Strategic and Entrepreneurship

One of the five forces that can be exemplified by the threat that videoconferencing presents to business travel

threat of substitutes

Questions that managers might ask when beginning the strategic management process

-How can we achieve our goals -What are our values -What do we ultimately hope to achieve

Elements of a good strategy according to the AFI framework

-a diagnosis of the competitive challenge -a guiding policy to address the competitive challenge -a set of coherent actions to implement the firm's guiding policy

Characteristics of a monopolistically competitive industry

-the ability to raise prices for differentiated products -obstacles to entry -a differentiated product

Topics that should be considered during the strategy analysis phase of the AFI framework

-the firm's internal strengths and resources -the external environment and and associated challenges -the firm's business model and competitive advantages -the role of strategic leadership and the strategy-making process

The pressure of rivalry increases when these forces increase in intensity

-the threat of substitutes -the power of buyers and suppliers -the threat of entry

The economic recession that began in 2008 in the US was the result of unwise investment in _______.

real estate

Exit barriers, strategic commitments, and competitive industry structure are important factors in determining the intensity of ________.

rivalry

Characteristics of a perfectly competitive industry

-firms in the industry sell a commodity product -individual firms have little to no ability to raise prices -the industry is fragmented

A well devised strategy helps a firm understand _________.

-what to do -what not to do

What conditions lead to a strong threat of substitutes

-when the cost of switching to the substitute is low -when the price-performance trade-off is attractive

Top-down strategic planning

A rational, data-driven strategy process through which top management attempts to program future success.

Price ________ is the lack of change in price levels of good and services

stability

Managers are able to influence what types of external forces

strategic group composition, the structure of their industry

What is a positive response to ecological factors in the PESTEL model

sustainable economic growth

Economies of scale

the cost advantages that a firm obtains by increasing output, such as by spreading fixed costs over more units

When a firm is able to maximize the gap between _________, it increases its competitive advantage

the cost of production and the value of what it produces

sociocultural factors

the cultures, norms, and value of the society in which a firm competes

AFI strategy framework

the tasks are very interdependent

When restrictive government policies do not exist or when industries become deregulated, the ________ of entry is high

threat

According to Porter's model, what should be considered when analyzing a firm's competition

threat of entry, power of suppliers, power of buyers, threat of substitutes, rivalry among existing firms

Why might a company develop organizational core values

to encourage employees to make ethical choices

Philanthropic responsibility

corporate citizenship

A company is a complementor to your company if

customers value your product more when they can use it with the other company's product

Ethical responsibility

do what is right, just, and fair

An inspiring vision helps employees _________.

find meaning in their work

Economic responsibility

gain and sustain competitive advantage

In the PESTEL model, political factors are those that relate to _______.

government bodies

When buyers can credibly threaten to backwardly integrate into the industry, the power of buyer is ________

high

When suppliers offer products that are differentiated, the power of suppliers is _______

high

T/F According to the five forces model, competition involves not only creating economic value but also a significant share of the economic value created

true

As strategic commitments increase, rivalry within an industry ______.

intensifies

A key feature of an oligopoly is that the competing firms in the industry are _________.

interdependent, the actions of any one firm will influence the behaviors of the other firms

A competitive advantage ________.

is assessed relative to other competitors in the industry

The economic factors that affect a firm's external environment are ______.

largely macroeconomic

Legal responsibility

laws and regulations are society's codified ethics; define minimum acceptable standard

Deregulation of industries leads to intensified competition and higher value at lower prices for consumers. This is an example of _______ influencing business

legal

Managers have _______ resources in their quest for competitive advantage.

limited

What results from strong competitive rivalry

limits to the industry's profit potential

What are considered nonmarket strategies

lobbying, public relations, contributions, litigation

In a period of economic boom, unemployment is ______ and human resources become expensive

low

The threat of entry is high when capital requirements are _________ in comparison to the expected returns

low

The stronger the five forces in Porter's model, the _________ the industry's profit potential

lower

Stakeholder strategy

managing the interactions of individuals and groups that affect and are affected by the activities of a firm

Defining organizational core values provides employees with information on how to accomplish the organization's ________.

mission

When managers understand the forces of the external environment, they are better able to _______.

