Strategic Management Midterm Questions and Definitions
Ultra-low cost
A model in which basic service is provided at a low cost and extra items are sold at a premium.
Recession
A slowdown in a nation's economy
Laggards (16%)
the last adopters, who distrust new products
environmental scanning
the process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends
late majority
the last group of buyers to enter a new product market; when they do, the product has achieved its full market potential
Stakeholders
the people whose interests are affected by an organization's activities
Legal Analysis
the process of applying the law to specific facts
When implementing the razor-razor-blade strategy, companies make their profit from:
complementary goods
Strategy formulation concerns the choice of strategy in terms of ______ to compete.
where and how
Johnson et al
*If the parasites are causing deformities then the treatments with higher parasite numbers will lead to increased deformities *Data supports the hypothesis that Ribeiroia (but not Alaria) infection causes deformities in this tree frog population
vision strategy
- Financial Perspective - Internal Business Process Perspective - Learning and Growth Perspective - Customer Perspective
TABLES
------
LEARNING REVIEW QUESTIONS
--------
MAJOR CONCEPTS TO UNDERSTAND AND BE ABLE TO APPLY
-----------------
Values business
-Subjective and related to choice -Used to develop norms -Provides guidance to organizations -Differs across cultures and firms
5 Stages of Decline
1-Hubris born of success,2-undisciplined pursuit of more, 3- denial of risk and peril, 4-grasping for solutions, 5-capitulation of irrelevance or death
sociocultural analysis
1. Power Distance 2. Uncertainty Avoidance 3. Individualism 4. Masculinity 5. Time Orientation
Board of Directors Responsibilities
1. Setting corporate strategy, overall direction, mission, or vision 2. Hiring and firing the CEO and top management 3. Controlling, monitoring, or supervising top management 4. Reviewing and approving the use of resources 5. Caring for shareholder interests
strategic groups
A set of companies that pursue a similar strategy in a specific industry
groupthink
A situation in which group members seek unanimous agreement despite their individual doubts
product innovation
A type of innovation that occurs when a business either creates or improves a product
What tactic did Amazon use when entering the book selling space and introducing the Kindle?
Amazon used disruption
How does strategic management help an organization cope with changes in its external and internal environments?
As you might expect, external analysis is also very important in the context of strategic management. When evaluating your organization's goals and resources, you absolutely need to look at the surrounding business environment.In the context of strategic management, internal analysis is crucial for a few reasons. Your organization might be spending too much in some areas due to internal inefficiencies, or, alternatively, your organization could be leaving money on the table. The only way to reveal these things — and get a true understanding of how resources are being used in your organization — is by means of internal analysis.
3 Jim Collins Buzzwords
BHAG, Level 5 leadership, 5 stages of decline
BHAG
Big hairy audacious goals that are clear and compelling and need little explanation
How can one use breakeven analysis to help evaluate an investment or pricing decision?
Break-even analysis tells you how many units of a product must be sold to cover the fixed and variable costs of production. The break-even point is considered a measure of the margin of safety. Break-even analysis is used broadly, from stock and options trading to corporate budgeting for various projects.
Blue Ocean Strategy
Business-level strategy that successfully combines differentiation and cost-leadership activities using value innovation to reconcile the inherent trade-offs.
technological analysis
Consider: -present and future state of technology -competing technologies to present technologies -innovation potential -customer use of technology/speed of technology transfer/rates of obsolescence -legislation on technology
Tedlow, "Leaders in Denial"
Denial has involved many other issues as well, from ignoring external forces such as technological innovation and demographic change to overestimating a company's own capabilities and resources.
What does a manager do with information gained through an external analysis?
External analyses can help businesses adapt to change and streamline their current products to fit the needs of their customer base better. Regardless of whether you are a business owner or finance professional, conducting an external analysis can help guide your company to success
How does one do an external analysis?
External analysis means examining the industry environment of a company, including factors such as competitive structure, competitive position, dynamics, and history. On a macro scale, external analysis includes macroeconomic, global, political, social, demographic, and technological analysis.
