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Strategic Management Exam 1 Duesing
Terms in this set (73)
What makes up Todays Competitive Markets?
--The global economy.
--Rapid technological change.
--Increasing importance of knowledge and people.
What is increasing in the Global Competitive Landscape?
--Market volatility and instability due to rapid pace of change in markets.
--Blurring of market boundaries.
--Globalized flor of financial capital.
--Need for flexibility, speed, innovation, and integration in the use of technology.
--Strategic and operational complexity of global-scale competition.
--Rising product quality standards.
What is decreasing in the Global Competitive Landscape?
--Traditional time for adapting to change.
--Traditional sources of competitive advantage
--Traditional managerial mindset.
What are the 4 Competitive Success Factors?
(Top Corporate Performers)
--Entrepreneurial/ opportunistic mindset.
--Effective use of valuable competencies.
--New/innovative products and services.
What Technological Trends are impacting the global competitive environment?
--Increasing rate of technology diffusion and the emergence of disruptive technologies.
--The information age
--Increasing knowledge source of competitive advantage.
What is Strategic Flexibility?
--Involves coping with the uncertainty and risks of hyper competitive environments.
--Must first overcome built up organizational inertia.
--Requires developing the capacity for continuous learning and applying the new and updated skill sets and competencies to the firms competitive advantage.
What 2 models make up a Competitive Strategy Model?
--Industry Organization Model (IQ).
What makes up a Successful Vision Statement?
--Enduring word picture of what the firm wants to be and expects to achieve in the future.
--Stretches and challenges its people.
--Reflects the firm's values and aspirations.
--Most effective when its development includes all stakeholders.
--Recognizes the firm's internal and external competitive environments.
--Supported by upper management decisions and actions.
What makes up an Effective Mission Statement?
--Specifies the present business or businesses in which the firm intends to compete and customers it intends to serve.
--Has more concrete,near-term forces on current product markets and customers than the firm's vision.
--Should be inspiring and relevant to all stakeholders.
What are the aspects of Primary Stakeholders?
--Can affect development of the firm's vision and mission.
--Are affected by the strategic outcomes achieved by the firm.
--Can have enforceable claims on the firm's performance.
--Are influential when in control of critical or valued resources.
What are the Categories of Stakeholders?
--Capital Market Stakeholders.
--Product Market Stakeholders.
What is a Opportunity?
--A condition in the general environment that, it exploited effectively, helps a firm achieve strategic competitiveness.
What is a Threat?
--A condition in the general environment that may hinder a firm's efforts to achieve strategic competitiveness.
What are the Dimensions in the General Environment that influence and industry and firms within?
What are the Factors that directly influence a firm within the Industry Environment?
--Threat of new entrants.
--Power of suppliers.
--Power of buyers.
--Threat of product substitutes.
--Intensity of rivalry among competitors.
What are the components of the External Environmental Analysis?
What is Scanning?
--Identifying early signals of environmental changes and trends.
What is Monitoring?
--Detecting meaning through ongoing observations of environmental changes and trends.
What is Forecasting?
--Developing projections of anticipated outcomes based on monitored changes and trends.
What is Assessing?
--Determining the timing and importance of environmental changes and trends for firms strategies and their management.
What are the Five Forces Of Competition?
1) Threat of new entrants.
2) Bargaining power of suppliers.
3) Bargaining power of buyers.
4) Threat of substitute products.
5) Rivalry among competing firms.
What are some of the Barriers To Entry?
--Economies of scale.
--Access to distribution channels.
--Cost disadvantages independent of scale.
When will Supplier Power Increase?
--Suppliers are large and few in #.
--Suitable substitute products are not available.
--Individual buyers are not large customers of suppliers and there are many of them.
--Suppliers goods are critical to the buyers' marketplace success.
--Suppliers' products create high switching costs.
--Suppliers pose a threat to integrate forward into buyers' industry.
When will Buyer Power Increase?
--Buyers are large and few in #.
--Buyers purchase a large portion of an industry's total output.
--Buyers' purchases are a significant portion of a supplier's annual revenues.
--Buyers' switching cost are low.
--Buyers can pose threats to integrate backward into the sellers' industry.
When does the Threat of Substitute products increase?
--Buyers face few switching costs.
--The substitute product's price is lower.
--Substitute product's quality and performance are equal to or greater than the existing product.
When does Industry Rivalry Increase?
--There are numerous or equally balanced competitors.
--Industry growth slows or declines.
--There are high fixed costs or high storage costs.
--There is a lack of differentiation opportunities or low switching costs.
