Midterm Review Flashcards Preview

Strategy > Midterm Review > Flashcards

Flashcards in Midterm Review Deck (35)
Loading flashcards...
1

Five Forces

-New entrants
-Rivalry
-Supplier Power
-Buyer Power
-Substitute Products

2

Determinants of New Entry Threat (6)

-capital requirements
-switching costs (differentiation)
-access to distribution channels
-gov't regulation
-Economies of scale
-advantages independent of size (relationships, brand, experience)

3

Determinants of Rivalry (6)

-number of firms
-undifferentiated product (low switching costs)
-high exit barriers
-price competition (if perishable, if low marginal cost)
-slowing industry growth
-rivals are highly committed

4

Determinants of Supplier Threat (4)

-threat of forward integration
-more concentrated than the industry they supply
-no substitute for their product
-switching costs (differentiation)

5

Determinants of Customer Threat (4)

-threat of backward integration
-size of purchase
- # of customers (fragmentation)
-switching costs (differentiation)

6

Drawbacks of Five Forces Analysis (3)

-industry profitability does not equal firm profitability
-static view, not dynamic
-zero-sum, not positive sum

7

Two forces driving industry life cycle

1. Demand growth
2. Knowledge diffusion

8

Four stages of Industry Life Cycle

1. Introduction
2. Growth
3. Maturity
4. Decline

9

Elements of Introduction phase (ILC) (5)

-product innovation
-high price, low volume and quality
-non-price based competition (features, tech)
-higher risk
-competing for attention, exposure

10

Elements of Growth phase (ILC) (6)

-dominant design emerges
-building brand, marketing
-access to distribution channels
-large scale manufacturing, economies of scale
-product innovation down, process innovation up
-increase in standardization

11

Elements of Maturity phase (ILC) (3)

-cost efficiency (econ. of scale, low import cost, low overhead)
-replacement demand
-differentiation through branding and complimentary serves

12

Elements of Decline phase (ILC) (3)

-change in customer tastes
-tech obsolescence/substitution
-foreign competition

13

Adjusting to capacity decline (3)

1. barriers to exit (fixed cost, specialized equipment, managerial commitment)
2. predictability of decline
3. strategies of surviving firms

14

Organizational Inertia (5)

1. social and political structures
2. organizational capabilities, competency traps
3. complements between strategy, structure, and systems
4. limited search and blinker perception
5. conformity

15

Two increasing returns to adoption

Learning curve and network effects

16

What kind of markets are created by network effects?

winner-take-all

17

Elements of disruptive technologies (4)

-offer different value proposition
-underperforms established products at first
-typically cheaper and easier to use
-creates new market by turning non-customers into customers

18

Principals of disruptive innovation industries (5)

1. small markets don't solve growth needs of large companies
2. no metrics, hard to forecast
3. depend on customers and investors for support
4. technology supply may be greater than demand, overshooting the market
5. organizational capabilities define its disabilities

19

VRIS stands for:

Value, Rare, Imitability, Substitutes

20

Principals of resource imitability (3*)

1. physical uniqueness
2. path dependency (asset mass deficiencies and time compression diseconomies
3. causal ambiguity

21

VRIS: no value =

competitive disadvantage

22

VRIS: only value =

competitive parity

23

VRIS: value & rarity =

temporary competitive advantage

24

VRIS: value & rarity & non-imitability =

temporary competitive advantage

25

VRIS: value & rarity & non-imitability & non-substitutable =

sustained competitive advantage

26

Cost Leadership: Economies of scale: (4)

-specialized machines
-specialized employees
-overhead costs
-PPE costs

27

Diseconomies of Scale (4)

-managerial complexity
-worker motivation
-physical limitations
-distance to markets and suppliers

28

Cost Leadership: Learning Curve:

-no diseconomies of learning
-leanring curve is cumulative, not marginal

29

Elements of Cost Leadership (7)

-economies of scale
-leaning curve
-product design
-low-cost inputs
-production techniques
-low overhead
-capacity utilization

30

BCG criticisms of cost leadership (4)

1. competitive parity bc decrease in price is offset by increase in advertising costs
2. ignores differentiation
3. doesnt show causation, only correlation
4. omitted variable

31

Economies of scale are less likely in:

mature markets

32

Leaning curve less likely in:

mature markets

33

Product Differentiation: Attributes of product (4)

-product features (easiest to imitate)
-complexity (easy)
-timing (hard)
-location (hard)

34

Product Differentiation: Relationship of firms and customers (3)

-customization (easy)
-reputation (hard)
-marketing (easy)

35

Product Differentiation: linkages with or between firms (5)

-service and support (hard)
-distribution channels (hard)
-product mix (medium)
-cobranding (easy-medium)
-collaboration within the firm (hard)