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SEVI 3013 Exam 1 | 55 Questions with 100%
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Strategy - ✔✔the set of decisions and actions of firm managers to ensure the future success of the firm; integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage Characteristics of a strategy - ✔✔focuses on future and success Corporate strategy - ✔✔What industries should we compete in? Business strategy - ✔✔How should we compete in our chosen industries? Global Economy - ✔✔economy in which goods, services, people, skills, and ideas move freely across geographic borders
Technological diffusion - ✔✔speed at which new technologies become available to firms and when firms choose to adopt them Knowledge intensity - ✔✔consists of information, intelligence, and expertise; basis of technology and its application Stakeholders - ✔✔individuals/entities who may be affected by or affect the firms outcomes Strategic leaders - ✔✔people located in different levels of the firm to select actions that help the firm achieve its vision and fulfill its mission; decisive and committed to creating value Above average returns - ✔✔investors get yields that exceed what they expect from other investments with similar risks
Components of general environment - ✔✔ecological, economic, political, sociocultural, legal, technological, global, demographic Members of an industry - ✔✔industry and its buyers and suppliers Suppliers of an industry - ✔✔set of firms that supplies raw materials to the industry 5 Forces Model key objectives - ✔✔determines the future and current profitability of the industry Criticisms of IO model - ✔✔IO model makes the following assumptions which are not realistic:
- There is only one strategy that can be successful in an industry.
- All firms can (and ought to) adopt the above strategy
Strategic groups - ✔✔set of firms following similar strategies Competitor analysis - ✔✔focuses on each company against which a firm competes directly Competitor analysis key elements - ✔✔capabilities, current strategies, assumptions, future objectives, response Resource based model key elements - ✔✔resources, capability, competitive advantage, attractive industry, strategy formulation and implantation, superior returns Resources - ✔✔broad in scope; cover a spectrum of individual, social, and organizational phenomena
Entry tickets - ✔✔competencies that a firm must necessarily have to survive in the industry; valuable and non-substitutable capabilities Core rigidities - ✔✔former core competencies that now generate inertia and stifle innovation Forms of imitation - ✔✔direct imitation, bells and whistles, stripping, substitution Why competitive advantage may/not diminish over time - ✔✔sustainable competitive advantage must be valuable, rare, imperfectly inimitable, and non- substitutable Value chain analysis - ✔✔allows the firm to understand the parts of its operations that create value and those that do not Value chain analysis key elements - ✔✔consists of primary and support activities
Outsourcing - ✔✔purchase of a value-creating activity or support function from an external supplier Building blocks of a business level strategy (aka generic strategy) - ✔✔Which customers will we serve? What needs of the target customers will be served? And how will those needs be served? Reach - ✔✔access to customers Richness - ✔✔depth and detail of communications with customers Affiliation - ✔✔facilitation of customer relationship
Stuck in the middle - ✔✔can't produce sufficient low cost or differentiation; compete at a disadvantage; are unable to earn more than average returns Integrated cost/differentiation - ✔✔provide low cost products with valued differentiated features; use primary and support activities to produce differentiated products at relatively low costs How do the different strategies help companies deal with adverse conditions such as high bargaining power of suppliers and other factors? - ✔✔develop a long- term relationship with suppliers, build trust, increase prices, reduce cost, gain more information Cost - ✔✔amount of money that a firm pays to deliver products or services to the customer Price - ✔✔what the customer pays to obtain the product/service
Different ways that companies can differentiate themselves - ✔✔unique product features, unique product performance, exceptional services, new technologies, quality of inputs, exceptional skill or experience, detailed Information Differentiation strategy key steps - ✔✔value provided by unique feature and value characteristics, command premium price, high customer service, superior quality, prestige or exclusivity, rapid innovation Cost leadership key steps - ✔✔relatively standardized products, features acceptable to many customers, lowest competitive price Global Economy and Technological Changes - ✔✔ 2 primary drivers of hypercompetition
