Policy & Strategy Chapter 6
For backward integration to be a cost-saving and profitable strategy__________
a company must be able to (1) achieve the same scale economies and outside suppliers and (2) match or beat supplier's production
The principal offensive strategy options include the following: (7)
adopting and improving on the good ideas of other companies (rivals or otherwise)
Outsourcing certain value chain activities makes strategic sense whenever: (5)
an activity can be performed better or more cheaply by outside specialists
Strategic Offensives
are called for when a company spots opportunities to gain profitable market share at its rivals' expense or when a company has no choice but to try to whittle away at a strong rivals' competitive advantage
Any company that seeks competitive advantage by being a first mover thus needs to ask these questions: (5)
are there influential competitors in a position to delay or derail the efforts of a first mover?
The extent to which companies benefit from entering into alliances and partnerships seems to be a function of six factors: (6)
being sensitive to cultural differences
Partial Integration
building potions in selected stages of the vertical chain
Horizontal mergers and acquisitions can strengthen a firm's competitiveness in 5 ways: (5)
by enhancing its flexibility and dynamic capabilities
Horizontal mergers and acquisitions can strengthen a firm's competitiveness in 5 ways: (5)
by heightening its product differentiation
Horizontal mergers and acquisitions can strengthen a firm's competitiveness in 5 ways: (5)
by improving the efficiency of its operations
Horizontal mergers and acquisitions can strengthen a firm's competitiveness in 5 ways: (5)
by increasing the company's bargaining power over suppliers and buyers
Horizontal mergers and acquisitions can strengthen a firm's competitiveness in 5 ways: (5)
by reducing market rivalry
Merger and acquisition strategies typically set sights on achieving any of these objectives: (5)
creating a more cost-efficient operation out of the combined companies
Any company that seeks competitive advantage by being a first mover thus needs to ask these questions: (5)
does market takeoff depend on the development of complementary products or services that currently are not available?
The extent to which companies benefit from entering into alliances and partnerships seems to be a function of six factors: (6)
ensuring that both parties live up to their commitments
Merger and acquisition strategies typically set sights on achieving any of these objectives: (5)
expanding a company's geographic coverage
Strategic offensives should_________
exploit the power of a company's strongest competitive assets
Merger and acquisition strategies typically set sights on achieving any of these objectives: (5)
extending the company's business into new product categories
Merger and acquisition strategies typically set sights on achieving any of these objectives: (5)
gaining quick access to new technologies or other resources and capabilities
The most serious drawbacks to vertical integration includes the following concerns: (6)
integration forward or backward typically calls for developing new types of resources and capabilities
Tapered Integration
involves a mix of in-house and outsourced activety in any given stage of the vertical chain
Outsourcing
involves contracting out certain value chain activities that are normally performed in-house to outside vendors
Backward Integration
involves entry into activities previously performed by suppliers of other enterprises positioned along either stages of the industry value chain system
Forward integration
involves entry into value chain activities closer to the end user
Strategic Alliance
is a formal agreement between two or more separate companies in which they agree to work cooperatively toward some common objective
Joint Venture
is a partnership involving the establishment of an independent corporate` entity that the partners own and control jointly, sharing in its revenues and expenses
Any company that seeks competitive advantage by being a first mover thus needs to ask these questions: (5)
is new infrastructure required before buyer demand can surge?
