MAN 4720 - Dever/FSU - Exam 1 (solved)

Strategic Competitiveness - THE CORRECT ANSWER IS Achieved when a firm successfully formulates and implements a value creating strategy Strategy - THE CORRECT ANSWER IS an integrated and coordinated set of commitments ...

Strategic Competitiveness - THE CORRECT ANSWER IS Achieved when a firm successfully formulates and implements a value creating strategy Strategy - THE CORRECT ANSWER IS an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage Competitive advantage - THE CORRECT ANSWER IS implementation of a strategy that creates superior value for customers and that the competitors are unable to duplicate or find it too costly to try and imitate Risk - THE CORRECT ANSWER IS is an investor's uncertainty about the economic gains or losses that will result from a particular investment above-average returns - THE CORRECT ANSWER IS are returns in excess of what an investor expects to earn from other investments with a similar amount of risk Average Returns - THE CORRECT ANSWER IS returns equal to those an investor expects to earn from other investments with a similar amount of risk Strategic Management Process Definition - THE CORRECT ANSWER IS The full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns. Hypercompetition - THE CORRECT ANSWER IS competition that is excessive such that it creates inherent instability and necessitates constant disruptive change for firms in the competitive landscape. It is a condition of rapidly escalating competition based on price-quality positioning, competition to create new know-how and establish first-mover advantage, and competition to protect or invade established product or geographic markets Globalization - THE CORRECT ANSWER IS is the increasing economic interdependence among countries and their organizations as reflected in the flow of goods and services, financial capital, and knowledge across country borders. - is a product of a large number of firms competing against one another in an increasing number of global economies. Technology Diffusion - THE CORRECT ANSWER IS which is the speed at which new technologies become available and are used, has increased substantially over the past 15 to 20 years. Perpetual Innovation - THE CORRECT ANSWER IS describes how rapidly and consistently new, information-intensive technologies replace older ones Disruptive technologies - THE CORRECT ANSWER IS technologies that destroy the value of an existing technology and create new markets —surface frequently in today's competitive markets. Information Age - THE CORRECT ANSWER IS a period in history where the production, distribution, and control of information is the primary driver of the economy Knowledge - THE CORRECT ANSWER IS a critical organizational resource and an increasingly valuable source of competitive advantage. - (information, intelligence, and expertise) is the basis of technology and its application. strategic flexibility - THE CORRECT ANSWER IS a set of capabilities used to respond to various demands and opportunities existing in a dynamic and uncertain competitive environment. - to gain the competitive benefits of such flexibility, a firm has to develop the capacity to learn. Industrial Organization Model of Above-Average Returns - THE CORRECT ANSWER IS explains the external environment's dominant influence on a firm's strategic actions. - The model specifies that the industry in which a company chooses to compete has a stronger influence on performance than do the choices managers make inside their organizations. I/O Model Assumptions - THE CORRECT ANSWER IS 1. The external environment imposes pressures and constraints that determine strategic choices. 2. Similarity in strategically relevant resources causes competitors to pursue similar strategies. 3. Resource differences among competitors are short-lived due to resource mobility across firms. 4. Strategic decision makers are rational and engage in profit-maximizing behaviors. Five Forces Model of Competition - THE CORRECT ANSWER IS is an analytical tool used to help firms find the industry that is the most attractive for them The five forces model suggests that an industry's profitability is a function of interactions among five forces: 1. suppliers 2. buyers 3. competitive rivalry among firms currently in the industry 4. product substitutes 5. potential entrants to the industry. The Resource-Based Model of Above-Average Returns - THE CORRECT ANSWER IS The model assumes that each organization is a collection of unique resources and capabilities The uniqueness of its resources and capabilities is the basis of a firm's strategy and its ability to earn above-average returns. What is a Resource? - THE CORRECT ANSWER IS are inputs into a firm's production process. i.e. capital equipment, skills of employees, patents, finances, and talented managers. What is a capability? - THE CORRECT ANSWER IS the capacity for a set of resources to perform a task or an activity in an integrative manner What is a Vision? - THE CORRECT ANSWER IS the picture of what a firm wants to be and, in broad terms, what it wants to ultimately achieve. Thus, a vision statement articulates the ideal description of an organization and gives shape to its intended future. In other words, a vision statement points the firm in the direction of where it would like to be in the years to come. What is a Mission? - THE CORRECT ANSWER IS specifies the businesses in which the firm intends to compete and the customers it intends to serve. - The firm's mission is more concrete than its vision. - should establish a firm's individuality and should be inspiring and relevant to all stakeholders. Stakeholders - THE CORRECT ANSWER IS those who affect or are affected by a firms performance (i.e. employees ,shareholders, managers) Capital Market Stakeholders - THE CORRECT ANSWER IS Major suppliers of Capital and Shareholders Product Market Stakeholders - THE CORRECT ANSWER IS the firm's primary customers, suppliers, host communities (local gov, fed. Regulations placed through laws), and unions representing the workforce Organizational Stakeholders - THE CORRECT ANSWER IS -Employees—the firm's organizational stakeholders those groups, individuals, and organizations that are directly affected by the practices of an organization and who therefore have a stake in its performance Strategic Leaders - THE CORRECT ANSWER IS people located in different areas and levels of