Ch 4 Environments and Strategic Management

Competitive advantage can be summarized best by which of the following?

A product or service that is perceived as having a higher value relative to competitive offerings.

Amazon has hired a strategic consultant to consider a partnership with Porsche. Amazon would sell Porsche's cars. As part of a VRIO analysis, the consultant would realize that

Amazon is not organized to realize the value of partnering with Porsche because Porsche must sell through local dealers.

Digit is a personal finance app that connects to users' bank accounts, analyzes their regular spending habits, and automatically deposits money into a savings account for them. Users can just install the app, set it up, and start saving money. Digit's value proposition is "Save money, without thinking about it." What does this statement emphasize in the effort to differentiate Digit from its competitors?

Digit makes it easier to save money than other tools.

Not all players in an industry will be in direct competition with your organization. The first step in competitor analysis is to decide who your competitor is. For example,

Ford and Porsche both make cars, but Ford does not compete with Porsche

Sun Tzu was a Chinese military strategist whose classic treatise, The Art of War, continues to influence both military and business strategy. Which of Sun Tzu's sayings explains competitor analysis?

If you know the enemy and know yourself, you need not fear the result of a hundred battles.

Which statement best captures the meaning of a value proposition?

It explains why the customer would choose the firm's product over alternatives or no product at all.

When customers perceive the product differentiation as valuable, they will prefer to purchase the business's product over a competitor's products. This is called

a competitive advantage

Cavanagh Altar Breads makes communion wafers or crackers for Catholic services. Historically, the wafers were made by local nuns or sisters, but automation and mass production lowered costs significantly. The sisters buy the wafers wholesale and resell them to local churches. From the perspective of the bakery industry, Cavanagh's strategy is

focused and low cost.

The cash-strapped Cuban government cut back deliveries of high-octane gasoline in April 2017. Cuba depends on crisis-racked ally Venezuela for about 70 percent of its fuel needs, including oil for refining and re-exports. Better-off Cubans scrambled to locate fuel and to wait in long lines to fill up their cars. A Miami car dealer came to the rescue, offering to sell electric vehicles shipped from the United States. The dealer's strategy is shaped by

resource scarcity.

In order to understand the competitive structure of an industry, analysts use Michael Porter's Five Forces model. Porter's model includes all of the following EXCEPT:

strategic partnerships, research and development

One major role of firms is to manage risk. Consumers do not want to pay for products of unknown quality or where the delivery date is questionable. Managers also worry about unexpected changes in supplies or markets. Strategic management seeks to adapt to and benefit from change. For strategists, this ________ is both a challenge and an opportunity.

uncertainty

The advertisements for the Apple MacBook show an edge-on image of a MacBook with the caption "MacBook: Light. Years ahead." This refers to the lightweight design and the advanced tech inside. This is Apple's

value proposition

Bharti Airtel is the largest cellular provider in India, with more than 300 million customers as of 2014. It also supplies broadband and telephone services, as well as many other telecommunications services to both domestic and corporate customers. Until a few years ago Airtel did not own its own towers, which was a particular strength of some of its competitors, such as Hutchison Essar. Towers are important if your company wishes to provide wide coverage nationally. In a SWOT analysis, this point would be ________.

weakness

Amazon relies on FedEx, UPS, the USPS, and others to deliver packages to consumers. These delivery companies are Amazon's

supply chain

Amir goes to industry conferences twice a year. The prepared speeches contain few surprises, but the side conversations give him a read on what other firms are doing and perhaps the trade-offs that they see in the industry. Amir is engaged in

environmental scanning.

A company is crafting a value proposition for its flagship product. The goal is to communicate to customers the main reason the product

is best suited to their needs

Michael Porter's Five Forces analysis looks at the forces driving an industry's profitability. An analyst might use it to compare the relative merits of

the cell phone industry and the internet service industry

SWOT analysis stands for:

Strengths, Weakness, Opportunities, Threats

In the resource view of strategy, VRIO stands for:

valuable, rare, inimitable, organized

A robust competitive analysis will allow you to focus on those companies that will compete for customers

your target market

From the inception of his electric car company, Tesla, Elon Musk has emphasized innovation and quality above all else. Part of the company's strategy is to never discount products, a policy that extends to all levels of the company. Upon hearing that some salespeople were offering promotional discounts in 2016, Musk sent an email to all Tesla employees that stated, "There can never—and I mean never—be a discount on a new car coming out of the factory in pristine condition. This is why I always pay full price when I buy a car and the same applies to my family friends, celebrities, no matter how famous or influential." Why did Musk feel the need to remind the entire company about the policy rather than just disciplining the offending salespeople?

Musk wanted to protect the business's overall strategy, and he recognized that all employees needed to be reminded of the company's luxury/performance vehicle positioning.

In 2017, the CEO of Netflix hired you as a strategic consultant to investigate music sales. What would you include as part of your VRIO analysis for Netflix?

Netflix's name is a valuable resource. Widely recognizable, the brand recognition could be leveraged to capture a portion of the streaming music market.

