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Business Policy Final Review (Spring 2019)
Terms in this set (56)
I can recreate the grid of Porter's Generic STrategies, recreate Ansoff's Product/Mission Matrix, and discuss the SWOT Matrix
I CAN define the term "strategy"
a careful plan or method for achieving a particular goal, usually over a long period of time
I CAN recall the 8 basic elements of strategy formulation in this order
4. strategic analysis
5. strategic alternatives
6. strategic choice
7. implementation plan
8. strategic controls
I CAN name at least three qualities of an effective mission statement
1. should be unique and representative of the company's identity
2. should be easy to memorize
3. should be actionable and even measurable
4. should be applicable to every aspect of the company's daily functioning
I CAN briefly explain how culture can become self-perpetuating (because, you see, i know what self-perpetuating means) through the passionate buy in of the team, sometimes called "clan control"
Perpetual: going on and on, remaining in motion, keeping itself alive
clan control: the leadership does not have to hammer or teach as much as they reinforce the culture of the business. the people police the culture themselves
I CAN list the terms that make up the acronym SMARTA
Specific, Measurable, Attainable, Relevant, Timely, Aligned
I CAN recall the most important task a leader has and twll what a leader's most important job or role is.
the best leaders understand that leadership's main role is infusing the organization with purpose and inspiring the people in the organization's vision, mission, and purpose
I CAN recall the five forces of competition listed in Michael Porter's model
1. threat of new entrants
2. buyer power
3. threat of substitutes
4. supplier power
5. intensity of rivalry
I CAN discuss KSF's! i know what they are. i know what questions a firm asks to determine what they are. and i remember what some common KSF's are.
Key Success Factors: factors that most affect every strategic group member's ability to perform in the market place
what must we be really good at in order to be successful in this industry? what is it about operating in this industry that is vital to survival or success? what criteria do customers choose between competing offerings? what does it take for sellers to achieve a sustainable competitive advantage? what resources and capabilities does a seller have to be competitive and successful?
price, service, quality, experience, location
I CAN recall the 4 criteria of the RBV (resource-based view of internal analysis)
1. is it rare?
2. is it valuable?
3. is it inimitable?
4. is it non-substitutable?
I CAN recall the 5 common types of resources a firm might possess?
5. human capital
I CAN define "resource" and "capability"
resource: everything that a firm possesses, both tangible and intangible
capability: the output of a combination of a firm's resources
I CAN identify at least one core competence for any of the main firms we discussed this semester
walmart: low cost, great with logistics, cost control
chick fil a: customer service
United: customer service
Amazon: innovation, marketing
I CAN recall and understand the meaning of terms like "retrenchment" and "harvesting"
retrenchment: contraction of markets or products with an emphasis on getting back to the core business
harvesting: seeing the end and riding it out as long as possible, reaping benefits but not reinvesting
I CAN recall the two basic ways a firm can approach gaining competitive advantage by offering customers superior value
1. offering good product at superior price
2. offering a superior, inimitable product at a reasonable price
I CAN explain the purpose of implementation plans and strategic controls
Implementation plan: focuses on putting strategy into; plan sets forth initiatives that are designed to achieve company objectives
strategic controls: the methods of measurement and the specific targets used to measure whether or not the initiatives have been successful in reaching company objectives
I CAN name three characteristics of differentiation strategy
1. uniqueness and perceived value
2. focus on research and development, marketing, training
3. more decentralized, allowing for freedom, flexibility, creativity, and innovation
4. customer feedback beyond sales figured is highly valued
5. exceptions and opportunities
I CAN explain two ways that a firm a cost advantage over rivals can use that advantage to its benefit
1. superior pricing: undercut rival pricing and capture increasing market share
2. increased profit: earn higher profit margins at matching prices
I CAN identify the appropriate strategy for any one of the four quadrants in the BCG mix.
I CAN also identify the correct growth/share combination for each quadrant in the BCG matrix
?: Earnings: low, unstable, grow; cash flow: negative
star: Earnings: high, stable, growing; Cash Flow: neutral
Dog: Earnings: low, unstable; Cash Flow: neutral/negative
Cow: Earnings: high, stable; Cash Flow: high, stable
I CAN remember and recognize the different reason reasons Mintzberg though formal strategic planning was problematic
Time: the biggest hurdle
the fallacy of prediction
the fallacy of detachment
the fallacy of formalization
I CAN remember that vision, mission, and culture address the questions
"who do we want to be?"
"what is our purpose?"
I CAN remember that there is always tension between financial objectives and strategic objectives within a firm
can often be found between financial/strategic in the long term
I CAN remember what the important concept of "identity" means
"who are we going to be?"