the firm using the strategic management process to select strategic actions that help the firm achieve its vision and fulfill its mission. - are located at various levels throughout the firm. - want the firm and its people to accomplish more. - are innovative thinkers who promote innovation. - can leverage relationships with external parties while simultaneously promoting exploratory learning. - have an ambicultural (global mindset) approach to management. organizational culture - THE CORRECT ANSWER IS refers to the complex set of ideologies, symbols, and core values that are shared throughout the firm and that influence how the firm conducts business. It is the social energy that drives—or fails to drive—the organization. - Organizational culture also affects strategic leaders and their work. In turn, strategic leaders' decisions and actions shape a firm's culture external environment - THE CORRECT ANSWER IS Firms understand the external environment by acquiring information about competitors, customers, and other stakeholders to build their own base of knowledge and capabilities. Three Major Parts of the External Environment 1. General Environment 2. Industry Environment 3. The Competitor Environment Industry Environment - THE CORRECT ANSWER IS the set of factors that directly influences a firm and its competitive actions and responses: - the threat of new entrants, - the power of suppliers, - the power of buyers, - the threat of product substitutes - The intensity of rivalry among competing firms Demographic Segment - THE CORRECT ANSWER IS concerned with a population's size, age structure, geographic distribution, ethnic mix, and income distribution Opportunity - THE CORRECT ANSWER IS is a condition in the general environment that, if exploited effectively, helps a company reach strategic competitiveness. General Environment (7 Segments) - THE CORRECT ANSWER IS composed of dimensions in the broader society that influence an industry and the firms within it 1. Demographic 2. Economic 3. Political/Legal 4.Sociocultural 5. Technological 6.Global 7. Sustainable Physical External Environmental Analysis - THE CORRECT ANSWER IS To cope with often ambiguous and incomplete environmental data and to increase understanding of the general environment, firms complete an external environmental analysis. This analysis has four parts: 1. Scanning 2. Monitoring 3. Forecasting 4. Assessing Threat - THE CORRECT ANSWER IS is a condition in the general environment that may hinder a company's efforts to achieve strategic competitiveness Scanning - THE CORRECT ANSWER IS identifying early signals of environmental changes and trends Monitoring - THE CORRECT ANSWER IS detecting meaning through ongoing observations of environmental changes and trends Forecasting - THE CORRECT ANSWER IS Developing projections of anticipated outcomes based on monitored changes and trends Assessing - THE CORRECT ANSWER IS Determining the timing and importance of environmental changes and trends for firms' strategies and their management Economic Environment - THE CORRECT ANSWER IS refers to the nature and direction of the economy in which a firm competes or may compete. political/legal segment - THE CORRECT ANSWER IS is the arena in which organizations and interest groups compete for attention, resources, and a voice in overseeing the body of laws and regulations guiding interactions among nations as well as between firms and various local government agencies. sociocultural segment - THE CORRECT ANSWER IS concerned with a society's attitudes and cultural values technological segment - THE CORRECT ANSWER IS includes the institutions and activities involved in creating new knowledge and translating that knowledge into new outputs, products, processes, and materials Global Segment - THE CORRECT ANSWER IS includes relevant new global markets, existing markets that are changing, important international political events, and critical cultural and institutional characteristics of global markets Sustainable Physical Environment - THE CORRECT ANSWER IS refers to potential and actual changes in the physical environment and business practices that are intended to positively respond to those changes with the intent of creating a sustainable environment Competitor Intelligence - THE CORRECT ANSWER IS the set of data and information the firm gathers to better understand and anticipate competitors' objectives, strategies, assumptions, and capabilities Industry - THE CORRECT ANSWER IS is a group of firms producing products that are close to substitutes. - In the course of competition, these firms influence one another. Typically, companies use a rich mix of different competitive strategies to pursue above-average returns when competing in a particular industry. An industry's structural characteristics influence a firm's choice of strategies. Five Forces of Competition Model - THE CORRECT ANSWER IS 1. Threat of new entrants & barriers to Entry - Economies of Scale - Product Differentiation - Capital Requirements - Switching Costs - Access to Distribution Channels - Cost Disadvantages Independent of Scale - Gov't Policy - Expected Retaliation 2. Bargaining power of suppliers - suppliers increasing their costs and lowering their quality are means suppliers use to exert power over firms 3. Bargaining power of buyers - buyers bargain for higher quality, low costs, and great service 4. Threat of substitute products - products from outside a given industry that perform similar functions 5. Rivalry among competing firms - Numerous Competitors - Slow Industry Growth - High Fixed/ Storage Costs - Lack of Differentiation - High Strategic Stakes - High Exit Barriers Strategic Group - THE CORRECT ANSWER IS is a set of firms emphasizing similar strategic dimensions and using a similar strategy - The competition between firms within a strategic group is greater than the competition between a member of a strategic group and companies outside that strategic group. - The notion of strategic groups can be useful for analyzing an industry's competitive structure. Such analyses can be helpful in diagnosing competition, positioning, and the profitability of firms competing within an industry. High mobility barriers, high rivalry, and low resources among the firms within an industry limit the formation of strategic groups. competitor analysis - THE CORRECT ANSWER IS How companies gather and interpret information about their