TBUS 400 Business Policy and Strategic Management

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What are the foremost questions in running a business enterprise:

1. What must managers do and do well to make a company a winner in the marketplace? The answer that emerges is that doing a good job of managing inherently requires good strategic thinking and good management of the strategy-making, strategy-executing process.

Select all that apply Which two kinds of improvements in performance provide the best information about whether a strategy is producing good company performance? a. improved competitive strength and market standing b. growing profitability and financial strength c. improvements in employee morale d. stronger consumer response to advertising expenditures

a & b a. improved competitive strength and market standing b. growing profitability and financial strength

Companies using a ______ strategy compete by attempting to have lower costs than competitors. a. low-priced sales b. broad differentiation c. low-cost provider d. focused differentiation

c. low-cost provider

Gillette's business model

low price and then making money on repeat purchases of razor blades

A company achieves a sustainable competitive advantage when a it is profitable for a period of ten years or more. b its revenue reaches a specified target. c it achieves a market share of over 50%, thereby limiting opportunities for competitors. d a significant number of customers develop a strong and lasting preference for its products or services.

d a significant number of customers develop a strong and lasting preference for its products or services.

What is Strategy and Why is it Important? A creative, distinctive strategy that sets a company apart from rivals and provides a competitive advantage is a company's reliable ticket to above-average profits. Concepts & Connections 1.2 discusses how Apple's strategy led to it becoming one of the most profitable companies in the world, with revenues of more than $225 billion. Its reputation for superior technological innovation and design capabilities has made its products and services the most popular in the world. A company's strategy is management's game plan to grow the business, attract and please customers, compete successfully, conduct operations, and achieve targeted levels of performance. The central thrust of a company's strategy is undertaking moves to build and strengthen the company's long-term competitive position and financial performance. Ideally, this results in a competitive advantage over rivals that then becomes the company's ticket to above-average profitability. A company's strategy typically evolves over time, arising from a blend of (1) proactive and deliberate actions on the part of company managers and (2) adaptive emergent responses to unanticipated developments and fresh market conditions. Closely related to the concept of strategy is the concept of a company's business model. A company's business model is management's blueprint for delivering a valuable product or service to customers in a manner that will generate revenues enough to cover costs and yield an attractive profit. The two elements of a company's business model are (1) its customer value proposition and (2) profit formula. A winning strategy fits the circumstances of a company's external and internal situations, builds competitive advantage, and boosts company performance. This exercise is important because it will help you to understand why every company needs a sound strategy to compete successfully, manage the conduct of its business, and strengthen its prospects for long-term success. The goal of this exercise is to aid you in developing an awareness of the five most dependable approaches for setting a company apart from rivals and winning a competitive advantage. After reviewing Chapter 1, including Concepts & Connections 1.2, read the case below and answer the questions that follow. Apple Inc.: Exemplifying a Successful Strategy For more than ten consecutive years, Apple has ranked number one on Fortune's list of the "World's Most Admired Companies." Given the worldwide popularity of its products and services, along with its reputation for superior technological innovation and design capabilities, this is not surprising. The key elements of Apple's successful strategy include: Designing and developing its own operating systems, hardware, application software, and services. This allows Apple to bring the best user experience to its customers through products and solutions with innovative design, superior ease-of-use, and seamless integration across platforms. The ability to use services like iCloud across devices incentivizes users to join Apple's technological ecosystem and has been critical to fostering brand loyalty. Continuously investing in R&D and frequently introducing products. Apple has invested heavily in R&D, spending upwards of $11 billion a year, to ensure a continual and timely injection of competitive products, services, and technologies into the marketplace. Its successful products and services include the Mac, iPod, iPhone, iPad, Apple Watch, Apple TV, and Apple Music. It is currently investing in an Apple electric car and Apple solar energy. Strategically locating its stores and staffing them with knowledgeable personnel. By operating its own Apple stores and positioning them in high-traffic locations, Apple is better equipped to provide its customers with the optimal buying experience. The stores' employees are well versed in the value of the hardware and software integration and demonstrate the unique solutions available on its products. This high-quality sale and after-sale support allow Apple to continuously attract new customers and retain existing customers. Expanding Apple's reach domestically and internationally. Apple operates globally in 500 retail stores across 18 countries. During fiscal year 2017, 63% of Apple's revenue came from international sales. Maintaining a quality brand image, supported by premium pricing. Although the computer industry is incredibly price competitive, Apple has managed to sustain a competitive edge by focusing on its inimitable value proposition and deliberately keeping a price premium - thus creating an aura of prestige around its products. Committing to corporate social responsibility and sustainability through supplier relations. Apple's strict Code of Conduct requires its suppliers to comply with several standards regarding safe working conditions, fair treatment of workers, and environmentally safe manufacturing. Cultivating a diverse workforce rooted in transparency. Apple believes that diverse teams make innovation possible and is dedicated to incorporating a broad range of perspectives in its workforce. Every year, Apple publishes data showing the representation of women and different race and ethnicity groups across functions. Note: Developed with Shawnda Lee Duvigneaud Sources: Apple 10-K, Company website Which one of the five generic competitive strategies discussed in Chapter 1 most closely approximates the competitive approach that Apple Inc. is employing? a. Best Cost Provider b. focused low-cost provider c. low-cost provider d. focused differentiation e. broad differentiation

e. broad differentiation

As part of a company's business model, the ______ describes the costs a company is willing to accept in producing a good or service given the pricing model described in the customer value proposition: a. Value Formula b. Profit Formula c. Competitive Strategy d. Pricing Structure

b. Profit Formula

Big Box Stores enjoys a competitive advantage because their competitors find it very difficult to match Big Box's prices and remain profitable given their higher costs. Big Box is most likely using a ______ strategy. a. low-cost provider b. broad differentiation c. generic cost d. focused differentiation

