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4490 Capstone > Exam/Quiz 1 > Flashcards

Exam/Quiz 1 Flashcards

(64 cards)

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1
Q

Business strategy

A

How to build a sustainable competitive advantage in a discrete and identifiable market

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2
Q

Corporate strategy

A

Overall plan for creating value in a diversified company

Resources united in one firm, not necessarily one market

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3
Q

Strategy

A

Choosing to perform activities differently or to perform different activities than rivals
Creation of a unique and valuable position, involving a different set of activities
Choosing what not to do
Creating fit among a company’s activities

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4
Q

Hallmarks of bad strategy (4)

A

Failure to frame problem appropriately
Mistaking goals for strategy
Bad (fuzzy) strategic objectives
Fluff (superficial abstraction)

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5
Q

Competitive parity

A

Performance of two or more firms at the same level

Measured on meaningful criteria, looks at lagging and leading indicators

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6
Q

Competitive disadvantage

A

Underperformance relative to other competitors in the same industry or relative to industry average

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7
Q

Sustained competitive advantage

A

Outperforming competitors or the industry average over a prolonged period of time

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8
Q

Temporary competitive advantage

A

Outperforming competitors or potential rivals over a relatively short period of time
Requires more emphasis on innovation and change

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9
Q

2 of Porter’s generic strategies

A

Differentiation

Cost leadership

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10
Q

Strategic positioning

A

Creation of a unique and valuable position, involving a different set of activities

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11
Q

3 strategic positions that Porter recommends

A

Variety based
Needs based
Access based

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12
Q

Variety based strategic positioning

A

Producing a subset of an industry’s products or services

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13
Q

Needs based strategic positioning

A

Serving most or all of the needs of a particular group of customers

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14
Q

Access based strategic positioning

A

Segmenting customers who are accessible in different ways

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15
Q

Strategic management

A

An integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage

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16
Q

Elements of effective strategy (3)

A

Analysis (diagnoses)
Formulation (guiding policies)
Implementation (coherent actions)

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17
Q

Analysis

A

Diagnosis of the competitive challenge

Accomplished through analysis of firm’s external and internal environments with a bias toward the future

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18
Q

Formulation

A

Guiding policy to address the competitive challenge

Accomplished through strategy formulation, resulting in firm’s corporate, business, and functional strategies

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19
Q

Implementation

A

Set of coherent actions to implement the firm’s guiding policy

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20
Q

Stakeholder strategy

A

Integrative approach to managing a diverse set of stakeholders effectively in order to gain and sustain competitive advantage and meet desired objectives

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21
Q

Stakeholder has power when

A

It can get the company to do something it wouldn’t otherwise do

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22
Q

Stakeholder has legitimate claim when

A

It is perceived to be legally or morally valid, or otherwise appropriate

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23
Q

Stakeholder has urgent claim when

A

It requires a company’s immediate attention and response

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24
Q

Porter’s 5 Forces

A 
Barriers to entry/ potential entrants
Suppliers
Customers
Substitute products
Established industry rivalry 
(Complements)
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25
Barrier to entry
Something that creates an obstacle for a new entrant to come into the industry profitability
26
7 barriers to entry
``` Supply side Econ of scale Demand side Econ of scale Customer switching costs Capital requirements Incumbency advantages independent of size Unequal access to distribution channels Restrictive government policy ```
27
Supply side economies of scale
Produce larger volumes --> decrease cost per unit
28
Demand side economies of scale
Network effects | Number of users of a product go up --> increase buyer's willingness to pay for product
29
Customer switching costs
Additional costs when customer switches products
30
Capital requirements
Cash or debt needed to start things up
31
Incumbency advantages independent of size (3)
Better location Established brand Cumulative experience
32
Unequal access to distribution channels
Better access to distribution
33
Power of suppliers
Suppliers have power to hurt industry profitability
34
Power of buyers
Negotiate lower prices, drive down profits
35
Threat of substitutes
Perform roughly same or similar functions
36
Rivalry among existing competion
Price war BAD | Other dimensions less destructive
37
PESTEL framework
``` Political Economic Sociocultural Technological Ecological Legal ```
38
Political (government influence) (ex2)
Subsidies | Political pressure on companies
39
Economic (economy wide phenomena) (ex5)
``` Growth rates Interest rates Employment levels Price stability Exchange rates ```
40
SCP model
Structure conduct performance Industry structure affects how firms behave Perfect comp; monopolistic comp; oligopoly; monopoly
41
6th force: complements
Product, service or competency that adds value to original product offering when the two are used in tandem
42
Industry dynamics
Repeat 5 forces to account for industry evolution
43
Strategic group
Set of companies that pursue a similar strategy within an industry Differ by important dimensions, can use generic strategies as a rough cut.
44
Strategic group insights (4)
Rivalry strongest within group Strategic group affected differently by macro forces Strategic group affected differently by 5 forces Some groups more profitable than others
45
Why not switch strategic groups
Mobility barriers = industry specific barriers that separate one group from another
46
Value chain
Activity template that describes the internal activities a firm engages in when transforming inputs into outputs
47
Primary activities (value chain)
Firm activities that add value directly by transforming inputs into outputs as the firm moves a product or service horizontally along the internal value chain
48
Support activities (value chain)
Activities that add value indirectly, but are necessary to sustain primary activites
49
Strategic activity system
Conceptualization of the firm as a network of interconnected activities
50
SWOT
Strengths (I) Weaknesses (I) Opportunities (E) Threats (E)
51
Resources and capabilities
All of the financial, physical, human and organizational assets used by a firm to develop, manufacture and deliver products or services to its customers Resources are what firms HAVE; capabilities are what firms DO
52
4 main types of resources
Financial Physical Human Organizational
53
Tangible resources
Resources that are visible, have physical attributes
54
Intangible resources
Resources that are invisible, have no physical attributes | More likely to lead to competitive advantage
55
VRIO - Questions of ...
Value Rareness Imitability Organization
56
Question of value
Do a firm's resources and capabilities add value by enabling it to exploit opportunities and/or neutralize threats?
57
Question of rareness
How many competing firms already possess these valuable resources and capabilities?
58
Question of imitability
Do firms without a resource or capability face a cost disadvantage in obtaining it compared to firms that already possess it?
59
2 main ways imitation can occur
Duplication | Substitution
60
Barriers to imitation (4)
Better expectations of future resource value Importance of history (path dependence) Importance of numeral hard to understand small decisions (causal ambiguity) Importance of socially complex resources (social complexity)
61
Question of organization
Is a firm organized to exploit the full competitive potential of its resources and capabilities?
62
2 key assumptions underlying resource based view (RBV)
Resource heterogeneity | Resource immobility
63
Core competencies
Unique strengths, often embedded deep within the firm, that allow a firm to differentiate its products and services from those of its rivals, creating higher value for the customer or offering products and services of comparable value at lower cost
64
Dynamic capabilities
A firm's ability to create, deploy, modify, reconfigure, upgrade, or leverage its resources in its quest for competitive advantage

4490 Capstone (2 decks)

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