.

29
Q
  • Be able to identify specific activities and processes that are executed within each of the primary and support activities of the value chain.
A

i. Primary Services:
ii. -Logistics – Managing resources and their transportation methods to ensure sufficient raw materials.
iii. Operations – Transforming inputs into final products.
iv. Marketing and sales = Your more traditional methods of promoting products and services to the customer itself.
v. Service: Providing services to enhance or maintain product value.

i. Secondary Services
vi. Procurement: How a firm purchases input.
vii. Technology Development: Providing tech support to all firm operations.
viii. HR: Recruitment, hiring, training and development, etc.

30
Q
  • Understand the value chain for service industries – and the differences as compared to the value chain for product-based industries.
A

i. Product based is standardized and simplified or optimized. Service based value chain is highly evolving and differs from each aspect of business, but also the person who is on the receiving end

31
Q
  • How do the interrelationships of activities within the firm create value? How do firms create value through interrelationships of activities with key outside stakeholders (Suppliers, customers)?
A

i. -Interrelationships are key to forming strong business ties and increasing competitive advantage due to the proper cooperation and alignment. If you can get everyone on the same page, and create that sense of reliability, it can greatly smooth out the day-to-day operations and processes down the line.

32
Q
  • What is meant by vertical integration? Be able to identify examples of forward vertical integration and backward vertical integration.
A

i. Vertical Integration is the process of a firm being able to strategically control different parts of the business without relying on other suppliers or partners.
ii. Backwards integration example can be like traveling back to raw materials. If you’re a firm, and you own your own resources, you don’t have to rely on anyone else.
iii. If you are a retailer, you can become your own manufacturer and get your own resources.

33
Q
  • Understand – and be able to identify examples of tangible resources, intangible resources, and capabilities.
A

i. Tangible Resources = Resources that can be seen, touched, or quantified. (Equipment, Cash, Locations, Data algorithms, Patents, Copyrights, etc.)

ii. Intangible Resources = Assets that are difficult for competitors to account for or imitate. They are often unique. (Examples: Trust, Ideas, Employee Experience, Managerial Skills, etc.)

34
Q
  • What are the characteristics of resources that can provide the basis for competitive advantage?
A

i. -They must be a core competency or follow the VRIN model. Which is talked about down below.

35
Q
  • What characteristics make a resource valuable? Rare? Inimitable? Non-substitutable?
A

i. Valuable: Enables a firm to form or implement strategies to improve efficiency or effectiveness.
ii. Rare: Competitors don’t have it.
iii. Imitable: It’s unique and unable to be copied. It can be dependent on path, have causal ambiguity, or be something socially complex.
iv. Non-Substitutable: No alternatives available that can achieve the same results.

36
Q
  • Be able to describe the characteristics that make a resource inimitable: physical uniqueness, path dependency, causal ambiguity, social complexity.
A

i. Physical Uniqueness: Resources that are physically unique, therefore impossible to duplicate.

ii. Path Dependency: Hard to duplicate because of all that has happened. The resource changes so much that it’s impossible to recreate without going through the full process.

iii. Causal ambiguity: Impossible for competitors to explain how the resource exists, or how to recreate it.

iv. Social Complexity: Competency emerged from cultural, interpersonal relationships built by firm and customers.

37
Q
  • Understand financial ratios, and how they can help to understand the performance of the firm. What comparisons are necessary to assess firm performance?
A

i. 5 Types of ratios: short term, long term, Asset Management, Profitability, and Market Value. This helps measure a firm’s performance.

ii. Meaningful ratios must have an analysis of how said ratios change over time. They must compare within the industry norms, and with key competitors.

38
Q
  • What is meant by the balanced scorecard? What four perspectives are incorporated into the balanced scorecard?
A

i. Balanced Scorecard is a evaluation system that uses multiple perspectives in assessing a firm’s performance. Here we want to focus on specific and measurable goals.

i. 4 Key Metrics are:
1. Business Processes.
2. Decisions and actions.
3. Key Resources and actions.
4. Employee skills and productivity.