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BU481 - Business Policy I > Midterm Review > Flashcards

Midterm Review Flashcards

(45 cards)

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1
Q

Strategic Management is…

A

an ongoing process that evaluates and evolves a firm’s direction to create/sustain a competitive advantage.

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2
Q

How is the strategic management process conducted?

A
  1. Assessing competitive environment and setting goals (ASSESS)
  2. Determining and choosing between strategic alternatives (SELECT)
  3. Regularly re-assessing implementation (REASSESS)
  4. Evaluating changing/newly emerging circumstances (EVALUATE)
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3
Q

What are the three “Big Picture Questions” in strategic management?

A
  1. Where do we compete?
  2. How do we compete?
  3. How do we execute on it?
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4
Q

What are the five elements of the Diamond-E Framework?

A
  1. Strategy
  2. Environment
  3. Resources
  4. Organization
  5. Management Preferences
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5
Q

Operating Performance

A

Quantitative measures of financial and market performance.

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6
Q

Organizational Health

A

Qualitative and quantitative measures of operating performance.

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7
Q

What are the four quadrants in the Organizational Health/Operating Performance matrix?

A

Quadrant 1: Desired State (+ OH, + OP)
Quadrant 2: Complacent Organization (+ OH, - OP)
Quadrant 3: Troubled Organization (- OH, + OP)
Quadrant 4: Crisis (- OH, - OP)

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8
Q

What are the four basic questions asked through a Balanced Scorecard?

A
  1. Can we continue to improve and create value? (Innovation and Learning)
  2. What must we excel at? (Internal)
  3. How do customers see us? (Customer)
  4. How do we look to shareholders? (Financial)
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9
Q

Strategic Vision vs. Mission

A

Vision: concerns a firm’s future business path - “where are we going?”
Mission: focuses on present business purpose - “who are we and what do we do?”

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10
Q

What is the definition of “industry”?

A

Firm or group of firms that produce and/or sell the same or similar products/services to the same market.

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11
Q

What are the five objectives in industry analysis?

A
  1. Understand where value is being derived in industry.
  2. Understand drivers of profitability
  3. Understand why some industries are more attractive than others.
  4. Understand macro-economic influences/trends.
  5. Understand key success factors.
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12
Q

What is an industry value system?

A

A chain of activities/steps that links raw materials through to the final product being delivered.

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13
Q

Forward vertical integration vs. Backward vertical integration

A

Forward: Integration with distributors
Backward: Integration with suppliers

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14
Q

What are Porter’s Five Forces?

A
  1. Threat of Entry
  2. Buyer Power
  3. Supplier Power
  4. Substitutes
  5. Rivalry
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15
Q

Threat of Entry

A

Brings in new capacity an desire to take market share –> caps profits
Based on:
- Height of barriers of entry
- Potential response by incumbent

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16
Q

Examples of potential barriers to entry:

A
  • Supply side economies of scale
  • Demand side economies of scale (network effects)
  • Customer switching costs
  • Access to distribution channels
  • Capital requirements
  • Government policy
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17
Q

Advantages of being an incumbent in an industry:

A
  • Proprietary technology
  • Cost or quality advantage not available to potential entrants
  • Access to raw materials
  • Brand
  • Learning/experience
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18
Q

What factors lead to high threat of substitutes?

A
  • Substitute offers an attractive price-performance trade-off compared to the industry.
  • Switching costs are low
  • Be aware of changes in other industries that may impact your industry.
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19
Q

What influences supplier power?

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A
  • Concentration relative to industry it sells into
  • Switching costs
  • Importance of industry to supplier
  • Suppliers’ products are differentiated
  • Possibility of forward integration
20
Q

What influences buyer power?

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A
  • Concentration - large or small volumes
  • Level of product standardization
  • Product represents significant portion of final product cost (more sensitive)
  • Buyers earn low profits (more sensitive)
  • Product unimportant to final product quality
  • Credible threat of backward integration
21
Q

What influences rivalry in an industry?

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A
  • Number of competitors
  • Industry growth
  • Switching costs
  • Exit barriers
  • Rival commitment
22
Q

When is competing on cost more likely?

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A
  • Fixed costs are high
  • Capacity can only be extended in large increments
  • Product is perishable
23
Q

What are some necessary considerations in addition to industry analysis?

