SLIDES WEEK 2 Flashcards
which 2 from porter’s 5 forces: switching costs, potential for vertical integration
Bargaining power of suppliers
what is the 6th one from porters five forces
roles of components
competitive advantage:
rare, durable, inimitable, valuable
rare and valuable
sustainable competitive advantage:
rare, durable, inimitable, valuable
all of them
Resources are difficult or impossible to imitate when they are:
- Tacit
- Path dependent
- Socially complex (comes from relationships, trust, or company culture)
- Causally ambiguous
What is the focus of a Red Ocean Strategy?
Competing in an existing market by beating the competition.
How does a Red Ocean Strategy handle demand?
It exploits existing demand and fights over market share.
What trade-off does Red Ocean Strategy accept?
you either differentiate or cut costs
What is the goal of a Blue Ocean Strategy?
To create uncontested market space and make the competition irrelevant.
What is unique about the value-cost relationship in Blue Ocean Strategy?
It breaks the trade-off by offering both differentiation and low cost.
strengths of discounted cash flow methods
- provide concrete financial estimates
- timing, cash flows, time value of money and risk is taken into account
weaknesses discounted cash flow
- deceptive: if future profits are wrong/unrealistic then it is misleading
- not good for long term and risky projects
- may fail to capture strategic importance
When is the real options method most useful?
When there’s high uncertainty, as in innovation or R&D projects.
Why might real options be unrealistic in practice?
Some projects require full investment upfront, not just a small initial cost.
screening questions, 3 sorts
role of customer
role of capabilities
project timing and cost
is advances r&d projects commercial
not immediate
which one takes the longest to pay off: advanced, breakthrough, platform, derivative?
advanced
which one takes the quickest to pay off: advanced, breakthrough, platform, derivative?
derivative
Gamified Experiment
Participants played a game where they “built a hotel” using a limited budget.
