BADM 449 More MT1

IF VRIO is the answer, what is the question?

How to get sustained competitive advantage?

What three factors impact company performance?

Industry Context, National Context, Company Capabilities

current value of all securities issued by firm

Market Value of Firm

EVA

Operating profit - annual capital costs

What are the key elements of a PESTEL Framework?

Political, economic, sociocultural, technological, ecological, legal

. Firm-level effects are more significant than industry effects on firm performance

T

Coca-Cola's forward vertical integration of bottlers is a corporate strategy.

T

When pursing a differentiation strategy, the focus of competition is to add unique features in order to create a level of value creation that competitors cannot easily imitate

T

four conditions that can help protect a competitive advantage

(1) Better expectation of future resource value (or simply luck) 2) Path dependency (3) Causal ambiguity (4) Social complexity

Porter's 5 Forces

*Rivalry among competitors; *Threat of new entrants; *Threat of substitute products; *Bargaining power of buyers; *Bargaining power of suppliers;

What does corporate answer

where to compete

Unique strengths embedded deep within a firm, that allow a firm to differentiate its products and services from those of its rivals, creating higher value for the customer or offering products and services.

core competencies

3 levels of strategy (in order)

corporate, business, functional

The triple bottom line has what considerations

financial, social, ecological

What does business answer

how to compete

What does functional answer

how to implement (what)

levels of knowledge

individual organization

MVA

market value - total investment

Tobin's Q

market value/book value

skills that a company uses to transform inputs into outputs

organizational capabilities

current alternatives are limited by past decisions

path dependence

2 Critical Assumptions of RBV

resource heterogeneity and resource immobility

firm is a bundle of resources and capabilities that differ across firms

resource heterogenity

Assumption in the resource-based view that a firm has resources that tend to be "sticky" and that do not move easily from firm to firm

resource immobility

any assets that a firm can draw on when formulating and implementing a strategy

resources

What are the three key drivers of economic value?

revenue, cost, risk

same industry, same inputs then the firms are

rivals

two or more systems interact creating many possibilities

social complexity

Explain current rivalry and profitability

static analysis

the quest to create, capture and sustain competitive advantage

strategy

Competitive rivalry among firms in the same strategic group is generally a. More intense than competition between strategic groups. b. Less intense than competition between strategic groups. c. Similar in intensity than competition between strategic groups. d. Fairly dependent on what industry the strategic group is in.

A

If Smith Pharmaceuticals has a 15% return on invested capital (RoIC), what do you need to know to determine if it has a competitive advantage? a. It must be compared to the RoIC of the competitors or industry average. b. Nothing, 15% is a terrific return for the shareholders. c. It must be evaluated for depreciation of the capital. d. It must be compared to the history of the firm's RoIC over a number of years.

A

Values describe ____________. a. the guidelines by which we want to accomplish our goals. b. what a business actually does and why it does it. c. what the norms are of the business. d. what the business has done historically.

A

A mission describes ____________. a. what a business will do in the future. b. what a business actually does and why it does it. c. what the norms are of the business. d. what the business has done historically.

B

Amazon is known for superior IT systems and customer service. UPS provides superior supply chain management services at low cost. Both Amazon and UPS have leveraged their _______________, which has led to competitive advantage for both firms. a. Mobility resources b. Core competencies c. Economic equity d. Core complements.

B

It is difficult to pinpoint the underlying cause of Apple's phenomenal success. Gaining a deep understanding of exactly why Apple has done so well is difficult because of which situation? a. Competitive dependence b. Causal ambiguity c. Path dependence d. Social complexity

B

Japan Railways diversifying into bottled water is an example of turning a problem into a business opportunity. What type of strategy process does this represent? a. Top-down strategic planning b. An emergent strategy c. An unrealized strategy d. Scenario planning

B

One of the drawbacks to the accounting profitability approach to measuring competitive advantage is that it does not consider: a. Tangible assets such as land. b. Off-balance sheet items such as pension obligations. c. Profit earned per dollar d. How the company performed in the past.

B

When costs per unit increase as output increases, ________ occur. a. Economies of scope b. Diseconomies of scale c. Economies of efficiency d. Economies of scale

B

Which of the main industry groups in the SCP model is described as having a few large firms, differentiated products, and high entry barriers? a. Monopolistic competition b. Oligopoly c. Monopoly d. Perfect competition

B

What are the 5-Forces?

Barriers to Entry, Power of Suppliers, Power of Buyers, Threat of Substitutes, Rivalry Among Existing Competitors

According to the SCP model, what is the relationship between firms and their industries? a. The firm's structure determines the industry conduct and is not related to firm performance. b. The firm's conduct shapes the industry structure and leads to firm performance. c. The industry structure determines firm conduct and these combine to determine firm performance. d. None of these.