a. low-cost provider

What is Strategy and Why is it Important? A creative, distinctive strategy that sets a company apart from rivals and provides a competitive advantage is a company's reliable ticket to above-average profits. Concepts & Connections 1.2 discusses how Apple's strategy led to it becoming one of the most profitable companies in the world, with revenues of more than $225 billion. Its reputation for superior technological innovation and design capabilities has made its products and services the most popular in the world. A company's strategy is management's game plan to grow the business, attract and please customers, compete successfully, conduct operations, and achieve targeted levels of performance. The central thrust of a company's strategy is undertaking moves to build and strengthen the company's long-term competitive position and financial performance. Ideally, this results in a competitive advantage over rivals that then becomes the company's ticket to above-average profitability. A company's strategy typically evolves over time, arising from a blend of (1) proactive and deliberate actions on the part of company managers and (2) adaptive emergent responses to unanticipated developments and fresh market conditions. Closely related to the concept of strategy is the concept of a company's business model. A company's business model is management's blueprint for delivering a valuable product or service to customers in a manner that will generate revenues enough to cover costs and yield an attractive profit. The two elements of a company's business model are (1) its customer value proposition and (2) profit formula. A winning strategy fits the circumstances of a company's external and internal situations, builds competitive advantage, and boosts company performance. This exercise is important because it will help you to understand why every company needs a sound strategy to compete successfully, manage the conduct of its business, and strengthen its prospects for long-term success. The goal of this exercise is to aid you in developing an awareness of the five most dependable approaches for setting a company apart from rivals and winning a competitive advantage. After reviewing Chapter 1, including Concepts & Connections 1.2, read the case below and answer the questions that follow. Apple Inc.: Exemplifying a Successful Strategy For more than ten consecutive years, Apple has ranked number one on Fortune's list of the "World's Most Admired Companies." Given the worldwide popularity of its products and services, along with its reputation for superior technological innovation and design capabilities, this is not surprising. The key elements of Apple's successful strategy include: Designing and developing its own operating systems, hardware, application software, and services. This allows Apple to bring the best user experience to its customers through products and solutions with innovative design, superior ease-of-use, and seamless integration across platforms. The ability to use services like iCloud across devices incentivizes users to join Apple's technological ecosystem and has been critical to fostering brand loyalty. Continuously investing in R&D and frequently introducing products. Apple has invested heavily in R&D, spending upwards of $11 billion a year, to ensure a continual and timely injection of competitive products, services, and technologies into the marketplace. Its successful products and services include the Mac, iPod, iPhone, iPad, Apple Watch, Apple TV, and Apple Music. It is currently investing in an Apple electric car and Apple solar energy. Strategically locating its stores and staffing them with knowledgeable personnel. By operating its own Apple stores and positioning them in high-traffic locations, Apple is better equipped to provide its customers with the optimal buying experience. The stores' employees are well versed in the value of the hardware and software integration and demonstrate the unique solutions available on its products. This high-quality sale and after-sale support allow Apple to continuously attract new customers and retain existing customers. Expanding Apple's reach domestically and internationally. Apple operates globally in 500 retail stores across 18 countries. During fiscal year 2017, 63% of Apple's revenue came from international sales. Maintaining a quality brand image, supported by premium pricing. Although the computer industry is incredibly price competitive, Apple has managed to sustain a competitive edge by focusing on its inimitable value proposition and deliberately keeping a price premium - thus creating an aura of prestige around its products. Committing to corporate social responsibility and sustainability through supplier relations. Apple's strict Code of Conduct requires its suppliers to comply with several standards regarding safe working conditions, fair treatment of workers, and environmentally safe manufacturing. Cultivating a diverse workforce rooted in transparency. Apple believes that diverse teams make innovation possible and is dedicated to incorporating a broad range of perspectives in its workforce. Every year, Apple publishes data showing the representation of women and different race and ethnicity groups across functions. Note: Developed with Shawnda Lee Duvigneaud Sources: Apple 10-K, Company website Which of the following is most accurate regarding Apple's ability to maintain a sustainable competitive advantage in the desktop and laptop computer, smartphone, and entertainment technology industry? a. Apple must lower its prices dramatically if it is to effectively compete against lower-priced rivals in the long term. b. Apple's customer value proposition and profit formula do not allow it to maintain a sustainable competitive advantage long term. c. Apple's strategy is virtually impossible to imitate and it's highly unlikely that any competitors could grab market share away from it. d. Apple can maintain a sustainable competitive advantage to the extent that it can continue offering a differentiated product and customer experience that customers are willing to pay for. e. Competitors would find it relatively easy to imitate Apple's strategy and take substantial market share from it.

d. Apple can maintain a sustainable competitive advantage to the extent that it can continue offering a differentiated product and customer experience that customers are willing to pay for.

A company's business model a. determines whether its strategy will be ethical or not. b. is management's story line for how the strategy will result in achieving sustainable competitive advantage. c. (1) specifies a customer value proposition and (2) develops a profit formula. d. identifies how the company plans to outmaneuver and outcompete key rivals and become a market leader. e. sets forth the actions and approaches that it will rely on to earn the best profit margins in the industry.

c. (1) specifies a customer value proposition and (2) develops a profit formula.

Nothing affects a company's ultimate success or failure more fundamentally than a. abandoning markets as conditions change. b. abandoning markets as conditions change. c. abandoning markets as conditions change. d. how well its management team charts direction, develops effective strategic moves, and pursues daily operating excellence. e. the creation of shareholder value.

d. how well its management team charts direction, develops effective strategic moves, and pursues daily operating excellence.

A(n) ______ business strategy is typically a combination of deliberate and emergent strategy initiatives. (Remember to place only one word in the blank.) a. realized b. unrealized

a. realized

Why is it important for a company to have a viable business model that outlines the company's customer value proposition and its profit formula?

Closely related to the concept of strategy is the concept of a company's business model. While the company's strategy sets forth an approach to offering superior value, a company's business model is managements blueprint for delivering a valuable product or service to customers in a manner that will yield an attractive profit.

Select all that apply The three tests of a winning strategy can be used to evaluate which of the following? a. quarterly profit margins b. existing strategies c. new initiatives that have been scrapped d. proposed strategies

b & d b. existing strategies d. proposed strategies

Which of the following is not a reason why management might modify the company's strategy? a Competitors are making unexpected moves. b The current strategy has been in place for over a year. c New market opportunities are becoming apparent. d Customers' preferences are changing.

b The current strategy has been in place for over a year.

A strategy that achieves ______ is likely to help a company excel for an extended period of time. a. a profit b. a sustainable competitive advantage c. strong revenues d. a permanent competitive advantage

b. a sustainable competitive advantage

Strategy measures that are implemented in response to surprise developments in the market are known as ______ moves. a. incremental b. adaptive c. abandoned d. proactive

b. adaptive note: A proactive approach is to anticipate something rather than responding to it.

A(n) ______ strategy is based on a combination of ongoing successful initiatives and proactive attempts at improving financial performance and building a competitive advantage. a. abandoned b. deliberate c. reactive d. one-time

b. deliberate

Mimicking the strategies of successful industry rivals

with either copycat product offerings or efforts to stake out the same market position- rarely works. A creative, distinctive strategy that sets a company apart from rivals and yields a competitive advantage is a company's most reliable ticket for earning above average profits.

Cable TV providers Business Model

Keyed to delivering news and entertainment that viewers will find valuable, to secure sufficient revenues from subscriptions and advertising to cover operating expenses and allow for profits.

1. How well does the strategy fit the company's situation?

Must be well matched to the company's external and internal situations. Must fit competitive conditions in the industry and other aspects of the enterprise's external environment. At the same time, it should be tailored to the company's collection of competitively important resources and capabilities. It's unwise to build a strategy upon the company's weaknesses or pursue a strategic approach that requires resources that are deficient in the company. Unless a situation, it is unlikely to produce respectable, first-rate business results.

