Principles of Management: Environments and Strategic Management

The five components of industry environment are

customers, competitors, suppliers, regulations, and advocacy groups

Michael Porter defined classified competitive strategies based on a grid of price strategy and target markets. Microsoft's Windows Operating System competes with Apple's MAC OS X and Linux. Linux is free. What is Microsoft's strategy in this grid?

overall differentiation

Companies strive to provide a product or service that is distinct, or ________, in some way from their competitors.

differentiated

The O in VRIO refers to ________ , meaning a company's capacity to use its resources with purposeful integration to achieve a particular result.

organized to capture value

The general environment analysis considers broad societal dimensions influencing the industry or firms within it. The general environment areas include

political, economic, social, technological, environmental, and legal

SWOT analysis stands for:

strengths, weaknesses, opportunities, threats

If a manager is listing resources that can be used for a competitive advantage, which item would NOT be on the list?

the economy

________ is primarily referring to an organization's industry, and the downstream and upstream markets related to it.

A situational analysis

When customers perceive the product differentiation as valuable, they will prefer to purchase the business's product over a competitor's products. This is called

a competitive advantage

Bharti Airtel is the largest cellular provider in India, with more than 300 million customers as of 2014. It also supplies broadband and telephone services, as well as many other telecommunications services to both domestic and corporate customers. Bharti Airtel and Vodafone have an on/off relationship. Vodafone owned a 5.6% stake in the Airtel business, until it sold it back to Airtel and invested in Airtel's rival, Hutchison Essar. Knowledge and technology previously available to Airtel moved into the hands of one of its competitors. In a SWOT analysis, this point represents ________.

a threat

American Spoon is a small company in Petoskey, Michigan that uses fruit from local farmers to handcraft gourmet fruit preserves and condiments in small batches since 1982. The company has expanded slowly and now has six stores in towns along Lake Michigan and a catalogue. It has grown and maintained its customers by continuing to make its products in small batches to ensure freshness and flavor, and to make seasonal and unique product offers possible. In the Strategic Evaluation and Control stage of the strategy process, American Spoon should

set up routine checks of the freshness of its inventory

Society and culture have great impacts on the business environment. These factors include demographics like population growth, age distribution, and attitudes toward safety and health consciousness. The macro term for these factors in the PESTEL analysis is

social

In order to understand the competitive structure of an industry, analysts use Michael Porter's Five Forces model. Porter's model includes all of the following EXCEPT:

strategic partnerships, research and development

Facebook needs a catchy slogan for its value statement. One bland statement is "Facebook is a social utility that connects you with the people around you." Which seems to best express Facebook's added value to customers?

"Be Connected. Be Discovered. Be on Facebook."

Macy's online store differs from the in-store experience. The online store offers free delivery on larger purchases, free returns, extensive information about the products, and reviews from other customers. Why might Macy's do business this way?

Many of the strategies needed to succeed in e-commerce are very different from competing in a non-digital environment.

Identifying the target customer and asking about customer demographics (age, income, location, gender, politics, etc.) is part of

customer analysis

In 2017, the CEO of Netflix hired you as a strategic consultant to investigate music sales. What would you include as part of your VRIO analysis for Netflix?

Netflix's name is a valuable resource. Widely recognizable, the brand recognition could be leveraged to capture a portion of the streaming music market.

The general environment analysis is composed of broad societal dimensions influencing the industry or firms within it. The acronym for these dimensions is

PESTEL

American Spoon is a small company in Petoskey, Michigan that uses fruit from local farmers to handcraft gourmet fruit preserves and condiments in small batches. Where would you first use this information in the strategic management process?

Strategic Objectives and Analysis

________ decides how best to attain a company's mission and vision through the coordinated efforts to achieve specific goals and objectives.

Strategic management

A highly competitive market suggests that the competitors are aggressively trying to take market share from their rivals. One of the simplest ways to do this is to lower prices. This ________ hurts the profitability of the whole industry.

competitive rivalry

Bharti Airtel is the largest cellular provider in India, with more than 300 million customers as of 2014. It also supplies broadband and telephone services, as well as many other telecommunications services to both domestic and corporate customers. Until a few years ago Airtel did not own its own towers, which was a particular strength of some of its competitors, such as Hutchison Essar. Towers are important if your company wishes to provide wide coverage nationally. In a SWOT analysis, this point would be ________.

a weakness

E-commerce includes online and smartphone sales. The younger the shopper, the more likely he or she is to conduct "business" using a smartphone. E-commerce refers to

exchanges or transactions that occur electronically

Strategic management's first function is deciding how to compete. The second function is to make sure

that the people in the organization support the strategy

Financial strength can be a competitive advantage. In the Great Recession, General Motors went bankrupt, but Ford had acquired long-term financing beforehand that carried it through the downturn. This insight is part of

competitive analysis

Amazon has hired a strategic consultant to consider a partnership with Porsche. Amazon would sell Porsche's cars. As part of a VRIO analysis, the consultant would realize that

Amazon is not organized to realize the value of partnering with Porsche because Porsche must sell through local dealers.