competitors, informs the firms about the future objectives, strategies assumptions and capabilities of the companies with which it competes directly. - An analysis of the general environment focuses on environmental trends and their implications - an analysis of the industry environment focuses on the factors and conditions influencing an industry's profitability potential - an analysis of competitors is focused on predicting competitors' actions, responses, and intentions. In combination, the results of these three analyses influence the firm's vision, mission, choice of strategies, and the competitive actions and responses it will take to implement those strategies. Complementors - THE CORRECT ANSWER IS are companies or networks of companies that sell complementary goods or services that are compatible with the focal firm's good or service. - When gathering competitive intelligence, firms must also pay attention to the complementors of its products and strategy • If a complementor's product or service adds value to the sale of the focal firm's product or service, it is likely to create value for the focal firm. • However, if a complementor's product or service is in a market into which the focal firm intends to expand, the complementor can represent a formidable competitor. Ethical Considerations - THE CORRECT ANSWER IS Practices considered both legal and ethical: 1. Obtaining publicly available information 2. Attending trade fairs and shows to obtain competitors' brochures, viewing their exhibits, and listening to discussions about their products • Practices considered both unethical and illegal: - Blackmail - Trespassing - Eavesdropping - Stealing drawings, samples, or documents global mindset - THE CORRECT ANSWER IS is the ability to analyze, understand, and manage an internal organization in ways that are not dependent on the assumptions of a single country, culture, or context. - Because they are able to span artificial boundaries, those with a global mind-set recognize that their firms must possess resources and capabilities that allow understanding of and appropriate responses to competitive situations that are influenced by country-specific factors and unique cultures. - Using a global mind-set to analyze the internal organization has the potential to significantly help the firm in its efforts to outperform rivals. Internal Organization - THE CORRECT ANSWER IS By studying the internal environment, firms identify what you CAN do. external = what they MIGHT choose to do. Thats why its important that a firms understand its own internal unique resources, capabilities and competencies. analyzing the firm's internal organization requires that evaluators examine the firm's entire portfolio of resources and capabilities. This perspective suggests that individual firms possess at least some resources and capabilities that other companies do not—at least not in the same combination. Resources are the source of capabilities, some of which lead to the development of core competencies; in turn, some core competencies may lead to a competitive advantage for the firm. Understanding how to leverage the firm's unique bundle of resources and capabilities is a key outcome decision makers seek when analyzing the internal organization value - THE CORRECT ANSWER IS is measured by a product's performance characteristics and by its attributes for which customers are willing to pay. - Firms use their resources as the foundation for producing goods or services that will create value for customers. - Firms create value by innovatively bundling and leveraging their resources to form capabilities and core competencies. - Superior value leads to above-average returns Conditions Affecting Managerial Decisions - THE CORRECT ANSWER IS Conditions: Uncertainty - exists about the characteristics of the firm's general and industry environments and customers' needs. Complexity - results from the interrelationships among conditions shaping a firm. Intraorganizational conflicts - may exist among managers making decisions as well as among those affected by the decisions. Resources, Capabilities, and Core Competencies - THE CORRECT ANSWER IS Resources, capabilities, and core competencies are the foundation of competitive advantage. Resources are bundled to create organizational capabilities. In turn, capabilities are the source of a firm's core competencies, which are the basis of establishing competitive advantages Resources - THE CORRECT ANSWER IS - are the source of a firm's capabilities. - are broad in scope. - cover a spectrum of individual, social and organizational phenomena. - alone, do not yield a competitive advantage A firm's assets, including people and the value of its brand name, that represent inputs into a firm's production process: • capital equipment • skills of employees • brand names • financial resources • talented managers Tangible Resources - THE CORRECT ANSWER IS are assets that can be observed and quantified. financial • physical • technological • organizational Intangible Resources - THE CORRECT ANSWER IS are assets that are rooted deeply in the firm's history, accumulate over time, and are relatively difficult for competitors to analyze and imitate. • human • innovation • reputation Types of Resources - THE CORRECT ANSWER IS Financial Resources • The firm's capacity to borrow • The firm's ability to generate funds through internal operations Organizational Resources • Formal reporting structures Physical Resources • The sophistication of a firm's plant and equipment and the attrac- tiveness of its location • Distribution facilities • Product inventory Technological Resources • Availability of technology-related resources such as copyrights, patents, trademarks, and trade secrets Intangible Resources - assets that are rooted deeply in the firm's history, accumulate over time, and are relatively difficult for competitors to analyze and imitate Human Resources • Knowledge • Trust • Skills • Abilities to collaborate with others Innovation Resources • Ideas • Scientific capabilities • Capacity to innovate Reputational Resources • Brand name • Perceptions of product quality, durability, and reliability • Positive reputation with stakeholders such as suppliers and customers Capabilities - THE CORRECT ANSWER IS The firm combines individual tangible and intangible resources to create capabilities. In turn, capabilities are used to complete the organizational task