Sustainable Competitive Advantage-Strategy-Making Process-Corporate-Level Strategies-Industry-Level Strategies-Firm-Level Strategies
Firm-level strategies answer the question:
"How should we compete against a particular company?"
cost leadership
the positioning strategy of producing a product or service of acceptable quality at consistently lower production costs than competitors can, so that the firm can offer the product or service at the lowest price in the industry
differentiation
the positioning strategy of providing a product or service that is sufficiently different from competitors' offerings that customers are willing to pay a premium price for it
focus strategy
the positioning strategy of using cost leadership or differentiation to produce a specialized product or service for a limited, specially targeted group of customers in a particular geographic region or market segment
acquisition
the purchase of a company by another company
acquisitions
the purchase of a company by another company
direct competition
the rivalry between two companies that offer similar products and services, acknowledge each other as rivals, and act and react to each other's strategic actions
recovery
the strategic actions taken after retrenchment to return to a growth strategy
strategic reference points
the strategic targets managers use to measure whether a firm has developed the core competencies it needs to achieve a sustainable competitive advantage
When referring to a SWOT analysis, the letter T stands for , and it refers to factors that are to the organization.
threats;external
Companies that use a focus strategy have narrow buyer groups.
true
Pretend that you own a small coffee shop. You have decided that this year is a good time to grow your business, and you have chosen to do so by acquiring a laundromat next door to you. This is an example of .
unrelated diversification
When a company purchases another business that does something different from what the purchasing company does, the purchasing company is using a strategy of .
unrelated diversification
distinctive competence
what a company can make, do, or perform better than its competitors
threat of substitute products or services
a measure of the ease with which customers can find substitutes for an industry's products or services
bargaining power of buyers
a measure of the influence that customers have on a firm's prices
bargaining power of suppliers
a measure of the influence that suppliers of parts, materials, and services to firms in an industry have on the prices of these inputs
character of the rivalry
a measure of the intensity of competitive behavior between companies in an industry
BCG strategy
a portfolio strategy developed by the Boston Consulting Group that categorizes a corporation's businesses by growth rate and relative market share and helps managers decide how to invest corporate funds
competitive inertia
a reluctance to change strategies or competitive practices that have been successful in the past
valuable resource
a resource that allows companies to improve efficiency and effectiveness
valuable resources
a resource that allows companies to improve efficiency and effectiveness
imperfectly imitable resource
a resource that is impossible or extremely costly or difficult for other firms to duplicate
imperfectly imitable resources
a resource that is impossible or extremely costly or difficult for other firms to duplicate
rare resource
a resource that is not controlled or possessed by many competing firms
rare resources
a resource that is not controlled or possessed by many competing firms
Nonsubstitutable resource
a resource that produces value or competitive advantage and has no equivalent substitutes or replacements
diversification
a strategy of increasing sales by introducing new products into new markets
stability strategy
a strategy that focuses on improving the way in which the company sells the same products or services to the same customers
growth strategy
a strategy that focuses on increasing profits, revenues, market share, or the number of places in which the company does business
retrenchment strategy
a strategy that focuses on turning around very poor company performance by shrinking the size or scope of the business
_____ is a competitive move designed to reduce a rival's market share or profits.
An attack
______ seek fast growth by searching for new market opportunities, encouraging risk taking, and being the first to bring innovative new products to market.
Prospectors
In the context of sustainable competitive advantage, _____ are those resources that are impossible or extremely costly or difficult for other firms to duplicate.
imperfectly imitable resources
Question marks have market shares and are in growth markets.
low;high-
On October 10, 2006, Google purchased YouTube for $1.65 billion. In 2008, the New York Times reported that Michael Buckley was making $100,000 a year from YouTube advertisements. Use the following facts to help you analyze the competitive environment for people seeking to make money on YouTube: 1. YouTube has a partner program that has three requirements: Partners must create original content that can be streamed; partners must own the content or have express permission to monetize it; and partners must regularly upload videos that are seen by thousands of users. 2. Videos in the partner program may either be rented for a fee or have advertisements associated with them. If a video has associated advertising, the ads will be chosen based on the criteria set by YouTube and the advertisers. According to Michael Porter, the fact that it is relatively easy to become a YouTube partner is an example of . In this case, barriers are . The is influenced by all of the other competitive forces.
potential new entrants;low rivalry among competitors
competitive advantage
providing greater value for customers than competitors can
Suppose you have accepted a job as the president and CEO of a large transportation conglomerate. Over the years, the conglomerate has acquired a number of unrelated divisions. Your first action as CEO is to complete a strategic plan. Shipping-low 1% cargo inspection-high 5% railroad loading-low 75% freight forwarding-high 70% Which of the following divisions would you take profits from and continue to run? Which of the following divisions would you invest in cautiously?
railroad loading ;Railroad loading has a large market share. Also, as we can see, despite the poor growth rate of the division, we have a larger market share, thus we must focus on this division in order to harvest profits and continue to operate. cargo inspection
Pretend that you own a small coffee shop. You have decided that this year is a good time to grow your business, and you have chosen to do so by acquiring another coffee shop one town over. This is an example of .
related diversification
When a company purchases another business that does something similar to what the purchasing company does, the purchasing company is using a strategy of .
related diversification
A _____ is an assessment of the strengths and weaknesses in an organization's internal environment and the opportunities and threats in its external environment.
situational analysis
Companies following a _____ would most likely try to improve the way in which they sell the same goods or services to the same customers.
