1st Half

Question 1

What is strategy?

Answer 1

1) the set of actions managers take in order to outperform competition and achieve superior profitabiltiy.

2) a central, integrated, externally oriented concept of how the business will achieve its objectives

Question 2

What constitutes a competitive andvantage?

Answer 2

Meeting customer needs either more effectively (higher value perceived) or more efficiently (at lower cost)

Question 3

What is the winning strategy test?

Answer 3

A winning strategy must pass 3 tests:

1) fit test
2) competitive advantage test
3) performance test

Question 4

What is the strategy making - strategy executing process?

Answer 4

1) develop vision, mission, and a set of core values
2) set objectives to measure performance and track progress
3) craft a strategy to reach objectives
4) execute efficiently and effectively
5) monitor and correct

Question 5

What is a strategic vision?

Answer 5

Management’s aspirations for the company’s future and the course and direction intended to achieve them. It provides direction and sets the far apart from its rivals

Question 6

List some vision statement Do’s and Dont’s

Answer 6

Do’s:
be graphic
be forward looking
keep it focused
have some flexibility
keep it feasible
make it memorable

Dont’s:
don’t be generic
don’t use superlatives
don’t be present looking
don’t use uninspiring terms

Question 7

What is a mission statement?

Answer 7

A mission statement defines present operations: what the company does and who it serves. it is focused on describing the business and not on making a profit.

Question 8

What are core values?

Answer 8

The beliefs, and behavioural norms which make up the firm’s culture

Question 9

What are the characteristics of well stated objectives?

Answer 9

Well stated objectives are:
1. Specific
2. Measurable
3. Challenging
4. Time bound

Question 10

What types of objectives can a company set?

Answer 10

1) financial objectives (focused internally)
2) strategic objectives (focused externally like market position)

Question 11

What are the three levels of strategy?

Answer 11

1) Corporate / International level (product diversification / geographic diversification: int/global/transnational/multidomestic)

2) Business level (cost leadership vs differentiation strategy)

3) Function / Department level (marketing, finance, operations strategy)

Question 12

What is the PESTEL analysis

Answer 12

Macro environment analysis of strategic components covers:
1) political
2) economic
3) social
4) technological
5) legal and regulatory
factors

Question 13

Describe Porter’s five forces

Answer 13

Suppliers, substitutes, buyers, and potential new entrants determine rivalry among competitors.

Question 14

What is a strategic group?

Answer 14

A group consisting of industry members with similar competitive approaches and positions in the market

Question 15

How do you build a strategic group map?

Answer 15

1. identify competitive characteristics
2. plot firms on a two variable map using pairs of competitive characteristics
3. assign firms occupying about the same map location to the same strategic group
4. draw circles around each strategic group proportional to the size of the group’s share of total industtry sales revenue

Question 16

What variables are typically used to create group maps?

Answer 16

1. price vs quality
2. geographic coverage (local, regional, national, global)
3. Product line breadth (wide, narrow)
4. Degree of service offered
5. distribution channel (retail, wholesale, internet, multiple)
6. degree of vertical integration
7. degree of diversification

Question 17

What should a company do when its industry is attractive, relatively unattractive, or unattractive?

Answer 17

in order it should: aggresively invest, protect its present position, find a buyer to acquire its business

Question 18

What is a SWOT analysis?

Answer 18

a tool for identifying situational reasons underlying a firm’s performance:

Strengths: the basis for strategy (what to leverage)

Weaknesses: deficient capabilities

Opportunties: the basis for strategic objectives

Threats: the basis for defense strategies

Question 19

What is the VRIN test?

Answer 19

To achieve a sustainable competitive advantage, a firms resources should have the following characteristics:

1. Valuable (allow to pursue opportunities, neutralize threats)
2. Rare
3. Inimitable (difficult or costly to imitate)
4. Nonsubstitutable

Question 20

Which two factors make it hard to imitate resources and capabilities?

Answer 20

1. Social complexity: culture, interpersonal relations, customers and suppliers relationships, R&D.
2. Casual ambiguity: how the firm uses resources and capabilities.

Question 21

What types of resouces are there?

Answer 21

Tangible and Intangible

Question 22

What is the purpose of value chain analysis

Answer 22

The value chain outlines the primary activities and related support activities that create customer value. A value chain analysis permits a deep look at the firm’s cost structure and its ability to profitably offer low prices.

Question 23

What is a comparative value chain analysis?

Answer 23

a comparison, activity by activity, of how effectively and efficiently a firm delivers value to its customers relative to its peers

Question 24

Which are the main 2 strategies for building competitive advantage?

Answer 24

1. Low cost strategy
2. Differentiation strategy

Question 25

List some cost cutting measures

Answer 25

1. economies of scale 2. learning curve 3. supply chain efficieny 4. bargaining power 5. selling direct to consumers bypassing distributors 6. reduce material handling and shipping costs by having suppliers locate plants or warehouses close to the firm

Question 26

which market circumstances favor low cost strategies?

Answer 26

1. lots of competition 2. many substitutes 3. few ways to differentiate 4. buyers incur low switching costs

Question 27

how do you effectively approach differentiation?

Answer 27

1. study carefully buyers needs 2. incorporate features that appeal to buyers (tangible and intangible features) 3. higher prices to recoup differentiation costs

Question 28

which areas of production and distribution should a company look at for driving up product value

Answer 28

1. Sales and marketing 2. Quality control processes 3. Product features and performance 4. Customers services 5. Production R&D 6. Technology and innovation 7. Input quality 8. Employee skill and training

Question 29

Why is differentiation difficult for rivals to imitate?

Answer 29

1. reputation 2. buyers relationships 3. unique product or service

Question 30

Which market circumstances favor differentiation?

Answer 30

1. buyers' needs are divers 2. few firms follow a similar differentiation approach 3. rapid change in technology and product features

Question 31

What does supplier's bargaining power depend on?

Answer 31

- company's ability to vertically integrate and take the supplier's place - fraction of the cost of supplier's product relative to the total cost of the good - whether the supplier provides a differentiated input difficult to outsource

Question 32

Describe a company's value chain

Answer 32

Primary activities: 1. supply chain management 2. operations 3. distribution 4. sales and marketing 5. customer service Support activities and costs 1. R&D, technology 2. HR 3. General administration

Question 33

Important factors to consider when picking strategic alliances

Answer 33

1. cultural affinity 2. common goals 3. ensuring partners respect their commitment 4. not choosing a direct competitor