GDP
Gross Domestic Product- the total market value of all final goods and services produced annually in an economy
Shakeout Stage
Growth has slowed Intense competition Increasing Industry overcapacity Declining profitability Increased cut costing Increased failures
shareholders
Investors who purchase shares of stock in a corporation.
Which of the following reduces profit margins for air carriers?
Large corporate customers contracting with the U.S. airline industry
Blackberry's Rise and Fall
Let's think about the rapid progress in mobile computing. BlackBerry, once an undisputed leader in the smartphone industry, did not recognize or act upon the changes in the external environment early enough. Consumer preferences changed quickly once the iPhone and later the iPad were introduced. Professionals brought their own Apple or other devices to work instead of using company-issued BlackBerries. Although the Canadian technology company made a valiant effort to make up lost ground with its new BlackBerry 10 operating system and several new models, it was too late.
Agency Model
Producer relies on an agent or retailer to sell the product. At a predetermined percentage commission Producer may also control the retail price.
Bundling Model
Products or services for which demand is negatively correlated at a discount
External Stakeholders
people or groups in the organization's external environment that are affected by it
Level 5 leadership
Self effecting, quiet, reserved motivators who inspire standards, not personality
What explains the reasons that oftentimes stakeholders in the same organization have different goals?
Stakeholders may have different goals because of their natural inclination of where they see the organization heading, this can be mitigated if the organization has clearly defined goals and strategic leadership that keeps the entire organization on the same page
A(n) ____ group is a set of companies within a specific industry that seek to achieve competitive advantage in similar ways.
Strategic
What coordinating role does the strategic management process play?
Strategic Control processes ensure that the actions required to achieve strategic goals are carried out, and checks to ensure that these actions are having the required impact on the organisation.
What does strategic leadership involve?
Strategic leadership is a practice in which executives, using different styles of management, develop a vision for their organization that enables it to adapt to or remain competitive in a changing economic and technological climate.
What's the difference between a strategic plan and an operating budget?
Strategic planning is a long-term process, usually addressing issues relevant to a time frame of at least a year. An operating budget tends to cover a shorter period of time, such as less than a year.
When suppliers can demand higher prices for their inputs or reduce the quality of the input factor delivered, they demonstrate that they are ______.
powerful
Wholesale Model
prices are determined by the retailer
As a consequence of the rapid development of business models, ______ may breach existing rules of commerce.
producers
A firm that successfully leverages network effects can ___
push its industry into the growth stage
When a company offers video-game consoles at a steep discount, but charges customers high fees for games, they are operating on a ______ business model.
razor-razor blade
Triple Bottom Line
recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth
SG&A
selling, general, and administrative expenses
Simons: Stress Test Strategy
set priorities, focus on priorities, creative tension, adapt strategy
the crossing-the-chasm framework
shows how each stage of the industry life cycle is dominated by a different customer group
maturity stage
stage of the product life cycle when industry sales reach their peak, so firms try to rejuvenate their products by adding new features or repositioning them
introduction stage
stage of the product life cycle when innovators start buying the product
decline stage
stage of the product life cycle when sales decline and the product eventually exits the market
growth stage
stage of the product life cycle when the product gains acceptance, demand and sales increase, and competitors emerge in the product category
contribution margin
The amount remaining from sales revenues after all variable expenses have been deducted. Sales - Variable Costs
Political Analysis
the attempt to describe (to answer the what questions) and then to explain politics (to answer the why and how questions)
Technology Enthusiasts
the customer segment in the introductory stage of the industry life cycle
strategy implementation
the process of putting strategies into action
Strategy is _____
the set of actions a firm takes to achieve a competitive advantage
strategy
the set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors
Both strategy formulation and strategy implementation are aspects of ______.
the strategy process
Ecological Analysis
The examination of issues and problems at different levels of the human ecosystem, ranging from the individual to macrosystems (e.g., cultures or societies).
How do the roles of vision, mission, and values affect strategy-setting?
