MAN4720 Quiz 3 Ch5&Ch6

Strategic positioning requires that managers address strategic trade-offs that:

arise between value and cost, because higher value tends to go along with higher cost.

Noneconomic factors can have a:

significant impact on a firm's financial performance, not to mention its reputation and customer goodwill.

into action takes place in the firm's business model

(how to make money).

The translation of a firm's strategy:

(where and how to compete for competitive advantage)

Using a triple-bottom-line approach, managers audit their company's fulfillment of its:

social and ecological obligations to stakeholders such as employees, customers, suppliers, and communities in as serious a way as they track its financial performance.

Managers are frequently asked to maintain and improve not only the firm's economic performance but also its:

social and ecological performance.

The triple-bottom-line framework is related to:

stakeholder theory, an approach to understanding a firm as embedded in a network of internal and external constituencies that each make contribu- tions and expect consideration in return.

To measure accounting profitability, we use:

standard metrics derived from publicly available accounting data.

Shareholder value creation is a better measure of competitive advantage over the long term due to:

the "noise" introduced by market volatility, external factors, and investor sentiment.

Some of the unique cost drivers that managers can manipulate are:

the cost of input factors, economies of scale, and learning- and experience-curve effects.

Economic value created is:

the difference between a buyer's willingness to pay for a good or service and the firm's cost to produce it (V − C).

The relationship between economic value creation and competitive advantage is fundamental in strategic management. It provides:

the foundation upon which to formulate a firm's competitive strategy of cost leadership or differentiation.

Applying a shareholders' perspective, key metrics to measure and assess competitive advantage are:

the return on (risk) capital and market capitalization.

Besides selecting an appropriate strategic position, managers must also define:

the scope of competition—whether to pursue a specific market niche or go after the broader market.

Value drivers contribute to competitive advantage only if:

their increase in value creation (ΔV ) exceeds the increase in costs, that is: (ΔV) > (ΔC).

Investors are primarily interested in:

total return to shareholders, which includes stock price appreciation plus dividends received over a specific period.

A successful blue ocean strategy requires that:

trade-offs between differentiation and low cost be reconciled.

Three components are critical to evaluating any good or service:

value (V ), price (P), and cost (C). In this perspective, cost includes opportunity costs.

In a differentiation strategy, the focus of competition is on:

value-enhancing attributes and features, while controlling costs.

Three dimensions make up the triple bottom line:

—economic, social, and ecological, also known as profits, people, and planet—

When firms fail to resolve strategic trade-offs between differentiation and cost, they end up being:

"stuck in the middle." They then succeed at neither business strategy, leading to a competitive disadvantage.

Managers develop strategic objectives for the balanced scorecard by answering four key questions:

(1) How do customers view us? (2) How do we create value? (3) What core competencies do we need? (4) How do shareholders view us?

To measure competitive advantage, we must be able to:

(1) accurately assess firm performance, and (2) compare and benchmark the focal firm's performance to other competitors in the same industry or the industry average.

Achieving positive results in all three areas can lead to:

a sustainable strategy—a strategy that can endure over time.

In a cost-leadership strategy, the focus of competition is:

achieving the lowest possible cost position, which allows the firm to offer a lower price than competitors while maintaining acceptable value.

Differentiation and cost-leadership strategies allow firms to:

carve out strong strategic positions, not only to protect themselves against the five forces, but also to benefit from them in their quest for competitive advantage.

Differentiation and cost leadership are:

distinct strategic positions.

Lowering a firm's costs is primarily achieved by:

eliminating and reducing the taken-for-granted fac- tors on which the firm's industry rivals compete.

The goal of a differentiation strategy is to:

increase the perceived value of goods and services so that customers will pay a higher price for additional features.

A blue ocean strategy often is difficult because the two distinct strategic positions require:

internal value chain activities that are fundamentally different from one another.

Total return to shareholders is an external performance metric:

it indicates how the market views all publicly available information about a firm's past, current state, and expected future performance.

Some of the unique value drivers managers can manipulate are:

product features, customer service, customization, and complements.

The five forces model helps managers use generic business strategies to:

protect themselves against the industry forces that drive down profitability.

The balanced-scorecard approach attempts to:

provide a more integrative view of competitive advantage.

Increasing perceived buyer value is primarily achieved by:

raising existing key success factors and by creating new elements that the industry has not yet offered.

The goal of a cost-leadership strategy is to:

reduce the firm's cost below that of its competitors.

Commonly used profitability metrics in strategic management are:

return on assets (ROA), return on equity (ROE), return on invested capital (ROIC), and return on revenue (ROR). See the key financial ratios in five tables in the "How to Conduct a Case Analysis" guide.

Business-level strategy determines a firm's:

s strategic position in its quest for competitive advantage when competing in a single industry or product market.