Now we look at the Patented Technology we have. Resource or Capability: Patented Technology Valuable? Yes Rare: Yes Inimitable: NO (it's not actually difficult to imitate) Organizational Support: Yes (There's only modest organizational support for leveraging it therefore it's a potential advantage) Competitive Outcome: Potential Advantage (non-sustainable competitive advantage at this point)

Now we look at the Strong Stage Gate we have. Resource or Capability: Strong Stage Gate Valuable? Yes Rare: NO (it's very popular among other firms) Inimitable: NO (easy to imitate) Organizational Support: Yes (There's only modest organizational support for leveraging it therefore it's a potential advantage) Competitive Outcome: Competitive Parity

Designer Handbags Inc. manufactures and sells fine leather handbags with price tags ranging from $5,000 to $10,000. Their target market is affluent women who want a prestigious brand name. Designer Handbags is competing based on which of the following strategies? a focused differentiation b broad differentiation c best-cost provider d break-even

a focused differentiation

Which two of the following are the key elements of a company's business model? a. pricing strategy b. profit formula c. customer value proposition d. target market

b. profit formula c. customer value proposition

Other competitors confine their operations to local or regional markets

Others are nationally, internationally, or globally. Some operate in only one industry, while others are more diversified broadly or narrowly, into related or unrelated industries.

Step 3: Analyze Whether Any of the Strengths are Sustainable Competitive Advantages Using VRIO: V= Valuable: As in does it create value for the firm (i.e., decrease costs or increase customer willingness to pay?) R= Rare: Do few (or no) other competitors have the capability or resources? I= Inimitable: Is it difficult for others to imitate or substitute the resource? O= Organizational Support: Is the right organization infrastructure, assets, and culture in place to leverage the capability or resource? Example: You're a company that designs Formula One Racing cars and your engineers come up with a way to make more aerodynamic bicycles but you don't have manufacturing or distribution facilities in bicycles and you don't really see yourself as a bicycle company. You could have an amazing advantage in this technology yet struggled to deploy it.

Resource or Capability: Exceptional Scientists Valuable? Yes Rare: Yes Inimitable: Yes Organizational Support: Yes Competitive Outcome: Sustainable Competitive Advantage

a. They have similar strategic resources and strategies.

competitive advantage is fundamentally comparative. Only through comparison can firms gain a better understanding of how well they are performing in the context of their respective markets. This activity uses a track and field race analogy to address the key concepts of competitive advantage, and it is important because the competition is at the heart of the business. The goal of this exercise is to bring forward the main concepts that define competitive advantage. Click the ► button to watch the video. Then, answer the questions that follow. As you saw in the video, one of the measures used to demonstrate Usain Bolt's competitive advantage in running is the number of gold medals he won during the Olympics. Which of the following measures, as described in the video, similarly demonstrates McDonald's competitive advantage in the fast-food industry? a. all day breakfast b. Market Share c. Number of menu options d. a strong leadership team e. brand recognition

b. Market Share

A company's customer value proposition and profit formula are the key elements of its: a. product/service model. b. business model. c. realized strategy. d. deliberate strategy

b. business model.

Competitive advantage is fundamentally comparative. Only through comparison can firms gain a better understanding of how well they are performing in the context of their respective markets. This activity uses a track and field race analogy to address the key concepts of competitive advantage, and it is important because competition is at the heart of business. The goal of this exercise is to bring forward the main concepts that define competitive advantage. Click the ► button to watch the video. Then, answer the questions that follow. Sustainable competitive advantage means a firm outperforms its peers over a sustained period of time. Such superior performance is noticed by the peer group that attempts to identify the source of the performance and copy it. This concept is called "benchmarking." Which of the following demonstrates a benchmarking process? a. Bolt competed in the 100-meter dash against a group of other runners to see which among them was the fastest. b. Sogelau Tuvalu switched from the shot put to the 100-meter dash. c. When Bolt was younger, he trained against other great runners, comparing his training program and performance to theirs. d. Bolt's naturally athletic gifts and hard training drove him to be the best. e. Winning the 100-meter and 200-meter races in two Olympics will likely never be repeated.

c. When Bolt was younger, he trained against other great runners, comparing his training program and performance to theirs.

Item 2 Item 2 Part 2 of 4 4 points Required information What is Strategy and Why is it Important? A creative, distinctive strategy that sets a company apart from rivals and provides a competitive advantage is a company's reliable ticket to above-average profits. Concepts & Connections 1.2 discusses how Apple's strategy led to it becoming one of the most profitable companies in the world, with revenues of more than $225 billion. Its reputation for superior technological innovation and design capabilities has made its products and services the most popular in the world. A company's strategy is management's game plan to grow the business, attract and please customers, compete successfully, conduct operations, and achieve targeted levels of performance. The central thrust of a company's strategy is undertaking moves to build and strengthen the company's long-term competitive position and financial performance. Ideally, this results in a competitive advantage over rivals that then becomes the company's ticket to above-average profitability. A company's strategy typically evolves over time, arising from a blend of (1) proactive and deliberate actions on the part of company managers and (2) adaptive emergent responses to unanticipated developments and fresh market conditions. Closely related to the concept of strategy is the concept of a company's business model. A company's business model is management's blueprint for delivering a valuable product or service to customers in a manner that will generate revenues enough to cover costs and yield an attractive profit. The two elements of a company's business model are (1) its customer value proposition and (2) profit formula. A winning strategy fits the circumstances of a company's external and internal situations, builds competitive advantage, and boosts company performance. This exercise is important because it will help you to understand why every company needs a sound strategy to compete successfully, manage the conduct of its business, and strengthen its prospects for long-term success. The goal of this exercise is to aid you in developing an awareness of the five most dependable approaches for setting a company apart from rivals and winning a competitive advantage. After reviewing Chapter 1, including Concepts & Connections 1.2, read the case below and answer the questions that follow. Apple Inc.: Exemplifying a Successful Strategy For more than ten consecutive years, Apple has ranked number one on Fortune's list of the "World's Most Admired Companies." Given the worldwide popularity of its products and services, along with its reputation for superior technological innovation and design capabilities, this is not surprising. The key elements of Apple's successful strategy include: Designing and developing its own operating systems, hardware, application software, and services. This allows Apple to bring the best user experience to its customers through products and solutions with innovative design, superior ease-of-use, and seamless integration across platforms. The ability to use services like iCloud across devices incentivizes users to join Apple's technological ecosystem and has been critical to fostering brand loyalty. Continuously investing in R&D and frequently introducing products. Apple has invested heavily in R&D, spending upwards of $11 billion a year, to ensure a continual and timely injection of competitive products, services, and technologies into the marketplace. Its successful products and services include the Mac, iPod, iPhone, iPad, Apple Watch, Apple TV, and Apple Music. It is currently investing in an Apple electric car and Apple solar energy. Strategically locating its stores and staffing them with knowledgeable personnel. By operating its own Apple stores and positioning them in high-traffic locations, Apple is better equipped to provide its customers with the optimal buying experience. The stores' employees are well versed in the value of the hardware and software integration and demonstrate the unique solutions available on its products. This high-quality sale and after-sale support allow Apple to continuously attract new customers and retain existing customers. Expanding Apple's reach domestically and internationally. Apple operates globally in 500 retail stores across 18 countries. During fiscal year 2017, 63% of Apple's revenue came from international sales. Maintaining a quality brand image, supported by premium pricing. Although the computer industry is incredibly price competitive, Apple has managed to sustain a competitive edge by focusing on its inimitable value proposition and deliberately keeping a price premium - thus creating an aura of prestige around its products. Committing to corporate social responsibility and sustainability through supplier relations. Apple's strict Code of Conduct requires its suppliers to comply with several standards regarding safe working conditions, fair treatment of workers, and environmentally safe manufacturing. Cultivating a diverse workforce rooted in transparency. Apple believes that diverse teams make innovation possible and is dedicated to incorporating a broad range of perspectives in its workforce. Every year, Apple publishes data showing the representation of women and different race and ethnicity groups across functions. Note: Developed with Shawnda Lee Duvigneaud Sources: Apple 10-K, Company website Apple's strategy of corporate responsibility is illustrated by a. continuously investing in R&D and frequently introducing products. b. cultivating a diverse workforce rooted in transparency. c. requiring suppliers to comply with established standards for safe working conditions, fair treatment of workers, and environmentally safe manufacturing. d. designing and developing its own operating systems, hardware, application software, and services. e. aggressively expanding their company-owned stores globally.