The fundamental purpose of strategic planning is to align a company's mission with its vision. Without mission and vision, the plan exists in a vacuum, as the mission is the starting point for planning, the vision is the destination, and the strategic plan is the roadmap that helps you navigate from one to the other.
early adopters
those who adopt an innovation early in the diffusion process but after the innovators
The _______ is the idea that products or services available from outside the given industry will come close to meeting the needs of current customers.
threat of substitutes
Serena is the CEO of an online retailer. She and her immediate staff have decided to implement a company-wide marketing strategy to improve online sales in Central and South America. What type of strategic approach is Serena engaging in?
top-down strategic planning
Upper-echelons theory views organizational outcomes as a reflection of the values of the ______.
top-management team
Sociocultural factors are constantly in flux and also differ across groups.
true
competitive disadvantage
underperformance relative to other competitors in the same industry or the industry average
pay as you go model
users pay for only the services they consume
In crafting a strategic management plan, leaders must first determine the company's long-term objective. This means leaders must first define the organization's ______.
vision
In the strategic management process, which basic principle must be defined first?
vision
What are the major elements of a strategic plan?
vision, mission, SWOT analysis, core values, goals, objectives, and action plans
Which of the following makes it more likely that producers will breach existing rules of commerce when responding to rapid developments in business models?
when the business models are disruptive
variable vs. fixed costs
Variable Costs: -costs that change, in total, in direct proportion to changes in activity level ex. direct materials Fixed Costs: -costs that stay the same regardless of activity ex. rent
Which of the following terms best describes an organization's primary objective and what it ultimately wants to accomplish?
Vision
What are the key elements included in a strategic plan?
Vision Statement. Mission Statement. Core Values. SWOT Analysis. Long-Term Goals. Yearly Objectives. Action Plans.
What is the typical result of cognitive limitations?
We choose the option that is "good enough" and satisfies immediate needs.
Corporate Social Responsibility (CSR)
a business's concern for society's welfare
process innovation
a change in the way a product or service is conceived, manufactured, or disseminated
market share
a company's product sales as a percentage of total sales for that industry
competitive parity
a firm's strategy of setting prices that are similar to those of major competitors
According to Michael Porter, the profit potential of an industry is ______.
a function of five forces related to competition
Inflation
a general increase in prices and fall in the purchasing value of money.
strategic management
a process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals
economies of scale
a proportionate saving in costs gained by an increased level of production.
break-even analysis
a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output
confirmation bias
a tendency to search for information that confirms one's preconceptions
Which of the following are examples of sociocultural factors?
a. A growing number of U.S. consumers have become more health-conscious about what they eat. b. The growth of the Hispanic population.
Which of the following industries use a subscription model? (Check all that apply.) Multiple select question. a. Magazines b. Cellphone providers c. Car rental d. Internet providers
a. Magazines b. Cellphone providers d. Internet providers
Which of the following are ways that powerful suppliers are a threat to firms? Multiple select question. a. They can reduce the industry's profit potential. b. They can force the cost of production to increase. c. They can force the cost of production to decrease. d. They can drive away the consumer market directly.
a. They can reduce the industry's profit potential. b. They can force the cost of production to increase.
What are the three aspects of mapping strategic groups? Multiple select question. a. graphing the firms in the strategic group and indicating each firm's market share b. choosing two key dimensions for the horizontal and vertical axes c. identifying the most important strategic dimensions d. calculating the shareholder value of the two firms selected
a. graphing the firms in the strategic group and indicating each firm's market share b. choosing two key dimensions for the horizontal and vertical axes c. identifying the most important strategic dimensions
Managers implement the blueprint of their business model through which of the following? (Check all that apply.) Multiple select question. a. processes b. voice memos c. culture d. structures
a. processes c. culture d. structures
The pressure of rivalry increases when which of the following forces increase in intensity? (Check all that apply.) Multiple select question. a. the power of buyers and suppliers b. the barriers to entry c. the threat of substitutes d. the threat of entry
a. the power of buyers and suppliers c. the threat of substitutes d. the threat of entry
competitive advantage
an advantage over competitors gained by offering greater customer value, either by having lower prices or providing more benefits that justify higher prices
sustainable competitive advantage
an advantage that cannot be copied by the competition
contribution
an individual efforts in a common set purpose
Which of the following are characteristics of the companies in a strategic group? (Check all that apply.) Multiple select question. a. The companies do not seek a competitive advantage. b. The companies pursue similar strategies. c. The companies differ in important dimensions from companies in other strategic groups. d. The companies form part of a specific industry.
b. The companies pursue similar strategies. c. The companies differ in important dimensions from companies in other strategic groups. d. The companies form part of a specific industry.
