BUS485 CH 2-6 & 12

In evaluating how well a company's strategy is working, the two best indicators are

SWOT and value chain analyses

What defines an insular, inwardly focused culture?

The firm believes they have all the answers because of their past great market success and is thus overconfident.

If you were asked to use a powerful analytical tool to size up Amazon's competitive assets and determine whether they can provide the foundation necessary for its competitive success in the marketplace, you would choose

VRIN tests

A company's strategic vision concerns

a company's directional path and future product-customer-market-technology focus

The difference between a merger and an acquisition is that

a merger is the combining of two or more companies into a single corporate entity, whereas an acquisition involves one company (the acquirer) purchasing and absorbing the operations of another company (the acquired).

Ride-hailing giant Uber purchased food delivery business Postmates in July 2020 in a $2.65 billion all-stock takeover. Postmates will continue to operate under its own name, but will be combined with UberEats to create the country's second-largest delivery goliath. This is known as a(n)

acquisition involving one company (the acquirer) purchasing and absorbing the operations of another company (the acquired)

A company needs financial objectives

because without adequate profitability and financial strength, the company's ultimate survival is jeopardized

Using the five forces model of competition to determine the character and strength of the competitive forces within a given industry involves

building the picture of competition in three steps: (1) identify the different parties involved, along with specific factors that bring about competitive pressures; (2) evaluate how strong the pressures stemming from each of the five forces are (strong, moderate or weak); and (3) determine whether the collective impact of the five competitive forces is conducive to earning attractive profits in the industry

Buyers are in position to exert strong bargaining power in dealing with sellers when

buyers are price sensitive because the product represents a significant portion of their purchasing budget

Company folktales and stories frequently

capture a significant part of a company's culture

A good example of vertical integration is a

crude oil refiner purchasing a firm engaged in drilling and exploring for oil

As a rule, the collective impact of competitive pressures associated with the five competitive forces

determines the extent of the competitive pressure on industry profitability

A company's values relate to such things as

fair treatment, integrity, ethical behavior, innovativeness, teamwork, top-notch quality, superior customer service, social responsibility, and community citizenship

The two culture-building roles of a company's stated values and ethical standards are to

foster a work climate where company personnel share common and strongly held convictions about how the company's business is to be conducted and to provide them with guidance about how to do their jobs, steering them toward both doing things right and doing the right things.

The competitive pressures from substitute products tend to be stronger when

good substitutes are readily available

A sustainable competitive advantage is gained when a company

has durable competitive assets that are central to its strategy and superior to those of rival firms

Low-cost leaders who have the lowest industry costs are likely to

have outmanaged rivals in finding ways to perform value chain activities more cost effectively

Tangible resources do not include

human assets

When trying to change a problem culture, management should undertake such steps as

identifying facets of the present culture that are supportive of good strategy execution and which ones are not and then specifying what new actions, behaviors, and work practices are needed in the new culture to improve performance.

Potential entrants are more likely to be deterred from actually entering an industry when

incumbent firms are willing and able to be aggressive in defending their market positions against entry

Outsourcing strategies

involve farming out value chain activities presently performed in-house to outside specialists and strategic allies

A blue-ocean strategy

involves abandoning efforts to beat out competitors in existing markets and instead inventing a new industry or new market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand

A corporate culture founded on ethical business principles and socially approved values

is a positive force underlying a company's long-term financial success and reduces the likelihood of lapses in ethical and socially approved behavior that can damage the company's reputation.

The difference between a resource and a capability is a resource

is a productive input or competitive asset, whereas a capability is the capacity of the firm to perform some internal activity competently

A competitive environment where there is weak to moderate rivalry among sellers, high entry barriers, weak competition from substitute products, and little bargaining leverage on the part of both suppliers and customers

is conducive to industry members earning attractive profits

A company's culture is in part defined and identified by

its internal work climate and personality—as shaped by its shared values, work practices, traditions, and ingrained attitudes and behaviors that define "how we do things around here."

Lululemon's strategy to acquire Mirror, the home exercise startup, for $500 million in June 2020 was primarily intended to

lead the convergence of industries whose boundaries were being blurred by changing technologies and new market opportunities

The generic types of competitive strategies include

low-cost provider, broad differentiation, best-cost provider, focused low-cost, and focused differentiation strategies

The lower the user's switching costs, the

more intense the competitive pressures posed by substitute products

Strategy-making is

more of a collaborative group effort that involves all managers and sometimes key employees, as opposed to being the function and responsibility of a few high-level executives

The five generic competitive strategies include

narrow differentiation

A company should not couch its mission statement in terms of making a profit because a profit is more correctly an

objective and a result of what a company does

The essence of a broad differentiation strategy is to

offer unique product attributes in ways that are valuable and appealing and that buyers consider the cost worth it

Whatever strategic approach is adopted by a company to deliver value, it nearly always requires

performing value chain activities differently than rivals and building competitively valuable resources and capabilities that rivals cannot readily match

First-mover advantages are unlikely to be present when

rapid market evolution (due to fast-paced changes in technology or buyer preferences) presents opportunities to leapfrog a first-mover's products with more attractive next-version products.

Strategic objectives

relate to strengthening a company's overall market standing and competitive position.

Once established, company cultures can be perpetuated by

relying on word-of-mouth indoctrination and the power of tradition to instill the culture's fundamentals, as well as frequent reiteration of core values by senior managers and group members, and regular ceremonies honoring members who display desired cultural behaviors.

The real purpose of the company's strategic vision

serves as management's tool for giving the organization a sense of direction.

The culture of a company can be a cost-efficient value chain activity because it can

spur worker pride in productivity and continuous improvement

A differentiation strategy works best when

technological change is fast-paced and competition revolves around rapidly evolving product features

One important indicator of how well a company's present strategy is working is whether

the company is achieving its financial and strategic objectives and is an above-average industry performer

A company's resources and capabilities represent

the firm's competitive assets that determine its competitiveness and ability to succeed in the marketplace

Buyer bargaining power is stronger when

the industry's products are standardized or undifferentiated

In adaptive corporate cultures

there's a spirit of doing what's necessary to ensure long-term organizational success provided that core values and business principles are not compromised and provided top management undertakes the changes in a manner that exhibits genuine concern for the legitimate interests of stakeholders.

What is the goal of signaling a challenger that strong retaliation is likely in the event of an attack?

to dissuade challengers from attacking or diverting them into using less-threatening options

Strategic offensives make sense when a company is

trying to whittle away at a rival's competitive advantage

Rivalry among competing sellers decreases

when buyer demand is growing rapidly

Being a first mover is not particularly advantageous under which circumstance?

when markets are slow to accept the innovative product offering of a first mover, and fast followers possess sufficient resources and marketing muscle to overtake a first mover

While there are many routes to competitive advantage, the two biggest factors that distinguish one competitive strategy from another are

whether a company's target market is broad or narrow and whether the company is pursuing a low-cost or differentiation strategy

When strategic managers assess the competitive power of company resources, what matters is

whether the resource is really competitively valuable, if it is rare and something competitors lack, how hard it is to copy or imitate, and how easily it can be trumped by the substitute resource strengths and competitive capabilities of rivals