c. requiring suppliers to comply with established standards for safe working conditions, fair treatment of workers, and environmentally safe manufacturing.

Item 3 Item 3 Part 3 of 4 4 points Required information What is Strategy and Why is it Important? A creative, distinctive strategy that sets a company apart from rivals and provides a competitive advantage is a company's reliable ticket to above-average profits. Concepts & Connections 1.2 discusses how Apple's strategy led to it becoming one of the most profitable companies in the world, with revenues of more than $225 billion. Its reputation for superior technological innovation and design capabilities has made its products and services the most popular in the world. A company's strategy is management's game plan to grow the business, attract and please customers, compete successfully, conduct operations, and achieve targeted levels of performance. The central thrust of a company's strategy is undertaking moves to build and strengthen the company's long-term competitive position and financial performance. Ideally, this results in a competitive advantage over rivals that then becomes the company's ticket to above-average profitability. A company's strategy typically evolves over time, arising from a blend of (1) proactive and deliberate actions on the part of company managers and (2) adaptive emergent responses to unanticipated developments and fresh market conditions. Closely related to the concept of strategy is the concept of a company's business model. A company's business model is management's blueprint for delivering a valuable product or service to customers in a manner that will generate revenues enough to cover costs and yield an attractive profit. The two elements of a company's business model are (1) its customer value proposition and (2) profit formula. A winning strategy fits the circumstances of a company's external and internal situations, builds competitive advantage, and boosts company performance. This exercise is important because it will help you to understand why every company needs a sound strategy to compete successfully, manage the conduct of its business, and strengthen its prospects for long-term success. The goal of this exercise is to aid you in developing an awareness of the five most dependable approaches for setting a company apart from rivals and winning a competitive advantage. After reviewing Chapter 1, including Concepts & Connections 1.2, read the case below and answer the questions that follow. Apple Inc.: Exemplifying a Successful Strategy For more than ten consecutive years, Apple has ranked number one on Fortune's list of the "World's Most Admired Companies." Given the worldwide popularity of its products and services, along with its reputation for superior technological innovation and design capabilities, this is not surprising. The key elements of Apple's successful strategy include: Designing and developing its own operating systems, hardware, application software, and services. This allows Apple to bring the best user experience to its customers through products and solutions with innovative design, superior ease-of-use, and seamless integration across platforms. The ability to use services like iCloud across devices incentivizes users to join Apple's technological ecosystem and has been critical to fostering brand loyalty. Continuously investing in R&D and frequently introducing products. Apple has invested heavily in R&D, spending upwards of $11 billion a year, to ensure a continual and timely injection of competitive products, services, and technologies into the marketplace. Its successful products and services include the Mac, iPod, iPhone, iPad, Apple Watch, Apple TV, and Apple Music. It is currently investing in an Apple electric car and Apple solar energy. Strategically locating its stores and staffing them with knowledgeable personnel. By operating its own Apple stores and positioning them in high-traffic locations, Apple is better equipped to provide its customers with the optimal buying experience. The stores' employees are well versed in the value of the hardware and software integration and demonstrate the unique solutions available on its products. This high-quality sale and after-sale support allow Apple to continuously attract new customers and retain existing customers. Expanding Apple's reach domestically and internationally. Apple operates globally in 500 retail stores across 18 countries. During fiscal year 2017, 63% of Apple's revenue came from international sales. Maintaining a quality brand image, supported by premium pricing. Although the computer industry is incredibly price competitive, Apple has managed to sustain a competitive edge by focusing on its inimitable value proposition and deliberately keeping a price premium - thus creating an aura of prestige around its products. Committing to corporate social responsibility and sustainability through supplier relations. Apple's strict Code of Conduct requires its suppliers to comply with several standards regarding safe working conditions, fair treatment of workers, and environmentally safe manufacturing. Cultivating a diverse workforce rooted in transparency. Apple believes that diverse teams make innovation possible and is dedicated to incorporating a broad range of perspectives in its workforce. Every year, Apple publishes data showing the representation of women and different race and ethnicity groups across functions. Note: Developed with Shawnda Lee Duvigneaud Sources: Apple 10-K, Company website Apple's strategy has proven successful, largely due to a. keeping prices competitive with rivals. b. limiting store growth to maintain the "exclusivity" of the brand image. c. being an early mover in essentially creating a distinctive new market segment and using a differentiation strategy to build demand for its brand. d. competing head-on in the existing technology market. e. Apple's ability to bring the best user experience to its customers through products and solutions with innovative design, superior ease-of-use, and seamless integration across platforms.

e. Apple's ability to bring the best user experience to its customers through products and solutions with innovative design, superior ease-of-use, and seamless integration across platforms.

Which of the following is not an element of a company's realized business strategy? a. actions and approaches used in managing R&D, production, sales and marketing, finance, and other key activities b. actions to strengthen competitiveness via strategic alliances and collaborative partnerships c. actions to capture emerging market opportunities and defend against external threats to the company's business prospects d. actions to enter new geographic or product markets e. adhering to abandoned strategy elements

e. adhering to abandoned strategy elements

Rolls Royce business model

"power by the hour" model that charges airlines leasing fees for engine use, maintenance, and repairs based upon actual hours flown. Use of sophisticated sensors that optimize maintenance and repair schedules.

The evolving nature of a company's strategy means the typical company strategy is a blend of what?

