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