Chapter 6: Strengthening A Company’s Competitive Position: Strategic Moves, Timing, And Scope Of Operations

Question 1

Offering = or better products at lower prices

Answer 1

Offensive

Question 2

Leapfrogging competitors by being first to market with next generation tech and products

Answer 2

Offensive

Question 3

Pursuing continuous product innovation to draw sales away from less innovative rivals

Answer 3

Offensive

Question 4

Pursuing disruptive product innovation to create new markets

Answer 4

Offensive

Question 5

Adopting and improving good ideas from other firms

Answer 5

Offensive

Question 6

Using hit and run/guerilla warefare tactics

Answer 6

Offensive

Question 7

Launching preemptive strike to capture a rare opportunity or secure an industry’s limited resources

Answer 7

Offensive

Question 8

Which rivals to attack with offensive strategies

Answer 8

Market leaders that are vulnerable, runner-up firms with weaknesses in areas where challenger is strong, struggling enterprises on the verge of going under, small local and regional firms with limited capabilities

Question 9

Blue Ocean Strategy

Answer 9

Discovering or inventing new industry segments that create altogether new demand

Question 10

Blocking avenues open to challengers

Answer 10

Defensive

Question 11

Introduce new features

Answer 11

defensive

Question 12

Add new models

Answer 12

Defensive

Question 13

Close vacant niches

Answer 13

Defensive

Question 14

Have economy options

Answer 14

Defensive

Question 15

Announce product/price earlier

Answer 15

Defensive

Question 16

Grant volume discount to dealers and distributors to discourage experimentation with other suppliers

Answer 16

Defensive

Question 17

Signal to challengers that retaliation is likely

Answer 17

Defensive

Question 18

Publicly announce mgmt’s commitment to maintaining market share

Answer 18

Defensive

Question 19

Publicly committing to matching competitors prices

Answer 19

Defensive

Question 20

Maintaining war chest of cash and marketable securities

Answer 20

Defensive

Question 21

Making occasional strong counter-response to moves of weak competitors to enhance the firm’s image as a tough defender

Answer 21

Defensive

Question 22

Conditions where being 1st mover is advantage

Answer 22

1) Pioneering helps build a firm’s reputation and create strong brand loyalty
2) First-movers customers will face significant switching costs
3) When property rights protections thwart rapid imitation
4) Early lead enables movement down the learning curve ahead of rivals
5) First-mover can set technical standard for the industry

Question 23

5 Conditions when late-movers have advantage

Answer 23

1) Market takeoff depends on development of complimentary products or services that currently aren’t available
2) New infrastructure is required before buyer demand can surge
3) Buyers need to learn new skills or adopt new behaviors
4) Buyers encounter high switching costs
5) Influential competitors are in a position to delay efforts of first mover

Question 24

Scope of the firm

Answer 24

Range of activities the firm performs internally, the breadth of its product and service offering, extent of its geographic market presence, and mix of businesses

Question 25

Horizontal scope

Answer 25

Range of product and service segments that a firm serves within its focal market

Question 26

Vertical scope

Answer 26

Extent to which a firm’s internal activities encompass one, some, many, or all of the activities that make up an industry’s entire VC system, ranging from raw material production to final sales and service activities

Question 27

Horizontal merger and acquisition strategies

Answer 27

Combining the operation of 2 companies is an attractive strategic option for achieving operating economies, strengthening the resulting company’s competencies and competitiveness, and opening avenues of new market opportunity

Question 28

5 objectives of Horizontal merger and acquisition strategies

Answer 28

1) New product categories 2) Increase cost-efficiency 3) Expand geographic coverage 4) Quick access to new tech or complementary resources and capabilities 5) Converging industries whose boundaries are being changed by tech and new market opportunities

Question 29

Vertical integration

Answer 29

Extends a firm’s competitive and operating scope within the same industry

Question 30

Full vertical integration

Answer 30

All stages of vertical chain

Question 31

Partial integration

Answer 31

Select stages of vertical chain

Question 32

Tapered integration

Answer 32

Outsource and perform internally simultaneously

Question 33

Backwards integration

Answer 33

Performing industry VC activities previously performed by suppliers

Question 34

Forward integration

Answer 34

Performing industry VC activities closer to the end user

Question 35

Advantages of vertical integration

Answer 35

1) Achieve greater competitiveness 2) Boost profitability

Question 36

Disadvantages of vertical integration

Answer 36

1) More capital investment 2) Increase business risk 3) Slower advance technologically 4) Less flexibility to acommodate customer wants if they don’t make a part 5) Capacity matching problems 6) Requires developing new skills and capabilities

Question 37

Outsourcing

Answer 37

Contracting out certain VC activities to outside specialists and strategic allies

Question 38

When to outsource

Answer 38

1) can be done better and more cheaply 2) activity isn’t crucial to sustainable competitive advantage 3) improves org flexibility and speeds time to market 4) reduces risk exposure to changes in tech and buyer preferences 5) allows more focus on core business and competencies

Question 39

Strategic alliance

Answer 39

Formal agreement between 2+ companies to work cooperatively toward some common objective

Question 40

Joint venture

Answer 40

Type of strategic alliance that involves establishment of an independent corporate entity that is jointly owned and controlled by the two partners

Question 41

Important considerations for strategic alliances

Answer 41

1) don’t be dependent on them for key capabilities 2) pick a good partner 3) Be sensitive to cultural differences 4) Be open and trustworthy (to a degree) 5) make sure both sides are delivering 6) structure so decisions can be made quickly 7) Adjusting and managing over time