Chapter 6 Mangt 595
Recruiting, retaining , paying and developing resources are all A.) internal costs B.) External costs
A
Complements are a cost driver of
Differentiation Strategy
Typically results in premium pricing
Differentiation strategy
are the savings that come from purchasing two (or more) outputs at less cost then producing each individually
Economies of scope
*Buying* another company (expansion of value chain) is a example of - Forward Integration - Horizontal integration - Backwards integration
Hori.
The company's business units share resources/capabilities. There are more corporate- than operational-linkages among these units.
Related Linked
provides useful theoretical guidance to explain and predict the boundaries of the firm
Transaction cost economics
generic strategies such as cost leader and differentiation are used by
all size firms
the Freemium model is a variation of
razor blade model
insight from transaction cost economics helps ________________ decide which activities to do in house and which services/products to obtain form a external market
strategic leaders
combines new core competencies with *existing market opportunities* managers need to come up with strategic initiatives on how to build new core competencies to protect and extend firms current market position
---
corporate strategies concerns the boundaries of the firm along the dimensions - Industry value chain (vertical integration) - geographic (geo scope) - products and services (diversification of products)
---------
the two elements that pertain the the attractiveness of a a industry are
5 forces model complementary products
corporate level strategy involves 3 important decisions in determining foundries of a firm - vertical integration - stages of industry value chain (raw materials --> finished goods) - Geographic expansion - Diversification
=----
Which of the following BEST describes a subscription-based business model? - Users pay for access to a product or service whether they use the product or service during the payment term or not - The initial product is sold at a loss or given away for free in order to drive demand for more profitable complementary goods or replacement parts - The company sells two or more products or services for which demand is negatively correlated at a discount - The company provides the basic features of a product or service free of charge, but charges the user for premium services (e.g., advanced service features)
A
the ___________ model is intended to give leverage to publishers to raise prices in ___________ books
Agency, E
Which of the following is NOT among the key components of business models? - Profit formula - Key processes - Asset diversity - Cost structure - Customer value proposition
Asset diversity
Strategic alliances examples are all *except* A.) Joint venture B.) Horizontal integration C.) Equity alliances D.) License E.) Franchise
B
benefits of vertical integration are all except - Secure critical distribution channels - increases legal repercussions - Lower cost - Improved Quality
B
searching monitoring and negotiating, resolving are all A.) internal costs B.) External costs
B
*owning* inputs of the value chain are examples of - Forward Integration - Horizontal integration - Backwards integration
Backwards
the metaphor of _____________ means - Untapped market space ▸Creation of additional demand ▸Opportunity for profitable growth
Blue Ocean Strategy
Answers the question how do we compete
Business level strategy
is a set of goal-directed actions that managers take to achieve competitive advantage in a given product market.
Business level strategy
a firms ______________ determines its strategic position
Business model
is the translation of strategy into action takes place
Business model
the choice of make and buy has to do with
Buying short term contracts and marking parent Subsidiary relationships
southwest airline is a example of A.) Differentiation (Broad) B.) Differentiation (Focused) C.) Cost Leader (Broad ) D.) Cost leader (Narrow)
C
company that combines two or more strategic business units under one overarching company and follows * UNRELATED DIVERSIFICATION STRATEGY*
Conglomerate
The decisions and actions taken to gain and sustain competitive advantage in several industries and markets (product and/or geographic) simultaneously
Corporate level strategy
answers the question "where do we compete"
Corporate level strategy
Cost of input factors is a cost driver of
Cost Leadership
Economies of scale is a cost driver of
Cost Leadership
Key objective is to reduce the firm's cost below its competitors' while offering adequate value
Cost Leadership
Learning-curve/experience-curve effects is a cost driver of
Cost Leadership
New business models is a cost driver of
Cost Leadership
in considering power of buyers __________ has protection against ___________ has protection against a _______ in sale prices which can be ____________
Cost Leadership, decrease , Absorbed
in considering Threat to Entry ___________ Strategy has a benefit to protection against entry due to protection of _________________________
Cost Leadership, economies of scale
in considering power of suppliers __________ has a benefit of protection against ________ in input prices which can be __________
Cost leadership, absorbed
Which of the following is LEAST likely to help managers develop an effective business model? - Creating and maintaining consistency among the key components of the business model - Continually seeking to add new revenue streams - Creating mechanisms that protect the firm against competitor imitation - Eliminating costs without fear of compromising customer value proposition
D
Customer service is a cost driver of
Differentiation strategy
Seeks to create higher value than competitors (e.g., higher performance) ▸Offers products or services with unique features
Differentiation strategy
Unique product features such as doing a "better job" "more jobs" or "unique jobs" is a cost driver of
Differentiation strategy
keeps firms cost at a moderate level
Differentiation strategy
in considering Threat to Entry ___________ strategy has a benefit to protection against entry due to __________ resources such as _________ for innovation, quality or customer service
Differentiation strategy (generic strategy) , Intangible , reputation
in considering power of suppliers __________ Strategy has a benefit of protection against ________ in input prices which can be passed on to ___________