Which of the following contribute to consumer buying power? Multiple select question. a. moderately high barriers to entry b. low switching costs c. high levels of product differentiation d. real time, accurate price comparisons
b. low switching costs d. real time, accurate price comparisons
barriers to entry
business practices or conditions that make it difficult for new firms to enter the market
The power of ______ is the pressure they can put on the margins of producers in the industry by demanding a lower price or higher product quality.
buyers
Production costs can increase when _____
buyers demand higher quality and more service
Industry Dynamics
changes in competitors, sales and profits in an industry over time
During the decline stage of the industry life cycle, product innovation efforts ______.
come to a halt
switching costs
costs that make customers reluctant to switch to another product or service
What must a firm do after diagnosing its specific competitive challenge?
create an effective guiding policy
Successfully transitioning from one stage of the industry life cycle to the next is referred to as ______.
crossing the chasm
Demand declines most rapidly in the ______ stage of the industry life cycle.
decline
capital requirements
describe the "price of the entry ticket" into a new industry
What method for improving strategic decision making involves having a separate team or individual carefully analyze and critique the underlying assumptions and potential downsides of a proposed course of action?
devil's advocacy
internal stakeholders
employees, owners, board of directors
Strategic Evaluation
financial measurement, innovation, employee satisfaction & engagement, monitoring and gauging strategic impact of macro trends
Michael Porter
focused on the importance of country factors to explain a nation's dominance in the production and export of certain products
External Analysis
focuses on factors such as characteristics of the firm's customers, market segments, positioning strategies, and competitors
Economic Analysis
focuses on what is the best decision for a company's profits
strategic intent
focuses organizational energies on achieving a compelling goal
Everybody can use the basic version of Dropbox for free, but needs to pay for premium services. Dropbox operates on a ______ business model.
freemium
Premium services cost money with complementary basic services, is a description of which type of business model?
freemium
The pay-as-you-go model is ______.
gaining momentum
Which are the four steps of the innovation process?
idea, imitation, innovation, invention
scenario planning
identifies alternative future scenarios and makes plans to deal with each
mission strategy
identify the purpose of organization and select strategies to pursue this mission
Black Swan Events
incidents that describe highly improbable but high-impact events
network effects
increases in the value of a product to each user, including existing users, as the total number of users rises
mobility barriers
industry-specific factors that separate one strategic group from another
Which of the following statements about scenario planning is true?
it starts with the top-down approach
Which of the following tend to result from strong competitive rivalry?
limits to the industry's profit potential
PESTEL Analysis
Political Economic Social Technological Environmental Legal
Discuss the relationship between stakeholder strategy and sustainable competitive advantage?
•Stakeholders are individuals or groups that have a claim or interest in the performance and continued survival of the firm. They make specific contributions for which they expect rewards in return.• Internal stakeholders include stockholders, employees (for instance, executives, managers, and workers), and board members. •External stakeholders include customers, suppliers, alliance partners, creditors, unions, communities, and governments at various levels.•Several recent black swan events eroded the public's trust in business as an institution and in free -market capitalism as an economic system. •The effective management of stakeholders—the organization, groups, or individuals that can materially affect or are affected by the action of a firm—is necessary to ensure the continued survival of the firm and to sustain any competitive advantage.
"The Five Forces Competitive Analysis Checklist"
1. define the relevant industry 2. identify the key players in each of the five forces and attempt to group them into different categories 3. determine the underlying drivers of each force 4. assess the overall industry structure
Which statement describes the long tail?
