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Flashcards in Lecture 2 Deck (17):
1

management

practice of formulating and implementing strategies across multiple levels in the organization

includes control and business administration in terms of formulation AND implementation

extracting effort in different ways can be better than others

2

competitive positioning comes down to advantages relating to...

resources and business (two externally facing factors)

Collis and montgomery

3

parent companies have an advantage: resources

when they can leverage key tangible resources and intangible resources for multiple businesses

it is worthwhile to expand new businesses if you utilize resources you have, and the whole is greater than sum of parts (value added!)

4

obtaining resources

build
borrow
buy

5

most successful way to obtain resrouces

use multiple modes: more likely to survive than when using only one strategy

capron and mitchell

6

4 step model

1. build?
2. borrow via contract?
3. borrow via alliance?
4. buy?

7

building

bias towards this
most co's preferred internal dev, but 1/2 were disappointed
(had probs integrating and diffusing resources)

8

borrowing

most would choose alliance > contract, but most alliances don't meet goals

look to contracting first!! control of resources is often overemphasized

9

when are alliances useful?

when limited # of people are needed for coordination

10

buying

mode of last resort
paranoia is a common motivator

11

corporate strategy: businesses

firm must decide where to compete - assess industry attractiveness

industry attractiveness = biggest predictor of profitability

12

porter's 5 forces

relevant for understanding profitability of any industry
1. threat of new entrants
2. threat of substitute products & services
3. bargaining power of buyers
4. bargaining power of suppliers
5. rivalry among existing firms

13

threat of new entrants

profits of est. firms in industry may be eroded by new competitors

lower threat when barriers to entry are higher: economies of scale, brand power, access to distribution, switching costs

14

bargaining power of suppliers

suppliers can threaten to raise prices or reduce quality of goods

have power when supplier's product is an irreplaceable input to buyer's business, or when suppliers can cluster into concentrated groups

15

bargaining power of buyers

buyers can force down prices or bargain for higher quality or more services by playing competitors against each other

have power when they have negotiating leverage, or when they are price sensitive

16

threat of substitutes

substitutes limit potential returns of an industry by placing a ceiling on the prices that firms in that industry can profitably charge

greater threat if substitute is cheaper and has higher performance

17

most important driver of profitability

industry!!