1. Proactive moves to improve the company's financial performance and secure a competitive edge. 2. Adaptive reactions to unanticipated developments and fresh market conditions. See

Select all that apply Which of the following strategies enhances fit with the company's situation? a. a strategy that works well with a company's existing strengths and resources b. a strategy that is based on the company's weaknesses c. a strategy that addresses existing market conditions d. a strategy that requires a firm to expand its resources

A & C a. a strategy that works well with a company's existing strengths and resources c. a strategy that addresses existing market conditions

3. Is the strategy Producing good Company performance?

A winning strategy is strong company performance. Two kinds of performance improvements tell the most about the caliber of a company's strategy: 1. Gains in Profitability and Financial Strength. 2. Advances in Company's Competitive Strength and Market Standing.

Explain why a company needs a creative, distinctive strategy that sets it apart from rivals:

For a company to matter in the minds of customers, its strategy needs a distinctive element that sets it apart from rivals and produces a competitive edge. A strategy must tightly fit a company's own particular situation, but there is no shortage of opportunity to fashion a strategy that is discernibly different from the strategies of rivals. Competitive success requires a company's managers to make strategic choices about the key building blocks of its strategy that differ from the choices made by competitors- not 100% different but at least different in several important respects. A strategy stands a chance of succeeding only when it is predicted on actions, business approaches, and competitive moves aimed at appealing to buyers in ways that set a company apart from rivals. Simply trying to mimic the strategies of the industry's successful compaies never works. Rather ever company's strategy needs to have some distinctive element that draws in customers and produces a competitive edge. Strategy at its essence is about competing differently- doing what rival firms don't do or better yet what rival firms can't do!

2. Is the strategy helping the company achieve a sustainable competitive advantage?

Strategies that fail to achieve a durable competitive advantage over rivals are unlikely to produce superior performance for more than a brief period of time. Winning strategies enable a company to achieve a competitive advantage over key rivals that is long-lasting. The bigger and more durable the competitive edge that the strategy helps build. the more powerful it is.

customer value proposition C. OTA Broadcasters

OTA Broadcasters 1. Free of Charge Music, national and local news and weather, local traffic reports, and talk radio programming. 2. Included frequent programming interruption for ads.

Profit Formula for Pandora Revenue generation Cost Structure Fixed and Variable Costs Profit Margin

Pandora Profit Form: Revenue generation: Display, audio, and video ads targeted to different audiences and sold to local/national buyers; subscription revenues generated from an advertising-free option called Pandora One Cost Structures: Fixed costs associated with developing software for computers, tablets, and smartphones. Fixed & Variable Costs: Related to operating data centers to support streaming network content royalties, marketing, and support activities. Profit Margin: profitability dependent on generating sufficient advertising revenues and subscription revenues to cover costs and provide attractive profits.

Some rivals strive to create superior value for customers by achieving lower costs than rivals, while others...

Pursue product superiority or personalized customer service or the development of capabilities that rivals cannot match.

Apple's Competitive Advantage

Strategy keyed to product innovation, brand image, and reputation for social responsibility. A creative, distinctive strategy such as that used by apple is a company's most reliable ticket for developing a sustainable competitive advantage and earnings above-average profits.

Profit Formula for Sirius XM: Revenue generation Cost Structure Fixed and Variable Costs Profit Margin

Sirius Profit Form: Revenue generation: Monthly sub fees, sales of satellite radio equipment, and advertising revenues. Cost Structures: Fixed costs associated with operating a satellite-based music delivery service and streaming internet service. Fixed & Variable Costs: related to programming and content royalties, marketing, and support activities. Profit Margin: dependent on attracting a sufficiently large number of subs to cover costs and provide attractive profits.

customer value proposition B. Sirius XM

Sirius XM 1. Monthly sub fee, provided satellite based music, news, sports, national and regional weather, traffic reports in limited areas, and talk radio programming. 2. Offered subs streaming internet channels and ability to create personalized commercial free stations for online and mobile listening. 3. Offered programming interrupted only by brief, occasional ads.

Select all that apply Which of the following statement(s) are true regarding the evolution of a company's strategy? a Crafting strategy is always a work in progress. b Crafting strategy is usually a one-time process. c Most of the time, changes in strategy are small adjustments rather than major shifts. d Changes in strategy are typically major shifts in response to failure of the current strategy or dramatic changes in market conditions.

a & C a Crafting strategy is always a work in progress. c Most of the time, changes in strategy are small adjustments rather than major shifts. Note on D Reason: Most of the times, a company's strategy evolves incrementally. Only occasionally does it a major shift in response to failure of strategy occur.

A company using a ______ strategy seeks to satisfy the needs of niche customers by offering unique and innovative product features that are not easily copied by rivals. focused differentiation broad differentiation best-cost provider break-even

a. focused differentiation

A sustainable competitive advantage is important because a. it defines the company's strategic vision. b. it allows a company to earn higher profits than competitors over the long term. c. it ensures that a company meets short-term profit objectives. d. it allows the company to justify hiring more employees and expanding operations.

b. it allows a company to earn higher profits than competitors over the long term. Note: allows a company to attract sufficiently large numbers of buyers who have a lasting preference for its products or services over those offered by rivals, despite the efforts of competitors to offset that appeal and overcome the company's advantage. The bigger and more durable the competitive advantage, the better a company's prospects for winning in the marketplace and earning superior long-term profits relative to rivals.

A(n) ______ business strategy is typically a combination of deliberate and emergent strategy initiatives. (Remember to place only one word in the blank.) a. unrealized b. realized

b. realized

Together, deliberate strategy elements and emergent strategy elements make up a company's ______ strategy. a. emergent b. realized c. abandoned d. deliberate

b. realized

Pet Foods & Supplies Inc. sells dog and cat products directly to pet owners via a website. In order to maximize its customer value proposition, the company must offer valuable products along with: a. Fast the Shipping b. Superior Customer Service c. Low Prices D. A diverse Selection

c. Low Prices The customer value proposition is established by the company's overall strategy and lays out the company's approach to satisfying buyer wants and needs at a price customers will consider a good value. The great the value provided and the lower the price, the more attractive the value proposition is to customers.

A company's ______ consists of the actions the company takes to use its resources and capabilities to create superior value for customers. a. Goals b. Objectives c. Strategy d. Plans.

c. Strategy

A strategy that is well-suited to address external market conditions by taking advantage of a company's resources and strengths meets which of the following tests for a winning strategy? a. "Is the strategy deliberate rather than emergent?" b. "Is the strategy helping the company achieve a sustainable competitive advantage?" c. "Is the strategy producing good company performance?" d. "How well does the strategy fit the company's situation?"

d. "How well does the strategy fit the company's situation?"

Which of the following is not true of strategy? a. Companies that imitate the strategies of rivals will struggle to maintain a competitive advantage. b. An effective and well-executed strategy improves a firm's chances of performing well in the marketplace. c. A sound strategy and good strategy execution are the best indicators of effective management. d. A brilliant strategy, even if poorly executed, will lead to outstanding market performance.

d. A brilliant strategy, even if poorly executed, will lead to outstanding market performance.

