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Mgmt 475 > Exam 1 > Flashcards

Exam 1 Flashcards

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1
Q

Components of the Macro Environment

A

Political and legal forces; demographic forces; global forces; technological forces; social forces

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2
Q

In general what are macro environment forces?

A

Forces that affect the general health and well-being of nation or the regional economy of an organization

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3
Q

What are the four most important macroeconomic forces?

A

Growth rate of the economy; interest rates; currency exchange rates; inflation (or deflation) rates

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4
Q

How does economic growth (macro environment force) effect a company?

A

It leads to an expansion in customer expenditures and tends to ease competitive pressures within an industry

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5
Q

How do interest rates (macro environment force) effect a company?

A

The determine the demand for a company’s product - important whenever customers routinely borrow money to finance their purchase of their products

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6
Q

How currency exchange rates (macro environment force) effect a company?

A

The define the comparative value of different national currencies and that has a direct impact on the competitiveness of a company’s products in the global marketplace

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7
Q

How does inflation (macro environment force) effect a company?

A

Price inflation can destabilize the economy, producing slower economic growth, higher interst rates, and volatile currency movements

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8
Q

How would economic decline effect mature industries?

A

Customer expenditures decrease leading to an increase in competitive pressures - price wars ensue.

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9
Q

How does deflation (macro environment force) effect a company?

A

Price deflation can destabilize the economy. As prices fall, real price of fixed payments goes up hurting companies with high levels of debt who make regular fixed payments.

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10
Q

Macro Environment: What recent global forces have affected business?

A

Barriers to international trade and investment have fallen allowing more countries to enjoy sustained economic growth

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11
Q

Macro Environment: How have technological forces affected business?

A

Technological change has accelerated making some products “obsolete” overnight. This lowers barriers to entry in markets creating new business opportunities (tech advancement are both creative AND destructive)

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12
Q

Macro Environment: How are demographic forces affecting business?

A

Industrialized nations are seeing aging customer populations creating business opportunists that cater to elderly

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13
Q

Macro Environment: How have social morals and values changed affecting business?

A

People are more health focused now creating business opportunities (light sodas and beers, hurt the tobacco industry, etc.)

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14
Q

Macro Environment: How do political and legal forces affect business?

A

Political processes make laws that constrain companies which create both opportunities and threats (deregulation of airlines allowed 29 new airlines to enter the industry and increased competition along routes resulting in price wars)

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15
Q

What is the purpose of the competitive forces model?

A

Help managers analyze opportunities and threats within the industry envirionment

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16
Q

List the 6 focuses in the competitive forces model (expansion of Michael E. Porter’s “Five Forces Model”)

A

Risk of entry by potential competitors; intensity of rivalry among established companies within an industry; the bargaining powers of buyers; the bargaining power of suppliers; the closeness of substitutes to an industry’s products; the power of complement provers

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17
Q

Competitive Forces Model: Factors affecting Risk of Entry of Potential Competitors

A

Potential competitors; economies of scale; brand loyalty; absolute cost advantages (superior production, control of inputs, access to cheaper funds); customer switching costs; government regulations

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18
Q

Competitive Forces Model: Factors affecting Rivalry Among Established Companies

A

Industry competitive structure; industry demand; cost conditions; exit barriers

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19
Q

Competitive Forces Model: Bargaining Power of Buyers

A

Buyers have choices between firms; when buyers purchase large quantities; supply industry depends upon buyers; switching costs are low and buyers can pit the supplying companies

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20
Q

Competitive Forces Model: Bargaining Power of Suppliers

A

Product suppliers sell has few substitutes; profitability of supplier not greatly affect by purchases of companies in given industry; companies would experience high switching costs; suppliers can threaten to enter suppliers industry

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21
Q

Competitive Forces Model: Substitute Products

A

If an industry’s products have few close substitutes, then companies in the industry have the opportunity to raise prices to earn additional products

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22
Q

Competitive Forces Model: Complementors

A

Complementors are companies that sell products that add value to (complement) the products of companies in an industry because, when used together, the use of the combined products better satisfies customer demands

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23
Q

Emergent Strategies

A

Unplanned responses to unforeseen circumstances taken by individual managers deep within an organization (autonomous action by low level managers and unplanned shifts by top-level managers)