--When the strategic stakes are high.
--When high exit barriers prevent competitors from leaving the industry.
What makes an Industry Unattractive when Interpreting one?
--Low entry barriers.
--Suppliers and buyers have strong positions.
--Strong threats from substitute products.
--Intense rivalry among competitors.
=Low profit potential.
What makes an Industry Attractive when Interpreting one?
--High entry barriers.
--Suppliers and buyers have weak positions.
--Few threats from substitute products.
--Moderate rivalry among competitors.
=High profit potential.
What is a Strategic Group?
--A set of firms emphasizing similar strategic dimensions and using similar strategies.
Why is Intra-Strategic Group Competition more intense than Inter-Strategic Group Competition?
--Similar market positions.
--Similar strategic actions.
What are Strategic Dimensions?
--Extent of technological leadership.
What are Strategic Group Implications?
--Intense competitive rivalry within a group threatens profitability of all group members.
--Strength of five forces differ across strategic groups.
--The closer the groups are in their strategies, the greater the rivalry between groups.
Why would firms Analyze the Internal Organization?
--By studying the internal environment , firms identify what they can do.
When do Firms achieve strategic competitiveness and earn above average returns?
--When their core competencies are effectively:
What is sustainability of a competitive advantage?
-The rate of core competence obsolescence because of environmental changes.
-The availability of substitutes for the core competence.
-The imitability of the core competence.
How does a firm create Value?
--By exploiting their core competencies or competitive advantages.
--By innovatively bundling and leveraging their resources and capabilities.
How is Value Measured?
--Product performance characteristics.
--Product attributes for which customers will pay.
What is a firms's most important sources of Competitive Advantage?
--Core competencies, in combination with product market positions.
What are Resources?
--The source of a firm's capabilities.
--Are broad in scope.
--Cover a spectrum of individual, social and organizational phenomena.
--Alone, do not yield competitive advantage.
--A firm's assets including people and the value of its brand name that represent inputs into a firm's production process:
-Skills of employees
What are the Types of Resources?
What are Capabilities?
--Represent the capacity to deploy resources that have been purposely integrated to achieve a desired end state.
--Emerge over time through complex interactions among tangible and intaglio resources.
--Often are based on developing, carrying, and exchanging information and knowledge through the firm's human capital.
--The foundation of many capabilities lies in:
-Unique skills and knowledge of a firm's employees.
-The functional expertise of those employees.
What are Core Competencies?
--Activities that a firm performs especially well compared to competitors.
--Activities through which the firm adds unique value to its goods or services over a long period of time.
--Resources and capabilities are the sources of a firm's competitive advantage.
What is the 4 Criteria Of Sustainable Competitive Advantage?
1) Valuable capabilities.
2) Rare capabilities.
3) Costly to imitate.
What is Value Chain Analysis?
--Allows a firm to understand the parts of its operations that create value and those that do not.
--Template firms use to:
-Understand their cost position.
-Identify multiple means that might be used to facilitate implementation of a chosen business-level strategy.
What are the Primary Activities Involved with?
--Product's physical creation.
--Product's sale and distribution to buyers.
--Product's service after the sale.
What are the Support Activities Involved with?
--Provide the assistance necessary for the primary activities to take place.
What is Outsourcing?
--The purchase of a value-creating activity from an external supplier.
-Few Orgs possess the resources and capabilities to achieve competitive superiority in all primary and support activities.
By a firm performing Fewer Capabilities:
--A firm can concentrate on those areas in which it can create value.
--Specialty suppliers can perform outsourced capabilities more efficiently.
--Improving business focus.
-Helps a firm focus on broader business issues by having outside experts handle various operational details.
--Providing access to world-class capabilities.
-The specialized resources of outsourcing providers make would-class capabilities available to firms in a wide range of applications.
--Accelerating re-engineering benefits.
-Achieves re-engineering benefits more quickly by having outsiders who have already achieved world class standard, take over process.
-Reduces investment requirements and makes firm more flexible, dynamic and better able to adapt to changing opportunities.
--Freeing resources for other purposes.
-Redirects efforts from non-core activities toward those that serve customers more effectively.
What is Business Level Defined?
--An integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific markets.
Business Level Key Issues?
--Who will be served?
--What needs will be satisfied.
--How will those needs be satisfied.
What are the three types of managing relationships with customers?
-Firm's access and connection to customers.
-Depth and detail of two way flow of information between the firm and the customer.
-Facilitation of useful interactions with customers.
How to determine the Customers to Serve?