A large amount of revenue derived from a small number of units among almost unlimited choices
Porter's Five Forces Model
A model for analyzing the competitive forces within the environment in which a company operates, to assess the potential for profitability in an industry.
Which statements about creating and implementing an effective business model are true? Multiple select question. a. Firms must transform their competitive strategy into a blueprint of initiatives and actions that support their goals. b. Firms must use a blueprint to come up with strategies for how the firms will compete in the market. c. Firms must implement their competitive strategy blueprint through processes, procedures, culture, and structure. d. Firms that wish to be truly innovative and original must avoid using a blueprint, which might be limiting.
a. Firms must transform their competitive strategy into a blueprint of initiatives and actions that support their goals. c. Firms must implement their competitive strategy blueprint through processes, procedures, culture, and structure.
Freemium
subscriptions that provide some content for free but require a monthly subscription to take advantage of all the site has to offer
What industry trends and external, internal, and competitive factors are facing the fast food industry today or a favorite industry with which you are familiar?
Low Wages, Few Benefits for WorkersThe fast-food industry hires around 3.5 million workers and pays minimum wage to a higher percentage of its employees than any other industry in the U.S. The only group that earns a lower hourly rate is migrant farm workers.
What are the factors that determine the level of competitive rivalry?
Market saturation. ... Slow market growth. ... High overhead. ... Lack of differentiation. ... Low switching costs. ... Supply and demand. ... Business diversity. ... Strategic planning.
What is and what should be the relationship between an organization's mission and its strategy?
Mission is a general statement of how you will achieve your vision. Strategies are a series of ways of using the mission to achieve the vision. Goals are statements of what needs to be accomplished to implement the strategy.
Value Creation
Performing activities that increase the value of goods or services to consumers
What are the strategic implications of different stages in the industry life cycle?
A product's life cycle is its progress from when it is created to when it is discontinued. There are four stages in the cycle, which are development, growth, maturity, and decline. The product life cycle helps business owners manage sales, determine prices, predict profitability, and compete with other businesses.
Starbucks CEO, Kevin Johnson, "I'm not Howard Schultz"
In January 2008, Howard Schultz came out of an eight-year retirement to once again take the reins as CEO of Starbucks. His mission was to re-create what had made Starbucks so special from the start. Upon his return, he immediately launched several strategic initiatives to turn the company around. Just a month after coming back, Schultz ordered more than 7,000 Starbucks stores across the United States to close for one day, so baristas could relearn the perfect way to prepare coffee. The company lost over $6 million in revenue that day, which heightened investor jitters. The financial hit and investor anxiety notwithstanding, Schultz knew it was critical for Starbucks employees to relearn what made the Starbucks experience so unique- he saw this as the key to restoring its corporate culture. Howard Schultz is not a founder of Starbucks, he is the one who created the company as we know it today. Schultz hopes that this second retirement from the company that he built from the ground up will be his last. In the meantime, new CEO Kevin Johnson, who transitioned from Microsoft, faces several challenges-in particular, how to maintain Starbucks' core competencies and how to achieve future growth-both domestically and internationally. The maturing sales of the more than 14,000 U.S.-based stores is one of the biggest challenges facing Johnson today.
Jim Collins
Level 5 Leadership: Their ambition is first and foremost for the institution, not themselves. Paradoxical blend of personal humility and professional will. They set up successors for even greater success.
What is the five forces model and how is it used?
Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape every industry and helps determine an industry's weaknesses and strengths. Five Forces analysis is frequently used to identify an industry's structure to determine corporate strategy.
