Strategic renewal

Question 1

When is radical change nececary

Answer 1

When an industry core assets and activities are threatened.

Question 2

When is a businesses core activities threatenned with obselesence

Answer 2

When the things you do are no longer valued by the customers, f.ex the advice of car salesmen become obsolete when people may look it up on the internet.

Question 3

What is a threat to a fimrs assets

Answer 3

When the things that previously made a firm unique has become common place. F.ex a when a patent expires it becomes obsolete

Question 4

When is an industrys change trajectory progressive

Answer 4

When neither core assets or activities are under threat

Question 5

What characterizes a creative change trajectory

Answer 5

Core assets being under threat but activities being safe

Question 6

Explain an intermediating industrial change trejectory

Answer 6

When activities are under threat but not assets

Question 7

Industries that are on a radical change trajectory often remain profitable for a long time

Answer 7

Yes, actually, especially if the companies in these industries scale back their commitments accordingly. Businesses also have time to
develop strategic options that can be exercised in the future if they recognize the trajectory they are on early enough

Question 8

Intermediating change typically occurs when buyers and suppliers have new options because they have gained unprecedented access to information

Answer 8

True

Question 9

Managing a company in an industry in intermediate change is the most difficult

Answer 9

True, this is beocuse they musst simultabiusly preserve their key assets and restructure their relationships

Question 10

In industries characterized by creative change the most profitable firms are usually the established ones

Answer 10

True as they can maintain a large portfolio of assets that are characterized by volatility

Question 11

The most profitable firms in an industry characterized by progressive change are the ones that carve out a niche for themselves

Answer 11

True

Question 12

What is the 5% rule of establishing if firms are competitors

Answer 12

If customres and supplyers switch if your prices change by 5% you are direct competitors

Question 13

How do you know if a thing is a core asset

Answer 13

If it was removed now would earnings be lowereed in a year even if efforts were made to work around it, If the answere is yes then it is a core asset

Question 14

Does the evolutionary trejectory of a firm switch often

Answer 14

No, it rarely happens more than once every decade

Question 15

How is strategic renewal defined

Answer 15

Strategic renewal includes the process, content, and out-
come of refreshment or replacement of attributes of an
organization that have the potential to substantially affect
its long-term prospects. Long term prospects being the key word

Question 16

What are dynamic capabilities of a firm

Answer 16

Its ability to change its resources

Question 17

What are the gales of creative destructuin

Answer 17

When technological change lets new entrants dethrone established firms

Question 18

How do firms survive the gales of createive distruction

Answer 18

Trough createive construction, to establich spinof fimrs and research alternaative technologuies so that they may pivot if the main money making stream comes under threat. Established firms often have resoources and established good will giving them an advantage over startups. Some studies point to the importance of continous incrementall renewal in response to minor changes while others on the benefit so mergers and sponsoring VC’s

Question 19

It is important for all levels of the organization to know and understand the strategy

Answer 19

True

Question 20

An important part of strategic renewal is to make stakeholders understand how the company change, develop their cognition

Answer 20

true

Question 21

How does the periphery tend to develop strategy

Answer 21

They talk to people they know who have knowledge in the area, make inferences based on observation and experiences and develop new knowledge structurees and explor new technologies and markets

Question 22

How does the strategic center tend to develop strategy

Answer 22

They work with models and consultants, make inferences based on historical data and strateg and tend to focuse on building on expanding technologies and markets empahsizing current knowledge structures

Question 23

What is it called when you simultaniusly exploit the resources/activities you have and explore new resources and activities

Answer 23

Ambidextartity aka the word for using both your right and left hand as main

Question 24

What type of strategy forulation is best suited to ambigous and complex situations

Answer 24

inductive and exploratory tequniques more common in the periphery

Question 25

If problems go on, unrecognized for long they cause exponentially more problems

Answer 25

True, it is sometimes reffered to as the law of squares. A problem that festers for 2 years take 4 to fix

Question 26

The cost of delay tends to be greater then the costs of mistakes

Answer 26

True

Question 27

What three capabilities are required to deal with bad strategies

Answer 27

(1) the capability to pay attention to negative feedback (attention stage), (2) the capability to collect and assess negative data objectively (assessment stage), and (3) the capability to initiate and complete change in a timely fashion even in the face of uncertainty

Question 28

Prior success never make managers resistant to negative feedback

Answer 28

False

Question 29

People in bad situations tend to take bigger risks

Answer 29

true

Question 30

In a culture where success is highly praised and mistakes are severely punished, managers avoid admitting mistakes.

Answer 30

True

Question 31

In the face of economic uncertainty firms seam to insticintivly want to preserve themeselves

Answer 31

True

Question 32

What factors increase the risk of organizational innertia

Answer 32

Past success, long tenure of top management and big size and age.

Question 33

What factors increase the risk of organizational denial

Answer 33

Sunk cost, weak governance and a culture harsh on mistakes

Question 34

Explain the vicious cycle of strategic regidity

Answer 34

organizatinal denial leads to a preference of the status quo enforces organizational innertia which fosters organizational denial

Question 35

Old managers are more likely to divest themselves of poorly preforming units that necommers

Answer 35

Flse, newcommers are catalysts especially new CEO's

Question 36

What five things can a firm do to prevent positive bias

Answer 36

Measure results, incorporate a devils advocate, create outside idea gathering mechanics, change borad members and develop decition portfolios

Question 37

What are the pros and conns of replacing top managmenent routinely

Answer 37

Pro is that they have a fresh perspective and con is that they they lack experience and continuity. They may also change good strategies becouse for ego reasons

Question 38

What mechanics may be used to gain new ideas and perspectives from the outside

Answer 38

Limit tenure of top executives, apoint directors from outside routinely, routinely rotate managers in key positions and exploit alliances with other firms

Question 39

Can a large difficult to reverse investment be justified by the potential to learn from it

Answer 39

Probably not