Three Tests of a Winning Strategy (A winning strategy must fit the company's external and internal situation, build sustainable competitive advantage, and improve company performance.)

1. How well does the strategy fit the company's situation? 2. Is the strategy, helping the company achieve a sustainable competitive advantage? 3. Is the strategy Producing good Company performance? Strategies that come up short on one or more of these tests are plainly less appealing than strategies passing all three tests with flying colors. Managers should use the same questions when evaluating either proposed or existing strategies. New initiatives that don't seem to match the company's internal and external situations basis to ensure they have a good fit, offer a competitive advantage and have contributed to above-average performance or performance improvements.

B. Deliberate The biggest portion of a company's current strategy flows from ongoing actions that have proven themselves in the marketplace and newly launched initiatives aimed at building a larger lead over rivals and further

True or false: The three tests of a winning strategy are useful when evaluating existing strategies but not when planning initiatives. True False

False Note: Recall that the three tests of a winning strategy should be used to evaluate both existing and planned strategies.

customer value proposition A. Pandora

Pandora: 1. free of charge internet radio service, allowed PC, tablet, smartphone users to create up to 100 personalized music and comedy stations. B. Utilized algorithms to generate playlists based on users predicted music preferences. C. Offered Programing interrupted by brief, occasional ads; eliminated advertising for Pandora One Subscribers.

Select all that apply Which two kinds of improvements in performance provide the best information about whether a strategy is producing good company performance? a. growing profitability and financial strength b. improvements in employee morale c. improved competitive strength and market standing d. stronger consumer response to advertising expenditures

a & c a. growing profitability and financial strength c. improved competitive strength and market standing

Select all that apply A company's strategy is most likely to be successful when it: a. captures consumer interest in ways that distinguish the company from its competitors. b. appeals only to a very narrow, selective target customer base. c. resembles the strategy of an industry-leading competitor d. is based on doing what competitors can't or don't do.

a & d: a. captures consumer interest in ways that distinguish the company from its competitors. d. is based on doing what competitors can't or don't do.

Sustainable competitive advantage

allows a company to attract sufficiently large numbers of buyers who have a lasting preference for its products or services over those offered by rivals, despite the efforts of competitors to offset that appeal and overcome the company's advantage. The bigger & More durable the competitive advantage, the better a company's prospects for winning in the marketplace and earning superior long-term profits relative to rivals.

Some competitors position themselves in only one part of the industry's chain of production and/or distribution activities, while others....

are partially or fully integrated with operations ranging from components production to manufacturing and assembly to wholesale distribution or retailing.

How well a company performs is directly attributable to a. which of the five strategic approaches the company employs. the industry in which it competes. b. the degree to which the company's pricing of its products or services is competitive. c. the strength of its strategy and how well it is executed.

c. the strength of its strategy and how well it is executed.

The biggest portion of a company's strategy is based on a. targeting a narrow market niche so as to fine-tune product or service offerings. b. finding ways to lower prices as much as possible to enhance competitive advantage over rivals. c. reactions to immediate crises and rapidly changing market conditions. d. ongoing actions that have proven to be successful and proactive attempts to improve finances and build a competitive advantage.

d. ongoing actions that have proven to be successful and proactive attempts to improve finances and build a competitive advantage.

Together, deliberate strategy elements and emergent strategy elements make up a company's ______ strategy. a. abandoned b. emergent c. deliberate d. realized

d. realized note: figure 1.1 a company's realized strategy tends to be a combination of deliberate planned elements and unplanned, emergent elements

How well a company performs is directly attributable to a. the degree to which the company's pricing of its products or services is competitive. b. the industry in which it competes. c. which of the five strategic approaches the company employs. d. the strength of its strategy and how well it is executed.

d. the strength of its strategy and how well it is executed.

A(n) ______ strategy must fit the company's external and internal situation, build sustainable competitive advantage, and improve company performance. a. baseline b. emergent c. adequate d. winning

d. winning note: An emergent strategy specifically seeks to identify unexpected outcomes.

Company's Strategy

the coordinated set of actions that its managers take to outperform the company's competitors and achieve superior profitability. The objective of a well-crafted strategy is not merely temporary competitive success and profits in the short run, but rather the sort of lasting success that can support growth and secure the company's future over the long term. Achieving this entails making a managerial commitment to coherent array of well-considered choices about how to compete. These include choices about

What are the key points.

1. A company's strategy is the coordinated set of actions that its managers take to outperform the company's competitors and achieve superior profitability. 2. Closely related to the concept of strategy is the concept of a company's buisness model. A company's business model is management's blueprint for delivering customer value in a manner that will generate revenues sufficient to cover costs and yield an attractive profit. The two elements of a company's business model are its: 1. Customer Value Proposition and 2. its profit formula. 3. The central thrust of a company's strategy is undertaking moves to build and strengthen the company's long-term competitive position and financial performance by competing differently from rivals and gaining a sustainable competitive advantage over them. 4. A company's strategy typically evolves over time, arising from a blend of (1) Proactive and Deliberate Actions on the Part of Company Managers, and (2) Adaptive Emergent responses to Unanticipated Developments and Fresh Market Conditions. 5. A winning strategy fits the circumstances of a company's external and internal situations, builds competitive advantage, and boosts company performance.

What are the two elements of a company's business model and what do they mean?

1. Customer Value Proposition a. Established by the company's overall strategy and lays out the company's approach to satisfying buyer wants and needs at a price customers will consider a good value. The greater the value provided and the lower the price, the more attractive the value proposition is to the customer. 2. Profit Formula b. Describes the company's approach to determining a cost structure that will allow for acceptable profits given the pricing tied to its customers value proposition. The lower the costs given the customer value proposition, the greater the ability of the business model to be a moneymaker. The nitty-gritty issue surrounding a company's business model is whether it can execute its customer value proposition profitably. Just because company managers have crafted a strategy for competing and running the business does not automatically mean the strategy will lead to profitability.