strategic formulation
The development of a set of corporate, business, and functional strategies that allow an organization to accomplish its mission and achieve its goals
sociocultural forces
The influences in a society and its culture(s) that change people's attitudes, beliefs, norms, customs, and lifestyles
How Dollar Shave Club Disrupted Gillette
To sustain this advantage over time, Gillette followed up with incremental innovations, mainly by adding additional razor blades to the razor, all the way from one blade to six. As a resul of this innovation pattern over time, one of Gillette's newest razors, the Fusion ProGlide with Flexball technology, a razor handle that features a swiveling ball hinge, costs $11.49 (and $12.59 for a battery-operated one) per razor. This created a situation where Gillette exposed itself to low-cost disruption. One key is that the high-end, highly priced offering of the market leader is not only overshooting what the market demands, but also often priced too high. One wonders if a person really does need six blades on one razor, or wants to pay over $10 for one cartridge. Seeing this opening provided by Gillette's focus on the high-endyhigh-margin business of the market. Dollar Shave Club established a low-cost alternative to invade Gillette's market from the bottom up. With an $8,000 budget and the help of a hilarious promotional video that went viral with over 25 million views, the entrepreneur Michael Dubin launched Dollar Shave Club, an ecommerce startup that delivers razors by mail. After the promotional video was uploaded on YouTube in March 2012, some 12.000 people signed up for Dollar Shave membership within the first 48 hours. It also raised more than $20 million in venture capital funding from prominent firms such as Kleiner Perkins Caufield & Byers and Andreessen Horowitz, among others. Dollar Shave Club followed up with advertising on regular television in addition to its online campaigns and has expanded its product lines with the introduction of additional personal grooming products.
Economic Forces
consist of the general economic conditions and trends - unemployment, inflation, interest rates, economic growth - that may affect an organization's performance
senior management
makes long-range strategic decisions about products and services as well as ensures financial performance of the firm
technological forces
new developments in methods for transforming resources into goods or services
exit barriers
obstacles that determine how easily a firm can leave an industry
Demographics
statistical data relating to the population and particular groups within it.
environmental uncertainty
the degree of change and complexity in an organization's environment
True or false: The best measure of competitive advantage can be found in the performance of specific departments.
False: the criteria reflecting overall business unit performance provide the best measure of competitive advantage
True or false: The freemium business model can be considered an evolutionary variation on the razor--razor-blade model.
True: the base product is provided free, and the firm relies on usage to make money
According to the ______, effective leadership is the outcome of certain intrinsic talents as well as education. Multiple choice question.
Upper-echelons theory
Which statements about creating and implementing an effective business model are true? Multiple select question. a. Firms must implement their competitive strategy blueprint through processes, procedures, culture, and structure. b. Firms must use a blueprint to come up with strategies for how the firms will compete in the market. c. Firms must transform their competitive strategy into a blueprint of initiatives and actions that support their goals. d. Firms that wish to be truly innovative and original must avoid using a blueprint, which might be limiting.
a. Firms must implement their competitive strategy blueprint through processes, procedures, culture, and structure. c. Firms must transform their competitive strategy into a blueprint of initiatives and actions that support their goals.
Which of the following are aims of stakeholder strategy? (Select all that apply.) Multiple select question. a. To manage various stakeholders effectively b. To persuade internal stakeholders to cede control to external stakeholders c. To reduce the number of stakeholders of a firm d. To gain and sustain competitive advantage
a. To manage various stakeholders effectively d. To gain and sustain competitive advantage
Stakeholder impact analysis is a decision tool that helps a company do which of the following? (Check all that apply.) a. Act as a good corporate citizen b. Achieve a competitive advantage c. Describe the role of functional managers in strategy formulation d. Decide where to compete
a. act as a good corporate citizen b. achieve a competitive advantage
Which of the following are important strategic dimensions in mapping strategic groups? (Check all that apply.) Multiple select question. a. expenditures on research and development b. cost structure c. product and service offerings d. expenditures on advertising and HR
a. expenditures on research and development b. cost structure c. product and service offerings
What should a successful vision do for an organization? (Check all that apply.) Multiple select question. a. It should inspire employees. b. It should describe the products and services it plans to provide. c. It should make employees feel that their work is important. d. It should ensure that employees understand their job duties.
