strategic management test 3

Options for competing in international markets

-Exporting -Wholly Owned Subsidiary -Franchising -Licensing -Joint Venture -Strategic Alliance

4 generic business level strategies

1. Cost Leadership 2. Differentiation 3. Focused Cost Leadership 4. Focused Differentiation

best cost strategy

A business-level strategy followed by firms that charge relatively low prices and offers substantial differentiation

horizontal integration

Absorption into a single firm of several firms involved in the same level of production and sharing resources at that level

Firms that consider international expansion will often examine absolute metrics on which countries to pursue investments in but also consider relative distance. To help firms decide where to compete, the ________ was developed to help firms make this decision.

CAGE distance framework

merger

Combination of two or more companies into a single firm

how to respond to innovation in the market

Continue to innovate (stay ahead of competition) Guard against disruptive innovation (protect low end of market) Disrupt yourself (don't wait for others to disrupt you)

economic distance

Differences in consumer incomes, costs, and human and natural resources

Which of the following is not an advantage when it comes to "first-mover advantages"?

First movers must educate potential customers about the product

innovation is a competitive weapon

Innovation can create and destroy value. •Traditional networks vs. cable providers •Cable providers vs. streaming content •Typewriters to PC's to mobile devices Innovation often comes in waves.

different types of international strategies

International Multi - domestic Global Transnational

Implementation Innovation

Introduction - what is your product Growth - increasing sales Maturity - peak sales Decline - falling sales

Technology enthusiasts

Introductory phase of the industry life cycle (2.5%)

diversification discount

Investors often struggle to understand the complexity of diversified firms and this can result in relatively poor performance by the stocks of such firms

Early adopters

People who adopt new products early, choose new products carefully, and are viewed as "the people to check with" by later adopters (13.5%)

geographic distance

Physical remoteness, lack of a common border, lack of sea or river access, size of country, weak transportation or communication links, climates

vertical integration

Practice where a single entity controls the entire process of a product, from the raw materials to distribution

Fang and Bone Inc. is a snack manufacturer that wants to expand globally. Few people abroad are familiar with Fang and Bone snacks. The countries into which the company wants to expand require a high degree of local responsiveness when it comes to food, and the citizens of those countries already spend plenty of money on snacks. Which action should the leaders of Fang and Bone take?

Pursue a multidomestic strategy that includes new "local" brands

4 types of innovation

Radical Architectural Disruptive Incremental

Differentiation examples

Starbucks Apple Rolex Tesla Tiffany and Co.

Administrative and political distances, such as the presence or absence of colonial ties, are part of the CAGE distance framework.

TRUE

CAGE framework

The analytical framework used to understand country and regional differences along the distance dimensions of culture, administration, geography, and economics Cultural Distance Administrative Distance Geographic Distance Economic Distance

Which of the following is most likely an accurate statement?

The multinational enterprise Burns Industries benefited from advances in communications technology.

entrepreneurial orientation

The tendency of an organization to identify and capitalize successfully on opportunities to launch new ventures by entering new or established markets with new or existing goods or services

According to the crossing-the-chasm framework, the biggest chasm between customer segments is between early adopters and the mass market made up of the early majority and the late majority.

True

Applying the five forces model to business-level strategy allows managers to assess the benefits and risks of both cost-leadership and differentiation strategies

True

cost leadership examples

Walmart Redbox BIC TATA McDonald's

Yubaba Inc., a company that manufactures and sells premium perfumes, is pursuing an international strategy. Axe Inc., a supermarket chain, follows a multidomestic strategy. Which of the following statements is most likely true of this scenario?

Yubaba Inc. will sell the same products in both domestic and foreign markets, whereas Axe Inc. will customize its product offerings to suit local requirements.

strategic alliance

a collaborative relationship between independent firms, though the partnering firms do not create an equity partnership; that is, they do not invest in one another

Assume that the market for print book publishing has entered the maturity stage. Which of the following would most likely exist during this stage?

a few large publishers

administrative distance

a term used to describe the value assigned for the trustworthiness of the source of the route that is learned by a router

why go international?

access new customers lower costs diversification of business risks (economic, political, cultural)

joint venture

an agreement between two or more companies to share a business project

competition vs. cooperation

competition: relationship between members of the same or different species in which individuals are adversely affected by those having the same living requirements, such as food or space cooperation: where groups of organisms work or act together for common or mutual benefits Joint ventures Strategic alliances M&A Internal Development

synergy

cooperation or interaction of two or more business units so that they perform more effectively together than they would if independent

advantages of business level strategies

cost leadership differentiation cost focus differentiation focus

Benny's Closet Inc. is an apparel company that caters to highly price-conscious customers. Through its simple apparel designs, acceptable quality levels, and minimal customer service, the company has been able to sell its merchandise at the lowest prices in the industry. Which of the following generic business strategies is Benny's Closet applying?