Differentiation, Increase , customers
in considering power of buyers __________ has protection against ___________ in sales prices because __________ products or services arent perfect imitations
Differentiation, decrease, differentiated
Value innovation to lower costs has to do with ________ factors that the industry takes for granted and _________ factors that are below the industry standard
Eliminate and reduce
are the costs of searching for a firm or an individual to contact, negotiate, monitor or enforce the contract
External transaction costs
owning activities closer to the customer is a examples of - Forward Integration - Horizontal integration - Backwards integration
Forward
parent subsidiary relationship and Joint venture have to do with - Forward Innovation - Backward Innovation
Forward
Dropbox, a cloud storage services firm, offers 2GB free space to first time users who open an account. To get more cloud storage space (i.e., 1TB) and utilize additional feature on the website, users pay $8.25 per month. Which of the following terms best describes Dropbox's business model? - Reverse Razor/Razor-Blade - Wholesale - Razor / razor-blade - Freemium - Bundle
Freemium
industry attractiveness and within the industry are both A.) Firm effects B.) Industry effects
Industry effects
costs pertaining to organizing an economic exchange within a firm (administrative costs)
Internal transaction costs
Value innovation makes competitors _______ by leaping over competitors in __________________
Irrelevent, Value creation
On Thursday last week, we discussed four issues that may make a business model fail. Which of the following factors was NOT considered in our discussion? - lack of financial resources - substitution - imitation - obsolescence - stakeholder hold up
Lack of financial resources
value drivers contribute to competitive advantage only if there is a _________ amount value created then costs
Larger
which quad * view pic* combines existing core competencies with existing markets. * the manager need to come up with ideas of how to leverage existing core competencies to improve their current market position
Lower left Quad
which quad* combines existing core competencies with *new market opportunities* * this manager needs to think about combining or deploying core competencies to compete in future markets
Lower right quad
Utility services (e.g., electricity), hotels that rent their rooms hourly, UBER rides, are all examples of _______ business model. - freemium - subscription-based - pay as you go - bundle - razor / razor-blade
Pay as you go
Value innovation in terms of increasing customer benefits has to do with _____________ factors *above the industry standards* and ______ factors that the industry has never offered
Raising and Creating
Polygon sells its e-book readers at a price of $40 each, which is below the manufacturing cost. However, the company makes profits when users buy books online and download them to their e-readers. Which of the following business models is Polygon using? - bundling - razor / razor-blade - pay-as-you-go - subscription-based
Razor
cell phone companies use a combination between ____________________ + _______________
Razor blade and Subscription
The company's business divisions share resources/capabilities. There are more operational- than corporate-linkages among these divisions.
Related constrained
Executives only engage in new business activity if they can use business resources and core competencies ALREADY available in the primary business
Related constrained diversification
drives less then 70% of its revenues form a single business activity but obtains revenues from other streams that *ARE RELATED* to the PRIMARY business activity
Related constrained diversification
the __________________ is whether to pursue a broad or narrow market
Scope of competition
The company leverages its core competencies in a single product market or industry.
Single business
involves moving one or more value chain activities outside the firms boundaries to *other firms in the industry value chain*
Strategic outsourcing
is a graphical depiction of a companies relative performance that its competitors across the industries key success factors A.) Value curve B.) Strategy canvas
Strategy canvas
T or F principal agent problems arise when a agent is performing activities on the behalf of the principal -----> which can lead to market failures
TTTTTrue
blue ocean strategy eliminates _______________ factors that competitors compete on
Taken for granted
a way of constructing value chain activities in which a firm is backwardly integrated but at the same time is also reliant on outside market firms for some of its supplies OR Is forwardly integrated but also relies on outside markets for distribution channels
Taper Integration (enhanes flexibility
two alternatives to vertical integration are - industry value chains - Taper integration - Restructuring business - Strategic outsourcing
Taper and Outsourcing
helps explain and predict the boundaries of the firm and helps managers decide: ‣Which activities to perform in-house
Total cost economics *views the firm as a collection of transactions*
_______________ are all the internal and external costs associated with economic exchange, wheather it take place within the boundaries of a firms markets
Transaction costs
drives less then 70% of its revenues form a single business activity but obtains revenues from other streams that *few, if any* linkages among the business
Unrelated diversification strategy
is a horizontal connection of points pf each value on the strategy canvas that helps strategic leaders diagnose and determine courses of action A.) Value curve B.) Strategy canvas
Value curve
blue ocean uses ________ to reconcile tradeoffs cost lead and diff.
Value innovation
if cost to pursue a activity in house < cost to transact in the market firm should
Vertically integrate
a framework to guide corporate diversification strategy by analyzing possible combinations of existing and new core competency in new and existing markets
core competence market matrix
The company's dominant and minor businesses share core competencies But has at least one other business activity that brings in revenue
dominant buiss
higher value creation leads to
higher costs
kind of strategy that executives pursue when various business opportunities that share ONLY limited number of linkages
related link diversification strategy