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A

Future structure/outlook and profitability potential

24
Q

What are the four elements of a PEST analysis?

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A

Political
Economic
Social
Technological

25
What are Key Success Factors?
Critical factors that determine a firm's success or failure within an industry.
26
What are some examples of KSFs for a firm competing in the airline industry?
- Gate access - Airplanes - Pilots - Meeting safety standards - Ticketing - On-board personnel
27
Two questions to identify an industry's Key Success Factors:
1. What do customers want? How do they choose between alternatives? 2. How does the firm survive competition?
28
What are the two roles of company resources?
1. "Fuel": Assets required for business to function 2. Potential sources of strategic competitive advantage
29
Three types of resources:
1. Tangible (ex. Marketing, Operations, R&D, Human, Manufacturing) 2. Intangible (ex. Brand, Reputation) 3. Organization Capabilities (ex. Routines, Processes, Abilities, Culture)
30
What are strategic resources?
Non-tradable assets which develop and accumulate within the firm (and which are valuable in the industry). Such assets defy imitation because they have a strong tacit dimension and are socially complex.
31
How can a company develop superior competitive performance?
By developing a competitively distinct set of resources and deploying them in a well-conceived strategy.
32
What are the key tasks of managers in resources management?
1. Finding/investing in resources 2. Upgrading resources 3. Leveraging resources
33
What is a resource-based strategy?
- Attempts to exploit company resources to offer value to customers in ways rivals cannot match. - Can focus on eroding the competitive potency of a rival by developing different resources that effectively substitute for the strengths of rivals.
34
Why is the Resource-Based View (RBV) useful?
- Internal perspective of firm (industry analysis only tells so much) - Explains profitability disparity among competitors - Suggests how to put idea of core competencies into practice - Develops strategies that are feasible based on what you already have/can get
35
What are the 4 tests a "resource" must pass to be the basis for a sustainable competitive advantage?
1. Value: context or industry dependent 2. Rarity: common resources are at best an entry ticket, but not a source of competitive advantage. 3. Inimitability: may arise as a result of history, many small decisions, or because of social complexity. 4. Organized to Exploit: if organization does not exploit the resource - no value! VRIO Framework
36
What are some characteristics of a strategically valuable resource?
- Hard to imitate - Depreciates slowly - Company controls its value (not employees, suppliers, or customers) - Not easily substituted - Better than competitors' similar resources
37
What makes a resource hard to copy?
- Physical uniqueness (ex. mineral rights, great locations) - Path dependency (ex. Gerber baby products) - Causal ambiguity (unclear what is actually creating the advantage) - Economic deterrence (sizeable investment in asset) - Socially complex
38
What are the elements that shape management preferences?
- Personal attributes - Beliefs - Character - Job context/situation - Career trajectory
39
How to address governance shortcomings?
- Expert board members - Meetings focus on the future - Informed board members - Committed board members - Incentivized board members (in the right way)
40
What are the 3 organizational levers to support strategy?
1. Organizational Structure 2. Management Processes (decision making, operating, performance assessment) 3. Leadership Behaviour
41
What are the benefits and issues of a functional org. structure?
Benefits: - Standard product; efficiencies in functional areas Issues: - Limited sensitivity to local markets - Slow decision making
42
What are the benefits and issues of a product/divisional org. structure?
Benefits: - Increased product focus; each product line Issues: - Lose efficiencies - Multiple contact points for customers
43
What are the benefits and issues of a geographical org. structure?
Benefits: - Good at tailoring to local markets Issues: - Lose efficiencies
44
What is Theory X vs. Theory Y?
Theories of Motivation Theory X: Organizational objectives can be reached best by control, coercion, direction, threat, and financial rewards. - People dislike work and prefer to avoid it. - Humans prefer to be directed over having responsibility. Theory Y: Putting effort in work is as natural as playing or resting. - People will direct themselves when they are committed to the objective of the organization. - Satisfaction with a job will result in commitment to the organization.
45
Behaviour vs. Culture
Behaviour: - Observable; - How much energy employees put into job - How they manage subordinates - How employees relate to each other Culture: - Shared values, beliefs, and core basic assumptions - Organizational way to "think and act" - Widely shared and strongly felt

BU481 - Business Policy I (1 decks)

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