Businesses can achieve competitive advantage in a number of different ways. For example, their product may provide

superior performance

In 1956, Dr. Hubbert accurately predicted U.S. oil production for the next 50 years. U.S. oil production started to decline in1970, causing volatile markets and, for strategists, ________. The development of fracking around 2010 restored the U.S. as a major oil producer.

resource scarcity

What is SWOT used for?

to analyze a business situation

Michael Porter defined classified competitive strategies based on a grid of price strategy and target markets. Tesla manufactures electric cars. What is Tesla's strategy in this grid?

focused differentiation

Michael Porter defined classified competitive strategies based on a grid of price strategy and target markets. Redbox, a major DVD rental company, uses vending machines placed outside grocery stores and other retail outlets to rent DVDs for $1. There are ways to view movies even cheaper, such as through the flat-fee streaming video subscriptions offered by Netflix. But among firms that rent actual DVDs, Redbox offers unparalleled levels of low price and high convenience. What is Redbox's strategy in this grid?

focused low cost

A robust competitive analysis will allow you to focus on those companies that will compete for customers

in your target market

An ________ is a method for a company to assess its market position relative to its competitors.

industry analysis

A company is crafting a value proposition for its flagship product. The goal is to communicate to customers the main reason the product

is best suited to their needs

Michael Porter defined classified competitive strategies based on a grid of price strategy and target markets. What is Walmart's strategy in this grid?

overall low cost

A competitive analysis of Google and Microsoft would look at their ________ . Both pay high salaries and offer great benefits. But their incentive structures are different. Google encourages collaboration and Microsoft encourages competition. Google's employees have been more innovative than Microsoft's.

personnel strategy

The second step of the strategy process, Strategy Formulation, includes

prioritizing the tactics most important to achieving the objectives

Amazon relies on FedEx, UPS, the USPS, and others to deliver packages to consumers. These delivery companies are Amazon's

supply chain

Michael Porter's Five Forces analysis looks at the forces driving an industry's profitability. An analyst might use it to compare the relative merits of

the cell phone industry and the internet service industry

The first step in the strategy process includes

to define the vision, mission, and values statements of the organization

Amazon, the largest online retailer, has experimented with physical stores and recently bought Whole Foods. Whole Foods has almost 500 stores and gives Amazon facilities for rapid physical expansion. The general insight here is that

to survive today, organizations need to be present in both the online and physical markets

One major role of firms is to manage risk. Consumers do not want to pay for products of unknown quality or where the delivery date is questionable. Managers also worry about unexpected changes in supplies or markets. Strategic management seeks to adapt to and benefit from change. For strategists, this ________ is both a challenge and an opportunity.

uncertainty

The threat of new entrants in Porter's Five Forces analysis is often the most important force affecting an industry. In the food truck industry, for example, it is easy for new firms to enter and compete. The food truck industry would benefit if there were ________, such as required and restricted licenses.

barriers to entry

Warren Buffett, a famous investor, has some guiding rules. One is "Invest within your circle of competence," meaning if you don't understand the business, don't invest. He sold positions in Freddie Mac because he did not understand or like financial derivatives. He called derivatives "weapons of mass destruction." In the context of strategy, financial firms that use derivatives are

complex

In the resource view of strategy, VRIO stands for:

valuable, rare, inimitable, and organized

A company wishes to convince customers that its product or service provides more value to them than a competitor's product or service. That is, it offers a

value proposition

The advertisements for the Apple MacBook show an edge-on image of a MacBook with the caption "MacBook: Light. Years ahead." This refers to the lightweight design and the advanced tech inside. This is Apple's

value proposition

Creating resources that meet the VRIO criteria are strategically important to a firm because:

Firms that possess these types of resources may be able to experience a sustained competitive advantage.

Strategic management

considers the entire organization and how the pieces fit together

Walmart has the highest in-store revenues for any U.S. retailer but it is a distant second to Amazon's online sales. Walmart believes it needs a better ________.

e-commerce strategy

Domestic U.S. companies conducting a PESTEL analysis consider national growth, employment, inflation, and interest rates. These are aspects of which macro term?

economic

Not all players in an industry will be in direct competition with your organization. The first step in competitor analysis is to decide who your competitor is. For example,

Ford and Porsche both make cars, but Ford does not compete with Porsche

Bharti Airtel is the largest cellular provider in India, with more than 300 million customers as of 2014. It also supplies broadband and telephone services, as well as many other telecommunications services to both domestic and corporate customers. Bharti Airtel is considering a customized version of the Google search engine, which will enhance broadband services to customers. The tie-up with Google will bolster the Airtel brand and also provide advertising opportunities in India for Google. A SWOT analysis was done. This partnership represents ________.

an opportunity

In the summer of 1998, Dr. Rumelt, a professor and consultant, got an opportunity to talk with Steve Jobs about strategy. Rumelt argued that everything we know about the PC business says that Apple cannot really push beyond a small niche position. The network effects are just too strong to upset the PC standard. He then asked for Jobs' strategy. Jobs said, "I am going to wait for the next big thing." Nearly twenty years later, Apple is the most valuable publicly traded company in the world. This story shows that in the context of strategy, the tech market is ________.

dynamic