a. it should inspire employees c. it should make employees feel that their work is important
Which of the following are factors in a firm's legal environment? (Check all that apply.) Multiple select question. a. regulations b. innovative technology c. demographic trends d. laws e. mandates
a. regulations d. laws e. mandates
Along which of the following dimensions do strategic groups differ from one another? (Check all that apply.) Multiple select question. a. research and development b. profit motive c. customer service d. distribution channels e. market segments
a. research and development c. customer service d. distribution channels e. market segments
Under a wholesale model, RETAILERS (not the wholesalers) sell goods for ______.
any price they want
Which of the following are questions that managers are likely to ask when beginning the strategic management process? Multiple select question. a. Is our vision product- or customer-oriented? b. What do we ultimately hope to achieve? c. What are our values? d. How can we achieve our goals? e. What is our profit?
b. What do we ultimately hope to achieve? c. What are our values? d. How can we achieve our goals?
Which of the following are ways in which the power of buyers affects producers? Multiple select question. a. by reducing economies of scale b. by obtaining price discounts c. by requesting more service d. by demanding higher quality
b. by obtaining price discounts c. by requesting more service d. by demanding higher quality
The business model used by telecommunication companies when they provide a basic cell phone at no charge when the customer signs a two-year contract is a combination of which of the following types of business models? (Check all that apply.) Multiple select question. a. freemium b. subscription c. pay-as-you-go d. razor--razor-blade
b. subscription d. razor-razor-blade
The pressures that industry suppliers can exert on an industry's profit potential, is also called the ______.
bargaining power of suppliers
A firm uses the ______ business model when it sells a set of products that have different levels of demand for a price less than their total combined prices.
bundling
The external forces called technological factors ______.
capture the application of knowledge to create new processes and product
Combining the razor-razor-blade model and the subscription model means that telecom providers make their money through lengthy service plans, which in turn means that it is crucial that they keep their ______ rate, or the proportion of subscribers who leave, down.
churn
subscription model
e-commerce sites sell digital products or services to customers
True or false: When a user values two products equally, they are negatively correlated.
false- negative correlation means that the user values one product more than the other
Stakeholder impact analysis is a _____-step process that allows managers to better understand and address stakeholders' needs.
five
A(n) _____ strategy is the outcome of a rational and structured, top-down strategic plan.
intended
A ____ outlines what an organization does, while a vision outlines what the organization wants to do.
mission
In the airline industry, the ______________ of offering international routes restricts movement between hub-and-spoke and point-to-point airlines.
mobility barrier
Increases in the value of a product or service that result from a corresponding increase in the number of users are known as ___.
network effects
Which of the following is an important part of strategic leadership and is the strategic leader's ability to influence and direct individuals to do things?
power
Which of the following performance dimensions matter in judging the effectiveness of a firm's strategy? (Check all that apply.)
quantitative and qualitative
Which of the following statements about legal factors as an external force is true?
regulatory changes tend to affect entire industries at once
The intensity with which companies in an industry jockey for market share and profitability is known as ___.
rivalry
A strategy-planning activity in which top management envisions various what-if scenarios to anticipate plausible futures in order to derive strategic responses is known as ______ planning
scenario
A firm's attempts to manage the web of relationships between internal and external stakeholders in order to create value is known as ______.
stakeholder strategy
Effective guiding policy is supported by and stays consistent through the use of ______.
strategic commitments
Burger Bomb is a new hamburger restaurant. In order to compete successfully against its many competitors, Burger Bomb has decided to focus on quality and an interesting, unique menu that uses locally sourced, organic ingredients. This is known as Burger Bomb's ______.
strategy
The threat of ______ is one of the five forces and can be exemplified by the threat that videoconferencing presents to business travel.
substitues
cost of goods sold
the amount of money a firm spent to buy or produce the products it sold during the period to which the income statement applies
Industry Life Cycle
the five different stages - introduction, growth, shakeout, maturity, and decline - that occur in the evolution of an industry over time
Which business model evolved from the razor—razor-blade model and involves a firm providing a base product for free, then finding ways to monetize the usage?
the freemium business model
Razor-Razor-Blade Business Model
the initial product is often sold at a loss or given away for free in order to drive demand for complementary goods
Which theory proposes that when faced with decisions, we tend to satisfice rather than optimize?
theory of bounded rationality