elect 1- 2nd exam Flashcards
Dynamic capabilities enable firms to quickly adapt to emerging markets or major technological discontinuities. This is also the set of abilities that make a firm more agile and responsive to change.
STRATEGIC INTENT
The two most commonly used tools for analyzing the external environment of the firm include Porter’s five-force model and stakeholder analysis.
In this model, the attractiveness of an industry and a firm’s opportunities and threats are identified by analyzing five forces
EXTERNAL ANALYSIS
Highly consolidated industries with a few large competitors
OLIGOPOLISTIC INDUSTRIES
An industry’s degree of rivalry is influenced by a number of factors. First, the number and relative size of competitors will shape the nature of rivalry. In general, the more firms competing that are of comparable size, the more competitive the industry will be.
The degree of existing rivalry.
influenced by the degree to which competitors are differentiated from each other. For example, if competitors are highly differentiated, they will experience less direct rivalry because their products are likely to appeal to different market segments.
The degree of existing rivalry.
is influenced by both the degree to which the industry is likely to attract new entrants and the height of entry barriers. This also refers to the threat that new competitors pose to current players within an industry.
Threat of potential entrants
Customers in the industry show a strong preference for the products and/or services of existing companies.
BRAND LOYALTY
Existing companies own exclusive rights to suppliers and distribution channels.
Access to suppliers and distribution channels
The degree to which the firm relies on one or a few suppliers will influence its ability to negotiate good terms. If there are few suppliers or suppliers are highly differentiated, the firm may have little choice in its buying decision, and thus have little leverage over the supplier to negotiate prices, delivery schedules, or other terms.
BARGAINING POWER OF SUPPLIERS
Finally, if the firm can _______ integrate (i.e., produce its own supplies), this will lessen supplier bargaining power
backward vertically integrate
this will lessen supplier bargaining power, and if the supplier can threaten to ______ integrate into the firm’s business, this will increase the supplier’s bargaining power.
forward vertically integrate
The degree to which the firm is reliant on a few customers will increase the customer’s bargaining power, and vice versa.
Bargaining power of buyers.
Substitutes are products or services that are not considered competitors, but fulfill a strategically equivalent role for the customer.
Threat of substitutes.
the firm most often begins with identifying the firm’s strengths and weaknesses. In Michael Porter’s model of a value chain, activities are divided into primary activities and support activities.
Internal Analysis
enable firms to quickly adapt to emerging markets or major technological discontinuities. This is also the set of abilities that make a firm more agile and responsive to change.
Dynamic capabilities
Sometimes the very things that a firm excels at can enslave it, making the firm rigid and overly committed to inappropriate skills and resources. The organizational culture may reward employees who are most closely connected to core competencies with higher status and better access to other organizational resources.
The Risk of Core Rigidities
The first entrants to sell in a new product or ser vice category.
first movers (or pioneers)
Entrants that are early to market, but not first.
early followers (also called early leaders)
Entrants that do not enter the market until the time the product begins to penetrate the mass market or later.
late entrants
The company that introduces a new technology may earn a long-lasting reputation as a leader in that technology domain. Such a reputation can help sustain the company’s image, brand loyalty, and market share even after competitors have introduced comparable products.
Brand Loyalty and Technological Leadership
if a product is complex, buyers must spend time becoming familiar with its operation; this time investment becomes a switching cost that deters the buyer from switching to a different product.
Exploiting Buyer Switching Costs
In an industry with pressures encouraging adoption of a dominant design, the timing of a firm’s investment in new technology development may be particularly critical to its likelihood of success.
Reaping Increasing Returns Advantages
Developing a new technology often entails significant research and development expenses, and the first to develop and introduce a technology typically bears the brunt of this expense. By the time a firm has successfully developed a new technology,
Research and Development Expenses
When a firm introduces a new-to-the-world technology, often no appropriate suppliers or distributors exist. The firm may face the daunting task of developing and producing its own supplies and distribution service, or assisting in the development of supplier and developer markets.
Undeveloped Supply and Distribution Channels