C

All of the following are aspects of sociocultural factors influencing industry attractiveness EXCEPT: a. The growth rate of the population b. The age distribution of the population c. Environmental protection laws d. Lifestyle changes

C

All of the following are tangible resources EXCEPT: a. Production equipment b. Distribution centers c. A firm's reputation d. A firm's headquarters building

C

Many of the early U.S. railroad companies defined themselves as being in the railroad business instead of being in the transportation needs business. These companies used ______________. a. resource-based mission b. customer-oriented mission c. product-oriented mission d. responsive mission

C

Shareholders are most concerned with ________ when it comes to measuring a firm's competitive advantage. a. Value creation b. Global expansion c. Return on risk capital d. Market share

C

Strategy formulation and implementation affect the organization at every level. What is the top level of strategy within an organization? a. Business b. Functional c. Corporate d. Production

C

Strategy is the quest to gain and sustain competitive advantage. Which of the following statements is incorrect about strategy? a. Through co-opetition, strategy is not necessarily a zero-sum game. b. It is the manager's decision about deciding what to do, and what not to do. c. It is about finding out industry best practices and imitating the best player. d. It requires long-term commitments that are often not easily reversible.

C

Suppliers are powerful when which of the following happens? a. Satisfactory substitutes are available. b. They sell a commodity. c. They offer a credible threat of forward integration. d. They are part of a highly fragmented industry

C

The threat of new entrants is increased if: a. Access to distribution channels is hard to gain. b. Economies of scale in the industry are high. c. Product differentiation in the industry is low. d. Capital requirements in the industry are high.

C

To generate sustainable competitive advantage, a resource should be: a. Valuable, rare, intangible b. Valuable, real, imitable c. Valuable, rare, costly to imitate d. Valuable, costly to imitate, differentiated

C

What is the sixth force of industry attractiveness? a. Substitutes b. Economic growth rates c. Complements d. Technological innovation

C

Which industry below is most likely to have low average profits? a. An industry with low bargaining power of suppliers and low threat of entry. b. An industry made up entirely of firms pursuing product differentiation. c. An industry with high bargaining power of buyers and low-cost substitutes. d. An industry with prevalence non-price competition and rarely falling into price competition

C

"Stakeholders" under the stakeholder theory are: a. Only concerned with return on risk b. Governmental bodies who oversee industry regulations. c. Interested in maximizing profits. d. Anyone who makes contribution to a firm and expects inducement in return.

D

2. _____________assesses whether a good business opportunity exists or not. a. A structure-conduct-performance (SCP) analysis b. A five forces industry environmental analysis c. A PESTEL model analysis d. All of these.

D

A vision describes ____________. a. what a business will do in the future. b. what a business actually does and why it does it. c. what the norms are of the business. d. an organizations aspirations and goals

D

All of the following are external shareholders except which of the following? a. Alliance partners b. Customers c. Creditors d. Competitors

D

Creating resources that meet the VRIO criteria are strategically important to a firm because: a. These resources can be easily deployed throughout the firm. b. Firms that possess these types of resources may be able to experience a temporary competitive advantage. c. It creates the heterogeneity essential for competitive parity d. Firms that possess these types of resources may be able to experience a sustained competitive advantage.

D

Where is industry headed in the future

Dynamic analysis

Compared to intangible resources, tangible resources are more likely to lead to sustainable competitive advantage because they are more likely to lead to capital cost requirement barriers to entry.

F

Succeeding at an integration strategy is typically easy for a firm

F

When measuring competitive advantage under the economic value creation approach, it can be easy to determine what the consumer's maximum willingness to pay will be.

F

Value drivers that managers can use include input factors, economies of scale, and learning-curve effects.

F (cost)

Business strategy concerns the choice of strategy in terms of where to compete

F. (Business strategy concerns the choice of strategy in terms of how to compete.)

Fragmented industry structures typically offer high profitability potential

F. (Fragmented industry structure typically is less profitability. Consolidated industry is more profitable)

Top-down strategic planning works best in more uncertain situation because the firm hand of senior leadership is best at seeing in the future.

F. (Scenario planning works better in uncertain situation, while strategic planning works best in more certain situation.)

What are the 3 frameworks

SCP PESTEL Porter's 5 Forces

What does the VRIO framework stand for?

Valuable, rare, costly to imitate, organized

If porters five forces is the answer, what is the question?

Why are some industries more attractive than others?

Organizational and managerial skills necessary to orchestrate a divers set of resources and deploy them strategically

capabilities

cause of success or failure are not apparent

causal ambiguity