I CAN identify the main components of external and internal analysis
Internal Analysis: resources, capabilities, core competencies, and sustainable competitive advantage
External Analysis: industry, competition, opportunities, and threats
I CAN identify what causes buyer power to be high
there are few buyers compared to seller; differentiation is low, price sensitivity, threat of backward integration is high
I CAN identify what conditions make rivalry among firms stronger
number of firms is high, similarity is great, market growth is slow, response to new entrants, industry ad market conditions affect competitor behavior
I CAN recall what the "value chain" concept is all about (activities, value, and cost)
breaking down a corporation's activities
I CAN identify an example of forward and backward integration
Forward: grocery store made a restaurant; whole sale bakery that sells to stores
backward: united bringing in a warehouse
I CAN recognize the basic attributes of a good, sound strategy
- maximizing strengths, taking the opportunities
- building an advantage -- cost differentiation
ECONOMICS (SHORT ANSWER)
I CAN discuss the law of comparative advantage-- whose idea it was, and what point he was trying to make regarding international trade with less developed nations
Ricardo; Comparative Advantage: trade, even with less advanced partner who hold no advantage enriches everyone
- specialization increases output, so give up the lest
I CAN recall that Marx's vision of communist society has never been able to be truly tested, because no significant society has ever been able to dissolve the central state and its powerful hold over the system
this is the answer
communism cannot be tested because no significant society has ever been able to dissolve central state and its powerful hold over our system
I CAN remember the emphasis Smith put on power and role of self-interest as the single greatest motivator humanity has
the greatest human motivator is SELF-INTEREST
I CAN remember and describe the three ways in which Smith said division of labor increases output
1. each worker increases skill and dexterity at a particular task
2. worker waste less time changing from one task to another (efficiency)
3. specialized workers will innovate and invent better systems, processes, machinery, etc. to help with that particular task
I CAN remember Mill's concept of "workfare" instead of welfare and why he believed it was important to add an expectation of work in order to receive welfare payments
-remember that in addition to the traditional welfare, there was a need for an expectation for work
- Why? mill was about what was best for people. if you did not have an expectation for work, the poor would not have any incentive to find work. it would create incentive not to work and wean people from a work ethic
I CAN regurgitate on demand the first six point of Marx's 10 point plan. because by the time we've gotten through the first six, im pretty sure we all recognize that this is not a plan we like.
1. abolition of landowning rights, and all current rents are applied to public purposes
2. heavy progressive income tax
3. abolition of all rights of inheritance
4. confiscation of the property of all emigrants and rebels
5. placing all credit in hands of state with a national bank, all capital belongs to state, exclusively monopoly
6. communication and transport put under complete state control
I CAN name the two main points of Marshall's Law of Demand
1. the greater the amount to be sold, the smaller the price has to be
2. amount demanded increased with a fall in price: amount demanded decreases with a rise in price
I CAN define opportunity cost as used by Ricardo
1. loss of potential gain from one alternative when another is chose
2. what you must give up or forgo to get something else (some other benefit that you do receive)
I CAN define "economics" using the definition used in class
the study of the use of scarce resources which have alternative uses
I CAN recall Marx's and Mill's stances on inheritance, remembering also that many thing inheritance is part of personal property and should therefore be rightly owned and passed on without penalty
Marx: inheritance should be abolished all together. no one should have more than the person next to him.
Mill: inheritance should be taxed heavily
I CAN remember what Keynes said is the most important component of overall demand and I CAN remember what is the main determinant of how much that component spends.
- the most important component is HOUSEHOLDS
- the household INCOME
Several economists expressed a common concern about a chief negative effect that socialist restrictions on profit, growth, and income would have on the future of a society. I CAN briefly articulate the nature of that concern
-capitalism provides an opportunity. in socialism, there is going to be a halt to progression. there is going to be a halt to innovation. there will be no incentive to keep working and improving
I CAN remember what Adam Smith says is the standard by which national wealth should be measured
national wealth is measured in the standard of living of households, not in procession of precious metals or raw materials
I CAN recall Smith's nickname for the free market forces that guide a seller's decision making
the invisible hand
I CAN identify what Smith believed to be the chief engine of economic growth
labor is the chief engine of economic growth: labor supply increases, labor subdivides, labor quality rises through new machines
I CAN identify all beliefs Adam Smith held about protectionism and regulation
- do not interfere with the market
- protectionism: against it. the government should not attempt to repress their self-interest but rather treat it as a natural resource
I CAN identify why Mill did not like progressive taxes and preferred proportional taxes
- Mill wanted proportional taxes because he believed that everyone should be taxed at the same rate. He wanted FAIRNESS. Progressive taxes discourage people who are making the good economical choices. he believed that the progressive taxes discourage work
I CAN identify what Marx saw as the key to capitalism's functioning
I CAN recognize Malthus' beliefs about overpopulation, reducing relief to the poor, and preventative checks
Reducing relief to the poor: by reducing relief, we can create an incentive to get them back to work. it will create a sense of urgency to provide for what the family needs. it could keep them from having more children, slowing the birthrate.
preventative checks: how can we slow the birthrate? convince people to marry later and have less children. having society think that this is what they chose to do
I CAN remember what the mercantilists believed about trade, namely their protectionist beliefs
restrict foreign trade in order to export more than is imported
I CAN remember that economics is all about:
trade-offs, choices, and consequences
I CAN remember about marginal utility-- namely what Marshall said to do if $1 spend on A brings more pleasure than $1 spent on B
if $1 spent on A brings more pleasure than $1 spent on B, we should consume A until their marginal utilities are equal
I CAN remember what Keynes said was the best way to end a recession
The best way to end a recession is to encourage as much spending as possible
I CAN identify the effects that altering prices or tax rates can have on the revenue generated by that elastic item or tax
- elasticity = responsiveness
- elastic: if prices rise, people buy less (demand falls). If prices fall, people buy more (demand rises)
- elasticity is a very important concept for those trying to generate revenue.
- because many assume that if we raise prices, or raise tax rate, etc., we will bring more dollars. Elasticity indicates that people will change behaviors in response to price changes
I CAN recall how Ricardo said a nation or individual should choose that activity in which to specialize.
comparative advantage and opportunity cost
- how do you figure out what to specialize in? you choose based on what causes you to give up the least or the smallest sacrifice
I CAN identify the economic system that, throughout history, can be credited with the greatest improvements in standard of living for the greatest number of people.
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