stability strategy
When a company's resources are valuable, rare, imperfectly imitable, and nonsubstitutable, it has a .
sustainable competitive advantage
resources
the assets, capabilities, processes, employee time, information, and knowledge that an organization uses to improve its effectiveness and efficiency and create and sustain competitive advantage
According to Porter's industry forces, _____ is a measure of the influence that suppliers of parts, materials, and services to firms in an industry have on the prices of these inputs.
the bargaining power of suppliers
core firms
the central companies in a strategic group
market commonality
the degree to which two companies have overlapping products, services, or customers in multiple markets
resource similarity
the extent to which a competitor has similar amounts and kinds of resources
secondary firms
the firms in a strategic group that follow strategies related to but somewhat different from those of the core firms
core capabilities
the internal decision-making routines, problem-solving processes, and organizational cultures that determine how efficiently inputs can be turned into outputs
Theo Chocolate produces organic, fair trade chocolate and other candies for not only foodies and green consumers, but also anyone who wants a milk chocolate bar. This indicates that Theo has a:
Differentiation strategy
Theo Chocolate is just one of many high-end chocolate manufacturers today. They compete against brands such as Scharffen Berger, Valrhona, and Godiva. This means that it is easy for customers to choose a different chocolate, passing up the opportunity to buy a Theo Chocolate confection. This problem illustrates which of Porter's five industry forces?
Threat of substitute products
Seattle, home to Theo Chocolate, experiences around 155 days of rain per year. CEO of Theo, Joe Whinney, recently purchased a umbrella company which will produce umbrellas in various colors and sizes. This is an example of:
Unrelated diversification
grand strategy
a broad corporate-level strategic plan used to achieve strategic goals and guide the strategic alternatives that managers of individual businesses or subunits may use
Shadow-strategy task force
a committee within a company that analyzes the company's own weaknesses to determine how competitors could exploit them for competitive advantage
star
a company with a large share of a fast-growing market
cash cow
a company with a large share of a slow-growing market
question mark
a company with a small share of a fast-growing market
dog
a company with a small share of a slow-growing market
sustainable competitive advantage
a competitive advantage that other companies have tried unsuccessfully to duplicate and have, for the moment, stopped trying to duplicate
response
a competitive countermove, prompted by a rival's attack, to defend or improve a company's market share or profit
attack
a competitive move designed to reduce a rival's market share or profits
firm-level strategy
a corporate strategy that addresses the question "How should we compete against a particular firm?"
industry-level strategy
a corporate strategy that addresses the question "How should we compete in this industry?"
portfolio strategy
a corporate-level strategy that minimizes risk by diversifying investment among various businesses or product lines
strategic dissonance
a discrepancy between a company's intended strategy and the strategic actions managers take when implementing that strategy
A sustainable competitive advantage is achieved when:
a firm's competitors cannot duplicate the value offered by the firm to its customers.
strategic group
a group of companies within an industry against which top managers compare, evaluate, and benchmark strategic threats and opportunities
threat of new entrants
a measure of the degree to which barriers to entry make it easy or difficult for new companies to get started in an industry
situational analysis
an assessment of a firm's internal and external environments
Situational (SWOT) analysis
an assessment of the strengths and weaknesses in an organization's internal environment and the opportunities and threats in its external environment
One of the four components of a sustainable competitive advantage, _____ resource is impossible or extremely costly or difficult for other firms to duplicate.
an imperfectly imitable
reactors
companies that do not follow a consistent adaptive strategy but instead react to changes in the external environment after they occur
defenders
companies using an adaptive strategy aimed at defending strategic positions by seeking moderate, steady growth and by offering a limited range of high-quality products and services to a well-defined set of customers
prospectors
companies using an adaptive strategy that seeks fast growth by searching for new market opportunities, encouraging risk taking, and being the first to bring innovative new products to market
analyzers
companies using an adaptive strategy that seeks to minimize risk and maximize profits by following or imitating the proven successes of prospectors
When conducting a SWOT analysis, information about turnover, profit margins, and staff quality can be used to identify:
company strengths and weaknesses
CLM is a leading cable operator. The company has recently declared bankruptcy and it needs to restructure its processes to attain more flexibility and allow it to raise capital. Since CLM has identified its need for strategic change, what would be CLM's next step in the strategy-making process?
conducting a situational analysis
In any organization, _____ are the less visible, internal decision-making routines, problem-solving processes, and organizational cultures that determine how efficiently inputs can be turned into outputs.
core capabilities
_____ means producing a product or service of acceptable quality at consistently lower production costs than competitors so that the firm can offer the product or service at the lowest price in the industry.
cost leadership
unrelated diversification
creating or acquiring companies in completely unrelated businesses
related diversification
creating or acquiring companies that share similar products, manufacturing, marketing, technology, or cultures
corporate-level strategy
the overall organizational strategy that addresses the question "What business or businesses are we in or should we be in?"
Businesses that do not adopt a differentiation, low-cost leadership, or focus strategy tend to be more successful than businesses that do adopt these strategies.
false
Employee abilities to create innovative products are critical for companies that adopt a low-cost leadership strategy.
false
A _____ is a broad corporate-level strategic plan used to achieve strategic goals and guide the strategic alternatives that managers of individual businesses or subunits may use.
grand strategy
Verizon and T-mobile have market commonality and resource similarity. Grade It Now Save & Continue
high;high
Cash cows have market shares and are in growth markets.
high;low