Key elements of Apple's successful strategy:

1. Designing and Developing its own operating system, hardware, application software, and services. This allows Apple to bring the best user experience to its customers through products and solutions with innovative design, superior ease-of-use, and seamless integration across platforms. The ability to use services like i-Cloud across devices incentivizes users to join Apple's technological ecosystem and has been critical to fostering brand loyalty. 2. Continuously Investing in R&D and Frequently introducing products: Apple has invested heavily in R&D, spending upwards of $11 Billion a year, to ensure a continual and timely injection of competitive products, services, and technologies into the marketplace. Its successful products and service include the Mac, iPod, iPhone, iPad, Apple Watch, Apple TV, and Apple Music. It is currently investing in an Apple electric car and Apple solar energy. 3. Strategically locating its stores and staffing them with knowledgeable personnel. By operating its own Apple stores and positioning them in high-traffic locations, Apple is better equipped to provide its customers with the optimal buying experience. The stores' employees are well versed in the value of the hardware and software integration and demonstrate the unique solutions available on its products. This high-quality sale and after-sale support allows Apple to continuously attract new and retain existing customers. 4. Expanding Apple's reach domestically and Internationally: Apple operates globally in 500 retail stores across 18 countries. During fiscal year 2017, 63% of Apple's revenue came from international sales. 5. Maintaining a Quality Brand Image, Supported by Premium Pricing: although the computer industry is incredibly price competitive, apple has managed to sustain a competitive edge by focusing on its inimitable value proposition and deliberately keeping price premium-thus creating an aura of prestige around its products. 6. Committing to corporate social responsibility and sustainability through supplier relations: Apple's strict Code of Conduct requires its suppliers to comply with several standards regarding safe working conditions, fair treatment of workers, and environmentally safe manufacturing. 7. Cultivating a diverse workforce rooted in transparency: Apple believes that diverse teams make innovation possible and is dedicated to incorporating a broad range of perspectives in its workforce. Every year, Apple publishes data showing the representation of women and different race and ethnicity groups across functions.

What questions are asked when making a managerial commitment to a coherent array of well-considered choices about how to compete? Hint: the "Hows of Strategy"

1. How to create products or services that attract and please customers. 2. How to position the company in the industry. 3. How to develop and deploy resources to build valuable competitive capabilities. 4. How each functional piece of the business (R&D, supply chain activities, production, sales and marketing, distribution, finance, and human resources) will be operated. 5. How to achieve the company's performance targets.

Five most dependable strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage. 1. Lower Cost Provider Strategy 2. Broad Differentiation 3. Focused Differentiation 4. Narrow Differentiation 5. Best or Better Cost Provider Strategy

1. Low Cost Provider Strategy: achieving a cost-based advantage over rivals. Walmart and SW Airlines have earned strong market positions because of the low-cost advantages they have achieved over their rivals. Low-cost provider strategies can produce a durable competitive edge when rivals find it hard to match the low-cost leader's approaching to driving costs out of the business. 2. Broad Differentiation Strategy: Seeking to differentiate the company's product or service from rivals' in ways that will appeal to a broad spectrum of buyers. Successful adopters of broad differentiation strategies include Johnson and Johnson in baby products (product reliability) and sufficiently innovative to thwart rivals' attempts to copy or closely imitate its product offering. 3. A Focused Low-Cost Strategy: concentrating on a narrow buyer segment (or market niche) and out-competing rivals by having lower costs than rivals and thus being able to serve and nutritional supplements use their low-cost advantage to offer supermarket buyers low prices than those demanded by producers of branded products. 4. A Focused Differentiation Strategy: concentrating on a narrow buyer segment (or market niche) and out-competing rivals by offering niche members customized attributes that meet their tastes and requirements better than rivals' products. Louis Vuitton and Rolex have sustained their advantage in the luxury goods industry through a focus on affluent customers demanding luxury and prestige. 5. A Best Cost Provider Strategy: Giving customers more value for the money by satisfying buyers' expectations on key quality/features/performance service attributes, Target's best cost advantage allows it an annealing shopping ambience at low prices.

What is abandoned strategy elements?

At times, certain components of a company's deliberate strategy will fail in the marketplace and become abandoned strategy elements. Managers must always be willing to supplement or modify planned, deliberate strategy elements with as-needed reactions to unanticipated developments. Inevitably, there will be occasions when the market and competitive conditions take unexpected turns that call for some kind of strategic reaction. Novel strategic moves on the part of rival firms, unexpected shifts in customer preferences, fast-changing technological developments, and new market opportunities call for unplanned, reactive adjustments that form the company's Emergent Strategy. As shown in the above picture.... A company's realized strategy tends to be a combo of deliberate planned elements and unplanned, emergent elements.

Markets are structured in value chains.

Example: Steel Mill, a tire manufacture, and labor are all inputs to an auto-manufacture, who then sells to dealerships, who sells to consumers. Each stage in the value chain someone is creating value, hopefully. There is a value chain inside the firm as well: A firms primary activities might start out with product design, followed by procurement of supplies, which enables manufacturing, which leads to marketing and sales. These primary activities are supported by secondary activities such as: Human Resources, Information Technology, Fiance/Accounting/Legal, Research. Step 1: Identify Value Chain Activities Example: Value Chain in Pharmaceutical Firms Primary Activities Might be: R&D, then leads to clinical trials, then manufacturing, and marketing and sales. Secondary Activities: Human Resources, Licensing and Alliances, Finance and Accounting, and Legal. Step 2: Identify Strengths and Weaknesses in the Value Chain Activities: Example: Value Chain of R&D Strengths: 1. Exceptional Scientists. 2. Patented Tech. 3. Strong Stage-Gate Process 4. Exclusive Relationship W/R&D Partner Weaknesses: 1. Smaller R&D Budget than Competitors.

Why is it important task to crafting and executing strategy?

High-achieving enterprises are nearly always the product of astute, creative, and proactive strategy making. COmpany's don't get to the top of the industry rankings or stay there with illogical strategies, copycat strategies or timid attempts to try to do better. Among all things managers do, NOTHING affects a company's ultimate success or failure more fundamentally than how well its management team charts the company's direction, develops competitively effective strategic moves and business approaches, and pursues what needs to be done internally to produce good day-in, day-out strategy execution and operating excellence. Good Strategy and Good Strategy Execution are the most telling signs of Good Management! Twin standards of good strategy making and good strategy execution to determine whether a company is well managed is therefore compelling: The better conceived a company's strategy and the more competently it is executed, the more likely that the company will be a standout performer in the marketplace. In contrast, a company that lacks clear-cut direction, has a flawed strategy, or cannot execute its strategy competently is a company whose financial performance is probably suffering, whose business is at long-term risk and whose management is sorely lacking.

Which of the following most accurately describes a best-cost provider strategy? a It aims to compete squarely with rivals using a low-cost strategy. b It is a hybrid of low-cost provider and differentiation strategies. c It is a hybrid of low-cost and focused-low cost strategies. d It focuses solely on offering the lowest possible prices on products or services.

It is a hybrid of low-cost provider and differentiation strategies. Reason: A best-cost provider strategy includes a differentiation strategy.

Profit Formula for OTA Broadcasters: Revenue generation Cost Structure Fixed and Variable Costs Profit Margin

Pandora Profit Form: Revenue generation: Advertising sales to national and local businesses. Cost Structures: fixed costs associated with terrestrial broadcasting operations. Fixed & Variable Costs: related to local news reporting, advertising sales operations, network affiliate fees programming and content royalties, commercial production activities, and support activities Profit Margin: profitability dependent on generating sufficient advertising revenues to cover costs and provide attractive profits.

