Module 1 Section A Flashcards

Question

Mission

Answer 1

Mission: overall goal(s) for an org. set within the parameters of the business scope Mission statement: company statement of purpose; grounded in the present and defines the reason an org. exists;

Answer 2

Vision - shared perception of the orgs. future - what the org. will achieve and a supporting philosophy; must be supported by strategic objectives, strategies, and action plans to move it in the desired direction Vision statement - org's statement of its vision

Answer 3

-set of important assumptions that members of the company share -system of shared values about what is important and beliefs about how the company works -common assumptions influence the ways the company operates

Answer 4

Process used to explore org's potential strengths, weaknesses, opportunities and threats; tool is primarily external EXAMPLES OF TOOLS: -Strategic benchmarking: key tool for external environment scanning; compares the org against external or internal organizations or functions or against industry standards Competitive Analysis: analysis of a competitor that includes its strategies, capabilities, prices and costs

Answer 5

-used to describe focus of an analysis of an org's external or macro environment -Macro environment - environment external to a business including technological, economic, natural, and regulatory forces that marketing efforts cannot control Org must focus on the environmental factors that are strategically relevant (i.e. will have a big impact on the org and its strategy) Political - government's willingness to become involved with an issue; stability of government and its institutions Economic - gross domestic product, employment levels, family or disposable incomes, interest or currency exchange rates Sociocultural - demographics (.e.g age, gender, birth rate, disease rate), values, preferences Technological - identifying emerging and speculative technology can have significant impact on society and commerce e.g. 3D printing, genetic engineering Environment - natural events/trends e.g. changes in weather, droughts, depletion of certain resources; also includes reactions to these events e.g. increases in insurance rates, changes in agricultural practices or energy production methods, increased popularity of energy saving equipment among consumers Legal/Regulatory Factors - laws and regulations enacted as a result of political attitudes

Answer 6

-methodology for analyzing competitive pressures in a market and assessing the strength/importance of each of those pressures -to use framework one must 1) identify key figures and major sources of competitive pressure in each area, 2) evaluate intensity of pressures, determine how overall picture supports profitability

Answer 7

-area represents intensity with which rivals compete in this industry to gain market share and competitive advantage -as rivalry intensifies likelihood of making sustainable profit decreases, since tactics can be costly EXAMPLE OF COMPETITIVE ACTION: 1) price cutting 2) providing better customer service 3) attractive financing terms 4) customizable products 5) frequent redesign of product to add new features/options 6) marketing tactics (e.g. heavy advertising) RIVALRY IS STRONGER WHEN: 1) Demand is growing slowly/declining 2) brand switching is not costly 3) competitors' products are not very distinct from one another 4) excess supply or unused capacity (and fixed and/or storage costs are high) 5) more competitors of equivalent size and capability 6) rivals have diverse strategies including globalization 7) it is harder to leave industry due to barriers to exit that may be legal/contractual or emotional

Answer 8

-entry of new competitor usually triggers costly competitive actions as existing competitors struggle to maintain their positions Threat of entry greater when: 1)industry is growing and new entrant can recoup investments in entry process over time 2) regulation is lax 3) new tech emerges that can overcome advantages of incuments 4) products are not strongly distinguished from each other; less customer loyalty to specific brands

Answer 9

-thinking outside of box in terms of who you think competitors are e.g. every org that meets same customer need, such as sweeteners -substitutes are only attractive if they are easily available, offer comparable/better quality and if there are few barriers to substitution (e.g. unattractive prices)

Answer 10

-suppliers with stronger bargaining power are in position to drive up producer's costs --> higher consumer prices for finishes good --> possible decreased sales -manufacturers could absorb suppliers' increases --> not raise prices --> suffer smaller profit margin Review Exhibit 1-20: conditions favoring suppliers and buyers/customer

Answer 11

-assessed by # and relative strength of the 5 forces -conditions in general favor org's ability to be profitable when: 1) internal rivalry among competitors is weak to moderate, 2) leverage over suppliers and buyers is high, 3) barriers to new entrants are high, 4) threat from substitutions is low

Answer 12

-identifies all of an organization's resources and capabilities to determine if they offer sustainable competitive advantage Resource: anything that adds value to a good or service in its creation, production, or delivery; can be tangible (physical, financial, technological, organizational) or intangible (e.g. human assets, intellectual capital, brands, reputation, relationships, culture, compensation system)

Answer 13

-capabilities use resources to create value -can be tangible (e.g. cryogenic machining , computer systems, personnel capable of data mining) or intangible (e.g. developing/launching a new product)

Answer 14

V: valuable resource of capability directly related to strategy being considered; is relevant and help create and advantage over competitors R: rare - something an org possesses but competitors lack e.g. patent and org. learning related to designing electric cars I = Inimitable - difficult for a competitor N = Nonsubstitutable - cannot be countered by entirely diff. types of resources/capabilities