cost leadership strategy

cultural distance

cultural disparity between an internationally expanding firm's home country and its targeted host country

Gr8t Food is a chain of "fast casual" restaurants that sells its menu items at higher prices than its competitors. The restaurant has a large customer base due to its wide product portfolio and superior customer service. Which of the following generic business strategies has Gr8t Food adopted in this scenario?

differentiation strategy

As a start-up company, Cambium Networks entered the low end of the highly competitive smartwatch industry with its low-cost smartwatches. Initially, the company was able to sell its inferior technology due to its low prices. Over the years, however, its rate of technology improvements increased above the industry standards. This helped the company to create a strong strategic position for its smartwatches in the high-end segment and claim a premium price. Which of the following types of innovation does this scenario best illustrate?

disruptive innovation

key to coporate strategy

diversification

related diversification

diversifying into business lines in the same industry

unrelated diversification

diversifying into new industries, such as amazon entering the grocery store busines with its purchase of whole foods

In the context of the Boston Consulting Group (BCG) growth-share matrix, if one of the strategic business units of a conglomerate is categorized under dogs, the management should

divest the strategic business unit

Firms that pursue extremely high or extremely low levels of diversification perform better than those that pursue moderate levels of diversification

false

a differentiation strategy works best when a

firm differentiates itself through intangible resources that increase its differentiation appeal and provide for customer loyalty, it will be able to pass on cost increases to the customer

Condax Electronics relied on a large chain of consumer electronics stores to sell its tablet computers, cell phones, and televisions and also to provide customer service and technical support. However, that retailer outsourced its service departments, and customers began to complain that they could not get reliable tech support for Condax products. In response, Condax Electronics decided to set up its own tech support department, and it also began to investigate opening its own brand-based retail stores. What does this scenario best illustrate?

forward vertical integration

One of the risks of pursuing a blue ocean strategy is that a firm can find itself

getting stuck in the middle and are not able to differentiate or establish a cost leadership positition

generic business level strategy

goal directed actions how a firm competes head to head against similar products and services in the marketplace

international strategy

how a business conducts business outside of their borders of their home country

Early Majority

individuals who adopt a new product just prior to the average person (34%)

forward vertical integration

integration with a business in the same industry but a customer of the existing business

backward vertical integration

integration with a business in the same industry but a supplier of the existing business

While the personal computer industry is flooded and growing with laptops and tablets, Javier recently bought a desktop, his first personal computer. He realized that a computer at home would be helpful for his children for their school projects, and he could use it to maintain the simple accounts of his plumbing business. Which of the following customer segments does Javier best represent?

laggards

focused differentiation strategy

offers a unique product to a special market segment

geographic diversification

operating in various geographic markets, which is the corporate strategy of Starbucks, target, and KFC

blue ocean strategy

positioning a firm far away from competitors' positions so that it creates an industry of its own and, at least for a time, isolates itself from competitors -Ford -Itunes -Amazon

Amazon.com has decided to enter the college bookstore market. The goal of "Amazon Campus" is to offer co-branded university-specific web sites that offer textbooks and paraphernalia, such as logo sweaters and baseball hats. This development shows Amazon's relentless pursuit of

product diversification

retrenchment

reducing staff or forces; conserving resources

focused cost leadership strategy

seeks the lowest costs of operations within a special market segment

The smartphone division of the large consumer electronics company, Streethex Inc., has a significant market share in the fast-growing cell phone market. If the company invests further into this division, it will be able to reap increased cash flows. In the Boston Consulting Group (BCG) growth-share matrix, the smartphone division of Streethex will be categorized under

stars

goal of the 3 diversification strategies

synergy

internal development

the company develops and launches the new business themselves

acquisitions

the incorporation of one firm into another through purchase

laggards

the last adopters, who distrust new products (16%)

late majority

the last group of buyers to enter a new product market; when they do, the product has achieved its full market potential (34%)

licensing

the legal process whereby a licensor allows another firm to use its manufacturing process, trademarks, patents, trade secrets, or other proprietary knowledge

corporate level strategy

the overall organizational strategy that addresses the question "What business or businesses are we in or should we be in?"

how to create a competitive advantage outside of the borders

what makes you different in other markets

where to go outside of borders?

what place will give you the best profits