Lecture 1-A MBV (Farmanara)

Question 1

Complementary views of strategic management:

Answer 1

1. Resource-based view (Inward view)
• Goals and values
• Resources and
capabilities
• Structure & systems
2. Market-based view (Outwards view)
• Competitors 
• Customers 
• Suppliers

Question 2

SWOT analysis

Answer 2

Strengths, Weaknesses, Opportunities, Threats

Question 3

Approach of MBV

Answer 3

Step 1 (Industry)
• 5 forces model
 Step 2 (Strategic groups)
• Strategy mapping(primary strategic goals, being used by the organization or management team)
 Step 3 (Enterprise)
• Generic strategies (Description of competitive advantages according to market scope) 
 Step 4 (Enterprise)
• Value Chain (Detailed study of org. activities)

Question 4

„Five Forces Model“

Answer 4

1. Competition (Rivalry of competitors)
   • Price competition
   • Advertising activities
   • Number of competitors
2. Customers (Market power of customers) (более высоких требований к качеству товара, к уровню сервиса, оказывать давление на уровень цен)
   • Share of total purchases from the supplier (Google)
   • Degree of customers’ price sensitivity and market awareness (Pharma)
3. Suppliers (Market power of suppliers)( (Количество поставщиков в отрасли незначительно, Объем ресурсов ограничен и не обеспечивает потребность рынка, Отрасль не является приоритетной для поставщиков)
   • Competitive intensity
   • Degree of differentiation of suppliers, e.g. through patents, standards, brands
4. Potential new competitors (threat of market entry)
   • Economies of Scale
   • Patents, brands (Pampers)
   • Customer loyalty: Switching costs, ‘Lock-In’-dependency, standards (Apple)
   • Retaliation, e.g. by price dumping (Samsung)
5. Substitute product (threat of substitutes)
   •Customers tendency for substitution (telephone to skype)
   •Relative price/performance ratio (Ryanair, Lidl)
   •Switching costs (Expensive grocery - Cheap grocery)

Question 5

Industry life cycle concept

Answer 5

1. Development (Low rivalry: Large differentiation, innovation important)
2. Growth (Growing rivalry:
   Strong growth, low entry barriers, the capability to grow (upscaling) important)
3. Maturity/ Saturation (Strong rivalry: Low growth and standardized products, larger market entry barriers, economies of scale important)
4. Decline/ Degeneration ( Extreme rivalry: Often many market exits, price competition, cost reduction important)

Question 6

Competition Model of Brandenburger and Nalebuff (1996)

Answer 6

1. Companies do not only compete, but also cooperate
2. Hence the total addressable market increases based on improved offerings (New product category)
3. A win-win situation (everyone gets his part of the pie) as opposed to the zero-sum game of Porter (Poker game).

Question 7

1. Cooperations producer-customer:

2. Cooperations with complementors:

Answer 7

1. Bosch-Daimler (cooperation in R&D of the electrical engines)

2.• Apple&Nike (Software for Nike)
• Apple&Starbucks (Apple product have priority in Starbucks cafes)

Question 8

Opportunities of (limited) cooperation with the competition (types)

Answer 8

1. Research and development ( Time and cost advantages, risk-sharing )
2. (Cross) licensing of patents (If use Microsoft, may use Siemens apps)
3. Purchasing (Better purchasing terms & conditions due to larger volume)’
4. Production ( Shared investment, economies of scale) (Samsung&Apple)
5. Sales (Market access and portfolio extension, Cost reduction) (Star Alliance)

Question 9

Macro environment types:

Answer 9

1. Economic Environment
   • Economic cycle (growth, and recession)(Interest rate, GDP, level of employment)
   • Infrastructure (Investments)
2. Technological environment
   • IT, communication technology
   • Regenerative energies
   • Biotechnology
3. Social environment
   • Demographics/ population structure (older people, diversity of population)
   • The educational level of population
4. Political-legal environment
   1) The legal system (protection laws, judicial system)(Brexit)
   2) Political system ( Taxes and subsidies, Regulation, Public security) (Venezuela)
5. Natural Ecological environment

Question 10

Goals of macro environment analysis:

Answer 10

• Recognize important trends in the environment of a company

* Derive opportunities and risks faced by the company