Answer 15

-used to assess an org's ability to implement a strategy and defend itself against competition -analysis of the strengths, weaknesses, opportunities, and threats of and to an org S/W reflect internal conditions that favor or damage competitiveness O/T reflect external conditions that impact the org

Answer 16

STRENGTHS 1) include an org's core process and core competencies 2) core process = unique capabilities central to org's competitive strategy 3) core competencies = bundles of skills/knowledge sets that enable a firm to provide greatest level of value to its customers in a way that is difficult for competitors to emulate and provides future growth; developed through collective learning, communication, and commitment to work across levels and functions in the org, with customers and suppliers WEAKNESSES 1) competitive liabilities; 2) things org does poorly or not at all; 3) may be insufficient resources or missing/deficient capabilities; 4) uncorrected weaknesses increase an org's vulnerability to external threats

Answer 17

OPPORTUNITIES 1) convey competitive advantage to org 2) could be newly discovered / unmet customer needs in market that could deliver new revenue with little competition, new tech that can lower costs and increase competitiveness, increases in market share because of exit of powerful competitor from market 3) must be aligned with org's strengths THREATS 1)will damage org's current competitiveness or profitability 2) may be risks that can limits success of a planned strategic action 3) org becomes more vulnerable when it does not build its competencies, correct its weakness, commit to regular scanning of its internal/external environments

Answer 18

VALUE CHAIN 1) functions within an org that add value to the good/services that org sells to customers and for which it receives payment 2) way of understanding where costs occur in org or supply chain and how one activity in chain can affect the costs of another VALUE CHAIN ANALYSIS 1) examination of all links an org uses to produce/deliver its products/services, starting from origination point and continuing through delivery to final customer -two types of activities: 1) primary - create value and will vary in diff. orgs. examples: purchasing, operations, logistics, sales/marketing 2) support - make the primary activities possible; examples - IT, HR, accounting -internal costs > than competitors' costs can put org at a competitive disadvantage unless able to create another advantage

Answer 19

-part of extended value chain system -any org external to the firm that plays an integral role within the supply chain (SC) community and whose business fortune depends on the success of the SC community e.g. suppliers and channel partners (distributors, dealers, retailers) -some supply chain partner activities can create costs without contributing value e.g. damaged goods or complicated ordering systems; org can work with supplier to help mitigate issues

Answer 20

1) stages a new product goes through from beginning to end (intro --> growth --> maturity --> decline) 2) time from initial research and development to time at which sales and support of product to customers are withdrawn 3) period of time during which product can be produced and marketed profitably Make to stock (MTS) for fast selling item is profitable only up to a point, if demand declines building inventory becomes unprofitable --> can switch to ATO or MTO products with shorter life cycles must generate revenue early

Answer 21

1) business invest large amount of resources to change customers' limited awareness of product 2) high degree of risk --> sales are slow, incur loss rather than profit 3) focus on product positioning - gaining consumer attention for the new product and distinguishing it from any competitors; marketing effort to place product in a market to service particular niche or function 4) manufacturing environment = ETO (mainly or MTO to avoid producing until there is demand

Answer 22

1) successful products gain market share rapidly 2) puts pressure on manufacturing and distribution to scale upward or downward quickly if demand differs from what was projected 3) product designs tend to stabilize 4) brand identities emerge and basis for brand loyalty built 5) competitors may try to introduce product imitations or price cut (over time slows revenue growth increases) 6) concerns = quality, compliance with specs, ability to meet demand reliably --> damage sales MTS work well

Answer 23

1) marks peak sales 2) functional product = low profit margin and predictable demand (sales can be steady) 3) associated with intensifying competition --> # of available customers levels off; price cutting/promotion increase 4) org must lower costs of production to maintain profit or support lower prices 5) org can expand # of customers by targeting new customer needs or entering new market areas 6) extensions of existing products or plans for new products may be introduced to create differentiation in crowded market MTS work well

Answer 24

1) products no longer in demand or demand falling at steady/increasing rate 2) profits still possible, but requires changing to less expensive production environment such as make to order 3) rollover strategy from existing to replacement can be: solo product roll - inventories of existing product completed used up before new product introduced; avoids problem of selling off inventory of older product at discount that erods profit; risk = manufacturing process may have been problematic and volume is insufficient dual product roll - plans for having both products available for period of time; decreases risk of not having product available to meet customer demand, but also risks confusing customers 4) production may begin to return to environment to facilitate shrinking demand e.g. ETO or MTO 5) products may be discontinued 6) if production costs can be lowered, can still make small profit margin 7) may sell to orgs that can produce products more profitably MTS becomes unprofitable

Module 1 Section A Flashcards

(48 cards)