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