The general environment analysis is composed of broad societal dimensions influencing the industry or firms within it. The acronym for these dimensions is

PESTEL

The general environment analysis considers broad societal dimensions influencing the industry or firms within it. The general environment areas include

Political Economic Social Technological Environmental Legal

META is an engineering firm that manufactures electronic gyroscopes for rockets and satellites. META has patents on key features of the design. The device itself is easy to build, so competitors could easily duplicate the device, but for the patent protection. META's sole competitive advantage is

an intangible asset.

The threat of new entrants in Porter's Five Forces analysis is often the most important force affecting an industry. In the food truck industry, for example, it is easy for new firms to enter and compete. The food truck industry would benefit if there were ________, such as required and restricted licenses.

barriers to entry

Financial strength can be a competitive advantage. In the Great Recession, General Motors went bankrupt, but Ford had acquired long-term financing beforehand that carried it through the downturn. This insight is part of

competitive analysis

Strategic management

considers the entire organization and how the pieces fit together

Identifying the target customer and asking about customer demographics (age, income, location, gender, politics, etc.) is part of

customer analysis

Dominion Electric in Virginia has proposed a 600-mile gas pipeline running through the George Washington National Forest. The forest attracts tourists and tourist spending to West Virginia and Virginia. Environmental groups have demonstrated against the proposed pipeline. Regulators are investigating the risks. Politicians have taken positions for and against it. Who else should be included in an industry environment analysis?

customers, competitors, and suppliers

The five components of industry environment are

customers, competitors, suppliers, regulations, and advocacy groups

Walmart has the highest in-store revenues for any U.S. retailer but it is a distant second to Amazon's online sales. Walmart believes it needs a better ________.

e-commerce strategy

DeBeers controls many of the world's most productive diamond mines, selling more than one-third of the world's rough diamond production. When analyzing the fine jewelry industry according to Porter's Five Forces, DeBeers' control over diamond supplies reveals ________within the industry.

high bargaining power of suppliers.

The O in VRIO refers to ________ , meaning a company's capacity to use its resources with purposeful integration to achieve a particular result.

organized to capture value

Michael Porter defined classified competitive strategies based on a grid of price strategy and target markets. Microsoft's Windows Operating System competes with Apple's MAC OS X and Linux. Linux is free. What is Microsoft's strategy in this grid?

overall differentiation

The second step of the strategy process, Strategy Formulation, includes

prioritizing the tactics most important to achieving the objectives

In 1956, Dr. Hubbert accurately predicted U.S. oil production for the next 50 years. U.S. oil production started to decline in1970, causing volatile markets and, for strategists, ________. The development of fracking around 2010 restored the U.S. as a major oil producer.

resource scarcity

Macy's online store differs from the in-store experience. The online store offers free delivery on larger purchases, free returns, extensive information about the products, and reviews from other customers. Why might Macy's do business this way?

Many of the strategies needed to succeed in e-commerce are very different from competing in a non-digital environment.

In 2011, JCPenney, a retail store, replaced its CEO with Ron Johnson, the genius behind both Apple's Genius Bar and attractive retail stores. Johnson eliminated all sales and discounts at JCPenney. According to D Magazine, "Sixteen months later, the company's stock had cascaded nearly 50 percent, 19,000 employees had lost their jobs, and sales had fallen by more than 25 percent—an almost unheard of slide for a major retailer." The next stage in JCPenney's strategy process is

Strategic Evaluation and Control.

________ decides how best to attain a company's mission and vision through the coordinated efforts to achieve specific goals and objectives.

Strategic management

In conducting its situation analysis, the New England Patriots, a professional football team, sees that most of its players are individually top competitors and their coach had been a great player. Where does this information belong in a SWOT analysis?

Strengths

The first step in the strategy process includes

To define the vision, mission, and values statement of the organization.

Amazon, the largest online retailer, has experimented with physical stores and recently bought Whole Foods. Whole Foods has almost 500 stores and gives Amazon facilities for rapid physical expansion. The general insight here is that

To survive today, organizations need to be present in both the online and physical markets.

Bharti Airtel is the largest cellular provider in India, with more than 300 million customers as of 2014. It also supplies broadband and telephone services, as well as many other telecommunications services to both domestic and corporate customers. Bharti Airtel is considering a customized version of the Google search engine, which will enhance broadband services to customers. The tie-up with Google will bolster the Airtel brand and also provide advertising opportunities in India for Google. A SWOT analysis was done. This partnership represents ________.

an opportunity

Amazon initially stole business from Best Buy. Customers would visit Best Buy to see the products and then look for the lowest prices online, often finding them at Amazon.com. Best Buy gradually found a way to compete. First, they committed to match prices with Amazon. Best Buy's salespeople are knowledgeable and helpful, something Amazon cannot offer. And they learned to showcase and ship, using their stores as warehouses for quick delivery to the local area. Best Buy's strategy mixed "brick-and-mortar" and

e-commerce

Domestic U.S. companies conducting a PESTEL analysis consider national growth, employment, inflation, and interest rates. These are aspects of which macro term?

economic

If a manager is listing resources that can be used for a competitive advantage, which item would NOT be on the list?

economy