Vertically Integrated Firm
is one that performs value chain activities more than on stage of an industyr's value chain system
The biggest danger of outsourcing____________
is that a company will farm out the wrong type of activities and thereby hollow out its own capabilities
Merger
is the combining of two or more companies into a single corporate entity
Outsourcing certain value chain activities makes strategic sense whenever: (5)
it allows a company to concentrate on its core business, leverage its key resources, and do even better what it already does best
An alliance becomes "strategic", as opposed to just a convenient business arrangement, when it serves any of the following purposes: (7)
it facilitates achievement of an important business objective (like lowering costs or delivering more value to customers in the form of better quality, added features, and greater durability)
An alliance becomes "strategic", as opposed to just a convenient business arrangement, when it serves any of the following purposes: (7)
it helps build, strengthen, or sustain a core competence or competitive advantage
An alliance becomes "strategic", as opposed to just a convenient business arrangement, when it serves any of the following purposes: (7)
it helps defend against a competitive threat, or mitigates a significant risk to a company's business
An alliance becomes "strategic", as opposed to just a convenient business arrangement, when it serves any of the following purposes: (7)
it helps open up important new market opportunities
An alliance becomes "strategic", as opposed to just a convenient business arrangement, when it serves any of the following purposes: (7)
it helps remedy of important resourced deficiency or competitive weakness
An alliance becomes "strategic", as opposed to just a convenient business arrangement, when it serves any of the following purposes: (7)
it increases bargaining power over suppliers or buyers
Outsourcing certain value chain activities makes strategic sense whenever: (5)
it reduces the company's risk exposure to changing technology and buyer preferences
An alliance becomes "strategic", as opposed to just a convenient business arrangement, when it serves any of the following purposes: (7)
it speeds the development of new technologies and/or product innovations
The principal offensive strategy options include the following: (7)
launching a preemptive strike to secure an industry's limited resources or capture a rare opportunity
Merger and acquisition strategies typically set sights on achieving any of these objectives: (5)
leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities
The principal offensive strategy options include the following: (7)
leapfrogging competitors by being first to market with next-generation products
Signals to would-be challengers can be given by: (4)
making an occasional strong counter response to the moves of weak competitors to enhance the firm's image as a tough defender
The extent to which companies benefit from entering into alliances and partnerships seems to be a function of six factors: (6)
managing the learning process and then adjusting the alliance agreement over time to fit new circumstances
Signals to would-be challengers can be given by: (4)
mantaining a war chest of cash and marketable securities
One of the best targets for offensive attacks: (4)
market leaders that are vulnerable
The principal offensive strategy options include the following: (7)
offering an equally good or better product at a lower price
Blue-Ocean Strategy
offers growth in revenues and profits by discovering or inventing new industry segments that create altogether new demand
Full Integration
participating in all stages of the vertiacal chain
The extent to which companies benefit from entering into alliances and partnerships seems to be a function of six factors: (6)
picking a good partner
Good defensive strategies can____________
protect a competitive advantage but rarely are the basis for creating one
Signals to would-be challengers can be given by: (4)
publicly announcing management's commitment to maintaining the firm's present market share
Signals to would-be challengers can be given by: (4)
publicly committing the company to a policy of matching compeitiors' terms or prices
The principal offensive strategy options include the following: (7)
pursuing continuous product innovation to draw sales and market share away from less innovative rivals
The principal offensive strategy options include the following: (7)
pursuing disruptive product innovations to create new markets
The extent to which companies benefit from entering into alliances and partnerships seems to be a function of six factors: (6)
recognizing that the alliance must benefit both sides
Scope of the Firm
refers to the range of activities that the firm performs internally, the breadth of it s product and service offerings, the extent of its geographic market presence, and its mix of businesses
One of the best targets for offensive attacks: (4)
runner-up firms wiht weakness in areas where the challenger is strong
One of the best targets for offensive attacks: (4)
small local and regional firms with limited capabilities
The extent to which companies benefit from entering into alliances and partnerships seems to be a function of six factors: (6)
structuring the decision-making process so that actions can be taken swiftly when needed
One of the best targets for offensive attacks: (4)
struggling enterprises that are on the verge of going under
Outsourcing certain value chain activities makes strategic sense whenever: (5)
the activity is not crucial to the firm's ability to achieve sustainable competitive advantage
Acquisition
the combination in which one company, the acquirer, purchases and absorbed the operations of another, the acquired