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24
Q

Realized Strateges

A

Planned strategy -> Deliberate Strategy -> Realized Strategy

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25
Unrealized Strategies
Planned strategy -> unpredie\cted change -> unrealized strategy
26
What are the four main categories of business strategy?
Functional-level; Business-level; Global level; Corporate level
27
4 Levels of Strategy: Describe functional-level strategy
Directed at improving the effectiveness of operations within a company (marketing, materials mgmt, product development)
28
4 Levels of Strategy: Describe business-level strategy
Encompasses the business's overall competitive theme, the way it positions itself in the marketplace to gain a competitive advantage, and the different position strategies that can be used in a different industry setting (cost leadership, differentiation, etc.)
29
4 Levels of Strategy: Describe global level stretgies
Address how to expand operations outside the home country to grow and prosper in a world where competitive advantage is determined at a global level
30
4 Levels of Strategy: Describe corporate-level strategy
Answers the following questions: what business should we be in to maximize the long-run profitability and profit growth; how to increase presences in these business to gain a competitive advantage
31
Value Inovation
When innovation pushes out the efficiency frontier in an industry, allowing for greater value to be offered through superior differentiation at a lower cost than previously possible
32
Market Segmentaiton
The way a company decided to group customers based on important difference in their need to gain a competitive advantage
33
Standardization Strategy
When a company decided to ignore different segments, and produce a standardized product for the average consumer
34
Segmentation Srategy
When a company decided to serve many segments, or even the entire market, producing different offerings for different segements
35
Focus Stratgey
When a company decides to serve a limited number of segments, or just one segment
36
Generic Business-level stargegy
A strategy that gives a company a specific form of competitive position and advantage vis-a-vis its rivals that results in above-average profitability
37
Broad low-cost strategy
When a company lowers costs so that it can lower prices and still make a profit
38
Broad differentiation strategy
When a company differentiates its product in some way, such as by recognizing different segments or offering different products to each segment
39
Focus low-cost strategy
When a company targets a certain segment or niche, and tires to be the low-cost player in that niche
40
Focus differentiation stratgy
When a company targets a certain segments or nice, and customizes its offering to the needs of that particular segment through the addition of features and fuctions
41
When a company is redefine its market and creating a new business-level strategy, what are the 4 areas managers should consider:
What to eliminate to reduce cost; what they can reduce to lower costs; what they can raise to increase value, what can they create to increase value
42
Fragmented Indsustry
An industry comprised of small- and medium-sized companies
43
Chaining
Strategy designed to obtain the advantages of cost leadership by establishing a network of linked merchandising outlets interconnected by information technology that functions as one large company
44
Franchising
Strategy in which the franchiser grants to its franchisees the right to use the franchiser's name, reputation, and business model in return for a franchise fee and often a percentage of the profits
45
Mass Market
One in which large numbers of customers enter the market
46
Product Proliferation Strategy
The strategy of "filing the niches," to catering to the needs of customers in all market segments to deter entry by competitiors
47
Limit Price Strategy
Charging a price that is lower than that required to maximize profits in the short run, but is above the cost structure of potential entrants
48
Strategic Commitments
Investments that signal an incumbent's long-term commitment to a market, or segment of that market
49
Price Signaling
The process by which companies increase or decrease product prices to convey their intentions to other companies and influences the price of industry's products
50
Price Leadership
When one company assumes the responsibility for determining the pricing strategy that maximizes industry profitability
51
Non-price competition
The use of product differentiation strategies to deter potential entrants and manage rivalry within an industry
52
Product Development
The creation of new or improved products to replace existing products
53
Market Development
When a company searches for new market segments for a company's existing products to increase sales
54
Leadership Strategy
When a company develops strategies to become the dominant player in a declining industry
55
Niche Strategy
When a company focuses on pockets of demand that are declining more slowly than the industry as a whole to maintain profitability
56
Harvest Strategy
When a company reduces to a minimum the assets if employs in a business to reduce its cost structure and extract or "milk" maximum profits form its investment
57
Divestment Strategy
When a company decides to exit an industry by selling off its business assets to another compnay
58
Chapter 7 Bankruptcy
Firms experiencing this form of bankruptcy are past the stage of reorganization and must sell off any un-exempt assets to pay creditors (ie. liquidation)
59
Chapter 11 Bankruptcy
Allows the firm the opportunity to reorganize its debt and to try to re-emerge as a healthy organization; firm will contact its creditors in an attempt to change the terms on loans such as the interest rate and dollar value of payments
60
What is the Balanced Scorecard Approach used for?
Used to set criteria for assessing performance of a company according to multiple perpectives
61
What are the four perspectives to consider when using the Balanced Scorecard Approach
Financial perspective; customer perspective; internal perspective; innovation and learning
62
Value Chain
The idea that a company is a chain of activities that transforms inputs into output that customers value
63
Definition of Primary Activities in a Value Chain
Activities related to the design, creation, and delivery of the product, its marketing, and its support and after-sales services
64
List Primary Activities in a Value Chain
Research and Development; Production; Marketing and Sales
65
Definition of Support Activities in a Value Chain
Activities of the value chain that provide inputs that allow the primary activities to take place
66
List Support Activities in a Value Chain
Materials Management (Logistics); HR; IS; Company Infrastructre
67
Jay Barney's 4 Attributes of Sustainable Competitive Advantage
Efficiency; quality; innovation; customer responsiveness

Mgmt 475 (4 decks)

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