Capstone

At ASI, you learned about three ways Competitive Advantage is measured, they are:

Economic Value Creation Accounting Profitability Shareholder Wealth

A firm has 30 million shares outstanding, and each share is traded at $100. Also, each shareholder gets a dividend of $2,000 annually. In this case, the market capitalization is:

$3 billion 30 million shares x $100

Corporate strategy concerns the boundaries of the firm along three dimensions:

(1) industry value chain, (2) products and services, and (3) geography (regional, national, or global markets)

These make up the five business level strategies

- Broad LC - Focused LC - Broad Diff - Focused Diff - Integration

These make up the Five Forces

- Power of the Buyers & Suppliers - Threat of New Entrants & Substitutes - Competitive Rivalry

Which of the following summarizes the difference between a firm's vision and mission?

A vision defines what an organization wants to accomplish and a mission is how the vision is accomplished.

Positive NPV

ACCEPT

Which of the following is directly proportional to profits of a firm in an industry: •Barriers to Entry? •Power of Suppliers? •Power of Buyers? •Threat of Substitutes? •Competitive Rivalry?

Barriers to Entry

Firms that compete within a Strategic Group are said to follow similar these

Business Level Strategies

It's the unique strength that is deeply embedded within a firm that creates higher value and can lead a firm towards competitive advantage

Core Competency

The X and Y variables in a SGM should never be this

Correlated

Name two criteria that determine Power of Buyer strength

Few large buyers, backward vertical integration, buyers purchase large quantities, products are standardized, buyers face no switching cost

It's the most common value chain activity that support a low cost strategy

Inbound logistics /Outbound Activities

It's the question that Porters Five Forces addresses

Industry Attractiveness

It's the level of analysis used when applying Porter's Value Chain

Internal Analysis

How is a cost-leader protected from threats from powerful suppliers?

It is more able to absorb price increases through accepting lower profit margins.

As the strategic manager of Butcher's Scissors, you are tasked with producing a strategy for introducing a new line of premium scissors. Your competitor produces a line of similar scissors at a cost of $1 and sells them for $12. Because your company has inferior production capabilities, your scissors will cost $3 each to produce. However, your handle is proven to be more comfortable than your competitors'. Assuming you are guaranteed to sell the same number of units as your competitor, which of the following strategies is most likely to achieve a competitive advantage?

Market Butcher's Scissors as a higher-quality alternative and sell them for $15.

It's the SWOT category(s) that can be applied in a PESTEL analysis

Opportunity & Threat

Market cap formula

Outstanding shares X Current Stock Price

The government of Wakanda has proposed a regulatory change in the labor law to increase their standard annual minimum wage to $55,000 per year. Which of the following PESTEL factors in this firm's general environment does this mandate best represent?

Political because it is only a proposal but if a law had been signed today then it would be Legal.

The United Auto Workers (UAW) union is an example of this powerful Five Forces category

Power of Suppliers

The nine activities of Porter's Value Chain are separated into these two distinct components

Primary & Support

Which of the following statements is true about strategic groups?

Profitability varies between different different strategic groups.

Negative NPV

REJECT

_____ is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage.

Strategic management

These are the two resources that make up the Resource Based View theory

Tangible & Intangible

It's the proper identifying name for the following categories: •Perfect Competition •Monopolistic Competition •Oligopoly •Monopoly

The SCP Framework (structure conduct performance)

It's the tool used to determine if a firm has a temporary or sustained competitive advantage

The VRIO Framework (valuable, rare, inimitable, organized)

Strategic Group Maps are made up of this many variables

Three (X,Y,Z)

Hurdle rate

WACC or higher with more risk

Soapsuds Inc, a manufacturer of cleaning agents, supplies its products to All Needs Inc, a supermarket chain. It demands that All Needs Inc create more shelf space in its stores for Soapsud's products. However, all needs ink refuses to do this. Instead, it decides to produce its own range of cleaning agents with its own label "All Wash" in this scenario, all needs Inc has exercised its bargaining power as a buyer through:

backward integration

If Elton's Electronics LLC obtains an 18 percent return on invested capital, which of the following will help determine if it has a competitive advantage over pharmaceutical companies?

comparing the return to the return on invested capital obtained by other firms in the electronics industry competitive advantage is always relative, not absolute

It's a firms ability to generate above average returns relative to competitors

competitive advantage

The third variable (Z variable) in a Strategic Group Map reveals how an industry measures this

competitive advantage

A new firm named Turn-it-Up Inc entered the radio retail industry. After performing an initial analysis, you find that this is a very consolidated industry. In response to Turn-it-Up's entrance to this industry, the two large incumbent radio firms, Listen Again LLC and Dude FM, lowered the price of their radios. They also spent more money to improve their radios and on additional marketing. By doing this, Listen Again LLC and Dude FM

decreased profit potential

Value drivers support a _________ strategy while cost drivers support a _______ strategy

differentiation low cost

Companies in the same strategic group are _____ to each other.

direct competitors

IRR

discount rate that equates to the present value of expected cash inflows and outflows

Planet of the GRapes LLc maintains a distribution plant located overseas. The local government has just been overthrown by a military group that opposes foreign influence in the country. This political situation would be classified as an _____ if using the SWOT analysis.

external threat

SWEATS is a spa that caters the needs of a small percentage of highly health-conscious consumers. It offers state-of-the-art treatments in a luxurious setting. They pursue...

focused differentiation strategy

With the emergence of smartphones, users no longer have to carry a separate music player, a video game, a laptop, or a magazine to keep themselves entertained when traveling. A smartphone is loaded with a variety of applications to satisfy all the customer needs that different industries or products individually satisfied earlier period as a result, the smartphone industry has been posing a threat to a lot of other unrelated industries. What is this phenomenon best known as?

industry convergence

It's the strategy more closely associated with "economies of scope"

integration

Enterprise holdings, The Hertz Corporation, and avis car rental, the three largest firms in the car rental industry, hold close to 94% of the industry's market share. These companies mainly compete against each other by providing unique features in their products rather than pricing them low. These firms are interdependent, and each firm must consider the strategic actions of its competitors. Which of the following industry competitive structures does this scenario best illustrate?

oligopoly (few sellers)

When companies that manufacture shipping containers want to buy iron ore, the purchase decision is solely based on price. This is because there are a large number of sellers in the iron ore industry, the iron ore is a highly undifferentiated commodity. Which of the following industry competitive structures does the iron ore industry best illustrate?

perfect competition

It's when you charge the lowest price for a good/service regardless of firm cost

price leadership

This Value Chain activity attempts to source the best possible suppliers for a firm

procurement

NPV

represents value of future cash flows, minus our initial investment

Sweet Cheezus is a brand-new restaurant that opened up in Downtown Orlando. They've hired you, a trained ASI analyst, to help them determine their _____ which you've explained relates to their ability to create value for their customers (V) while containing the cost to do so (C).

strategic position

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

"competition"

threat

A new client of ASI called, Wired LLC operates in an industry characterized by the presence of strong network effects, high brand loyalty, high economies of scale, and proprietary tech among incumbent firms. Thus we can conclude that the:

threat of new entrants is low

"an obsolete, narrow product line"

weakness