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BUS-J 306 : EXAM 1
Strategy |
A firm's theory about how to gain
competitive advantages |
The Strategic Management Process |
Mission ---> objectives --> external/internal analysis --> strategic choice -->strategy implement -->comp adv.
increases likelihood firm will choose good strategy |
a firms mission |
encompasses the entire strategic management process
long term purpose |
objectives |
specific, measurable targets to help firm determine if its realizing its mission, tightly connected to mission and easy to measure |
external/internal analysis |
Systematic Examination of the Environment |
external analysis |
• interest rates • demographics • social trends • technology
threats/oppurtunites from the environment |
internal analysis |
internal analysis • human resources (knowledge)
• manufacturing abilities
• technology
helps a firm determine its own strengths/weaknesses |
Corporate-level strategies |
operating in multiple markets or industries simultaneously
vertical integration, diversification, mergers, alliances |
strategy implementation |
formal/informal management controls, formal organizational structure, employee compensation policies
basically who's doing what, and how |
competitive advantage |
more economic value than rivals |
business strategies |
Cost Leadership
Product Differentiation |
accounting performance |
using information from a firm's published profit and loss and balance sheet statements. |
T or F - strategy implementation is just as important as strategy formulation |
True |
two types of comp adv |
preference for firms output, and/or coast advantage |
why is a firms corporate strategy almost always based on theory? |
difficult to predict how competition will evolve |
general external environment includes.. |
tech change
demographic trends
cultural trends
economic climate
legal/politcal conditions
specific international events |
The Structure-Conduct-Performance Model |
industry structure
firm conduct
performance |
environmental threats |
threat of new competition
threat from existing competitors
threat of subs
threat of supplier leverage
threat from buyers influence |
T or F
Complementary Increase the Value of
the Focal Firms Product |
True |
four industry structures |
fragmented
emerging industry
mature industry
declining industry |
fragmented firm structure |
large # of small firms - no one is dominate, build power, exploit economies of scale |
Emerging Industry Structure |
new tech, no dominant leader, new customers come from non consumption (not competitors), first mover advantage, create switching costs |
mature industry structure |
slow demand growth, profits declining, exit begins, refine current products |
declining industry structure |
sales sustained decline, firms exiting, harvest, divest, niche |
SCP |
strategy, conduct, performance |
conduct |
strategies a firm chooses to implement in SCP model |
barrier to entry based on knowledge/info needed to compete in industry on daily basis |
managerial know how |
all of these are considered a barrier to entry |
economies of scale
cost adv independent of scale
gov regulation
product differentiation |
forward vertical integration |
suppliers ability to enter into and compete in a firms industry |
threats of suppliers in an industry |
subs
suppliers sell unique products
few firms in industry
suppliers threaten forward vertical integration |
rivalry tends to be low in competing firms when... |
substitutes are available
|
primary drivers of comp. adv? |
resources and capabilities |
4 categories of resources |
financial, physical, human, organizational |
critical assumptions for RBV |
resource heterogeneity and resource immobility |
VRIO framework |
value, rarity, imitability, organization |
valuable but not rare resources |
competitive parity |
costs of imitation |
casual ambiguity, unique historical conditions, social complexity |
valuable, rare, and costly to imitate |
... |
product differentiation |
focus directly on attributes of service/good
product features
product complexity
timing of production
location/relationship among customers
|
architectural Competence |
firms organize a structure that facilities coordination among disciplines to conduct research example of linkages |
cooperative strategic alliances |
linkages between firms that differeinate their product |
product differentiation helps reduce... |
threat of subs |
basis of product differentiation |
value! |
n a decline industry where should product differentiation efforts be focused? |
becoming industry leaders based on reputation |
to differentiate a firm can choose one of the following to focus on... |
attributes of product/service
relationship with customers
linkages within firm |
attributes of product/service differentiation |
product features, product complexity, product introduction, product location, |
attributes of relationship differentiation |
product customization, consumer marketing, reputation, product mix, distribution channels, service, support |