mitigate threats and leverage opportunities

An industry in which only one firm supplies the market is known as a _________.

monopoly

A _______ occurs when a firm has accrued significant market power and is changing the industry structure in its favor

near monopoly

Stakeholder impact analysis

a decision tool with which managers can recognize, prioritize, and address the needs of different stakeholders, enabling the firm to achieve competitive advantage while acting as a good corporate citizen

The ______ rate determines how many dollars one must pay for a unit of foreign currency

currency exchange

Obstacles that determine how easily a firm can enter an industry are called ________.

entry barriers

Although ________ coordination such as price fixing is illegal in the US, _______ coordination such as an unspoken understanding is not

explicit; tacit

T/F The stronger the five forces, the greater the industry's ability to earn above-average competitive advantage

false

Competitive parity

performing at the same level of a primary competitor

PESTEL stands for

political economic sociocultural technological ecological legal

When suppliers can demand higher prices for their inputs or reduce the quality of the input factor delivered, they demonstrate that they are _________.

powerful

Core values statement

principles to guide an organization as it works to achieve its vision and fulfill its mission

Which type of vision is most likely to fail

product-oriented

An increase in the overall price level is also called

inflation

Pyramid of corporate social responsibility

a model that suggests corporate social responsibility is composed of economic, legal, ethical, and philanthropic responsibilities and that the firm's economic performance supports the entire structure

When a stakeholder has power over a company it is ________.

able to influence the company to pursue a course a course of action it would not otherwise take

Strategic commitments

actions that are costly, long-term oriented, and difficult to reverse

Steps in traditional top-down strategic planning

-analysis -formulation -implementation

Advantages, independent of size, that incumbent firms possess

-brand loyalty -proprietary technology -preferential access to raw materials and distribution channels -favorable geographic locations -cumulative learning and experience effects

Primary strategy objectives

-controlling costs -creating value

The expected competitive intensity is _______, when the other four forces are _________.

-weaker., weaker -stronger, stronger

Black swan event

incidents that describe highly improbable but high-impact events

The pace of technological change seems to be _______.

increasing

In order to influence changes in their political environment firms pursue _______.

non market strategies

Mission

outlines what an organization does

Vision

outlines what the organization wants to do

Elements that comprise strategic management

analysis, formulation, implementation

An _________ can help employees feel that they are doing something worthwhile and are part of something important and meaningful

aspirational vision

In a ______ strategy formulation managers focus on deciding HOW the firm should compete

business

A rise in economic growth is reflected by

businesses expanding operations to satisfy demand

Production costs can increase when

buyers demand higher quality and more service

Strategic initiatives

can be the result of top-down planning or can emerge through a bottom-up process from deep within the organization. They have the potential to shape a firm's strategy

When a company outperforms other companies for a long time (a decade) they have a

competitive advantage

A ________ occurs when a firm performs below the industry average or is outperformed by its competitors

competitive disadvantage

Trade-offs

decisions managers need to make between two conflicting strategic options

What is the focus in a consumer-oriented vision statement

developing goods and services that solve consumer problems

When companies seek ways to recharge car batteries in a sustainable way, it is an example of ______ factors creating business opportunities

ecological

Exit barriers are composed of ________ factors

economic and social

In the external analysis phase of the AFI strategy framework, managers should ask _________.

how do external forces affect our strategy and competitive advantage

An ________ describes the tendency of managers to overestimate their ability to manage events

illusion of control

Aims of stakeholder strategy

-gain and sustain competitive advantage -manage various stakeholders effectively

What are likely outcomes of a competitive rivalry based entirely on price cutting

-most or all value is transferred to customers -firms struggle to make profits -investments from firms drop off

An industry analysis provides

-the level of profitability that can be expected for the average firm in the industry -insight into a firm's strategic position within an industry -a rigorous way of identifying the industry's profit potential

What helps determine the competitive industry structure

-the number and size of its competitors -the firm's degree of pricing power -the type of product or service -the height of entry barriers

Questions in the five steps in stakeholder impact analysis

-who are our stakeholders -what are our stakeholder's interests and claims -what opportunities or threats do our stakeholders present -what economic, legal, ethical, and philanthropic responsibilities do we have to our stakeholders -what should we do to effectively address the stakeholder concerns