-Process used to cluster people with similar needs into individual and identifiable groups.
What are the two sides of Market Segmentation?
What factors lie within Consumer Markets?
What factors lie within Industrial Markets?
-Common buying factor segments
-Customer size segments
How to determine which Customer Needs to Satisfy?
--Customer needs are related to a product's benefits and features.
--Customers needs are neither right nor wrong, good nor bad.
--Customer needs represent desires in terms of features and performance capabilities.
How to determine Core Competencies Necessary to satisfy customer needs?
--Firms must decide:
-Who to serve, what customers needs to meet, and how to use core competencies to implement value creating strategies that satisfy customer's needs.
--Only firms with capacity to continuously improve, innovate and upgrade their competencies can expect to meet or exceed customer expectations across time.
What is the Purpose of Business Level Strategies?
--Intended to create differences between the firms competitive position and those of its competitors.
--To position itself, firm must decide whether it intends to:
-Perform activities differently or
-Perform different activities as compared to its rivals.
What are the two types of Competitive Scope?
-The firm competes in many customer segments.
-The firm selects a segment or group of segments in the industry and tailors its strategy to serving them at the exclusion of others.
What is Cost Leadership Strategy?
--Integrated set of actions taken to produce goods or services with features that are acceptable to customers at the lowest cost relative to that of competitors.
-Relatively standardized products
-Features broadly acceptable to many customers
-Lowest competitive price
What Cost Saving actions are required by Cost Leadership Strategies?
--Building efficient scale facilities.
--Tightly Controlling production costs and overhead.
--Minimizing costs of sales, R&D and service.
--Building efficient manufacturing facilities.
--Monitoring costs of activities provided by outsiders.
--Simplifying production processes.
Cost Leadership Competitors
--Due to Cost Leaders advantageous position:
-RIvals hesitate to compete on basis of price.
-Lack of price competition leads to greater profits.
Cost Leadership Buyers/Suppliers
--Can mitigate buyers power by:
-Driving prices far below competitors, causing them to exit, thus shifting power with buyers back to the firm.
--Can mitigate suppliers power by:
-Being able to absorb cost increases due to low cost position.
-Being able to make very large purchases, reducing change of supplier using power.
Cost Leadership New Entrants/Subs
--Can frighten off new entrants due to:
-Their need to enter a large scale in order to be cost competitive.
-The time it takes to move down the industry learning curve.
--Cost leader is well position to:
-Lower prices in order to maintain its value position.
-Make investments to add features unavailable in substitutes.
-Buy intellectual property and patent developed by potential substitutes.
What is Differentiation Strategy?
--An integrated set of actions taken to produce goods or services (at acceptable cost) that customers perceive as being different in ways that are important to them.
-Focus is on no standardized products.
-Appropriate when customers value differentiated features more than they value low cost.
Differentiation Strategy Competitors/Buyers/Suppliers/New Entrants/Substitutes
-Defends against competitors because customer brand loyalty to diff product offsets price competition.
-Can mitigate buyers power because well differentiated products reduce customer sensitivity to price increases.
--Can mitigate suppliers power by:
-Absorbing price increases due to higher margins.
-Passing along higher supplier prices because buyers are loyal to diff brand.
--Can defend against new entrants because:
-New products must surpass proven products.
-New products must be at least equal to performance of proven products, but offered at lower prices.
--Well position relative to substitutes because:
-Brand loyalty to a diff product tends to reduce customer's testing of new products or switching brands.
What is Focus Strategies?
--An integrated set of actions taken to produce good and services that serve the needs of a particular competitive segment.
-Particular buyer group---Youths or senior citizens.
-Different segment of a product line---Professional craftsmen vs do it yourselfers.
-Different geographic markets---East coast vs West Coast.
Types of Focus Strategies?
--Focused Cost Leadership
What must Firms be able to do to implement a Focus Strategy?
--Complete various primary and support activities in a competitively superior manner, in order to develop and sustain competitive advantage and earn above average returns.
Factors that drive Focused Strategys?
--Large firms may overlook small niches.
--Firm may lack the resources needed to compete in the broader market.
--Firm is able to serve a narrow market segment more effectively than can its larger industry wide competitors.
--Focusing allows the firm to direct its resources to certain value chain activities to build competitive advantage.
Integrated Cost Leadership/Differentiation Strategy
--Firm that successfully uses an integrated cost leadership/ differentiation strategy should be in a better position to:
-Adapt quickly to environmental changes
-Learn new skills and technologies more quickly.
-Effectively average its core competencies while competing against its rivals.
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