Vertical Scope
the extent to which a firm's internal activities encompass the range of activities that make up an industry's entire value chain system, from raw material production to final sales and service activites
Example of blue-ocean strategy
the online auction industry that eBay created and now dominates
Outsourcing certain value chain activities makes strategic sense whenever: (5)
the outsourcing improves organizational flexibility and speeds time to market
Horizontal Scope
the range of product and service segments that a firm service within its focal market
The principal advantages of strategic alliances over vertical integration or horizontal mergers and acquisitions are threefold: (3)
they are more flexible organizational forms and allow for a more adaptive response to changing conditions
The principal advantages of strategic alliances over vertical integration or horizontal mergers and acquisitions are threefold: (3)
they are more rapidly deployed- a critical factor when speed is of the essence
Companies that have greater success in managing their strategic alliances and partnership often credit the following factors: (5)
they build relationships with their partners and establish trust
Companies that have greater success in managing their strategic alliances and partnership often credit the following factors: (5)
they create a system for managing their alliance
The principal advantages of strategic alliances over vertical integration or horizontal mergers and acquisitions are threefold: (3)
they lower investment costs and risks for each partner by facilitation resource pooling and rick sharing
Companies that have greater success in managing their strategic alliances and partnership often credit the following factors: (5)
they make a routine part of the management process
Companies that have greater success in managing their strategic alliances and partnership often credit the following factors: (5)
they make commitments to their partners and see that their partners do the same
Companies that have greater success in managing their strategic alliances and partnership often credit the following factors: (5)
they protect themselves from the threat of opportunism by setting up safeguards
The principal offensive strategy options include the following: (7)
using hit-and-run or guerrilla warfare tactics to grab market share from complacent or distracted rivals
The most serious drawbacks to vertical integration includes the following concerns: (6)
vertical integrated companies are often slow to adopt technological advances or more efficient product methods
The most serious drawbacks to vertical integration includes the following concerns: (6)
vertical integration can result in less flexibility and accommodating shifting buyer preferences
The most serious drawbacks to vertical integration includes the following concerns: (6)
vertical integration may not enable a company to realize economies of scale if its production levels are below the minimum efficient scale
The most serious drawbacks to vertical integration includes the following concerns: (6)
vertical integration poses all kinds of capacity matching problems
The most serious drawbacks to vertical integration includes the following concerns: (6)
vertical integration raises a firm's captial investment in the industry, thereby increasing business risk
Conditions in which first-mover advantages are most likely to arise: (5)
when a first mover can set the technical standard for the industry
Conditions in which first-mover advantages are most likely to arise: (5)
when a first mover's customers will tereafter face significat swithcing costs
Conditions in which first-mover advantages are most likely to arise: (5)
when an early lead enables the first mover to move down the learning curve ahead of rivals
Late-mover advantages (first-mover disadvantages) arise in instances: (5)
when an innovator's products are somewhat primitive and do not live up to buyer exceptions, thus allowing a follower with better-performing products to win disenchanted buyers away from the leader
Late-mover advantages (first-mover disadvantages) arise in instances: (5)
when customer loyalty to the pioneer is low and first mover's skills, know-how, and actions are easily copied or even surpassed
Late-mover advantages (first-mover disadvantages) arise in instances: (5)
when market uncertainties make it difficult to ascertain wihat will eventually suceed, allowing late movers to wait until these needs are clarified
Conditions in which first-mover advantages are most likely to arise: (5)
when pioneering helps build a firm's reputation and creates strong brand loyalty
Conditions in which first-mover advantages are most likely to arise: (5)
when property rights protections thwart rapid imitation of the initial move
Late-mover advantages (first-mover disadvantages) arise in instances: (5)
when raid market evolution (due to fast-paced changes in either technology or buyer needs) gives second movers the opening to leapfrog a first mover's products with more attractive next-version products
Late-mover advantages (first-mover disadvantages) arise in instances: (5)
when the costs of pioneering are high relative to the benefits accrued and imitative followers can achieve similar befits with far lower costs. this is often the case when second movers can learn from pioneer's experience and avoid making the same costly mistakes as a pioneer
Any company that seeks competitive advantage by being a first mover thus needs to ask these questions: (5)
will buyers encounter high switching costs in moving to the newly introduced product or service?
Any company that seeks competitive advantage by being a first mover thus needs to ask these questions: (5)
will buyers need to learn new skills or adopt new behavior?