Now we look at the Exclusive Relationship We Have With Our R&D Partner. Resource or Capability: Exclusive Relationship with R&D Partner Valuable? Yes Rare: YES (it's very popular among other firms) Inimitable: NO (if we think there are similar firms our competitors could partner with, we might be worried that it could be imitated) Organizational Support: Yes Competitive Outcome: Temporary Advantage

Step 4: Assess the Strategic Implications of Our Analysis: Now using the results of our analysis we will ask questions for each result.... Weaknesses: How can we obtain the Resources and Capabilities We Need to Overcome Our Weaknesses? Temporary Advantages: How Can We Best Extend and Defend Our Temporary Advantages? Sustainable Competitive Advantages: How Can We Best Exploit and Reinforce Our Sustainable Competitive Advantages? ***Sustainable Competitive Advantages should be the foundation of our strategy**** A rigorous understanding of our advantages and disadvantages is key to formulating a winning strategy.

Which of the following are choices that managers must make in crafting their company's strategy? a. How to create products or services that will attract and please customers b. How to operate each functional area of the business c. How to compensate employees and attract top talent d. How to position the company in the industry

a, b, & d a. How to create products or services that will attract and please customers b. How to operate each functional area of the business d. How to position the company in the industry

A company's managers should be prepared to modify strategy in response to which of the following events? a. The firm has identified new market opportunities. b. Buyer tastes and preferences in the company's target market have evolved. c. Shift in manager's interests d. The strategy is not achieving the company's objectives.

a, b, & d a. The firm has identified new market opportunities. b. Buyer tastes and preferences in the company's target market have evolved. d. The strategy is not achieving the company's objectives.

Select all that apply Which of the following are questions that can be used to identify a winning strategy? a. How well does the strategy fit the company's situation? b. Is the strategy a secret from competitors? c. Is the strategy helping the company achieve a sustainable competitive advantage? d. Has the strategy been used successfully in another industry? e. Is the strategy producing good company performance?

a, c, & e a. How well does the strategy fit the company's situation? c. Is the strategy helping the company achieve a sustainable competitive advantage? e. Is the strategy producing good company performance?

A strategy that improves the company's profitability and strengthens its market position meets which of the following tests of a winning strategy? a. "How well does the strategy fit the company's situation?" b. "Is the strategy producing good company performance?" c. "Does the strategy increase shareholder wealth?" d. "Is the strategy helping the company achieve a sustainable competitive advantage?"

a. "How well does the strategy fit the company's situation?" Note: Reason D is not the answer: Recall that a sustainable competitive advantage is long lasting. The example given does not indicate the period of time.

Lennie is the founder of a start-up business that allows homeowners to rent out their properties like hotels. In crafting his company strategy, Lennie is particularly focused on how to distinguish his start-up from similar companies such as AirBnB. Which of the following choices best describes Lennie's strategic focus? a. How to position the company in the industry. b. How to achieve the company's performance targets. c. How to create products or services that attract and please customers d. How each functional piece of the business will be operated.

a. How to position the company in the industry.

Pet Foods & Supplies Inc. sells dog and cat products directly to pet owners via a website. In order to maximize its customer value proposition, the company must offer valuable products along with: a. low prices. b. superior customer service. c. fast the shipping. d. a diverse selection.

a. low prices.

Companies using a ______ strategy compete by attempting to have lower costs than competitors. low-cost provider broad differentiation focused differentiation low-priced sales

a. low-cost provider

Pet Foods Inc. sells cat and dog products directly to pet owners via a website. Given pricing strategy described in the customer value proposition, the firm can increase its profits by: a. lowering costs. b. offering free shipping. c. broadening the selection of d. products. d. improving its customer service.

a. lowering costs. The profit formula describes the company's approach to determining a cost structure that will allow for acceptable profits given the pricing tied to its customer value proposition. The lower the costs given the customer value proposition, the greater the ability of the business model to be a money maker!

Which of the following is not one of the most frequently used strategic approaches to building a sustainable competitive advantage? a. sticking with an outdated business model b. focusing on a narrow market niche within an industry c. striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage over rivals d. developing an advantage based on offering more value for the money e. creating a differentiation-based advantage over rivals

a. sticking with an outdated business model

How well a company performs is directly attributable to the caliber of its strategy and the proficiency with which the strategy a. the strength of its strategy and how well it is executed. b. the industry in which it competes. c. the degree to which the company's pricing of its products or services is competitive. d. which of the five strategic approaches the company employs.

a. the strength of its strategy and how well it is executed.

Why will strategy execution be important to your company's success? a. Having a solid nonchanging strategy will be important to remain competitive. b. Changing circumstances, a dynamic environment, and ongoing management efforts cause a company to change a strategy overtime. c. Competitiveness stems from internal operations; the company will need to focus on leadership and employee actions. d. A winning strategy is one that is matched to the rivals' strategy as much as possible. e. Strategy execution will be necessary to identify competitors that companies can acquire, merge with, or partner with.

b. Changing circumstances, a dynamic environment, and ongoing management efforts cause a company to change a strategy overtime.

A(n) ______ strategy element is the result of a failure of part or all of a deliberate strategy in the marketplace. a. emergent b. abandoned c. realized d. adaptive

b. abandoned note: at times, certain components of a company's deliberate strategy will fail in the marketplace and become abandoned strategy elements.

A company using a ______ strategy seeks to provide value by keeping costs low yet providing key features or quality attributes difficult for competitors to imitate. a. focused low-priced b. best-cost provider c. low-cost provider d. focused differentiation

b. best-cost provider Note on A & C: a. Reason: A focused low-priced strategy seeks to compete solely on price within a narrow market niche. c. Reason: A low-cost provider seeks only a cost-based advantage over rivals.

A creative, distinctive strategy that delivers a sustainable competitive advantage is important because a. how a company goes about trying to please customers and outcompete rivals is what enables senior managers to choose an appropriate strategic vision for the company. b. crafting a strategy that yields a competitive advantage over rivals is a company's most reliable means of achieving above-average profitability and financial performance. c. a competitive advantage is what enables a company to achieve its strategic objectives. d. a competitive advantage is what enables a company to achieve its strategic objectives. e. without a competitive advantage a company is likely to fall into bankruptcy.

b. crafting a strategy that yields a competitive advantage over rivals is a company's most reliable means of achieving above-average profitability and financial performance.

In a ______ strategy, a company seeks to satisfy the needs of a narrow group of customers by offering affordable prices on goods produced at a low cost. a. low-cost provider b. focused low-cost provider c. focused differentiation d. best-cost provider

b. focused low-cost provider

The heart and soul of any strategy a. is its ability to increase shareholder value. b. is the actions and moves to gain a competitive edge over rivals in the marketplace. c. deals with how management plans to maximize profits while, at the same time, operating in a socially responsible manner. d. is the day-to-day demands of delivering a service or producing goods to be sold. e. is its linkage with its business model.

b. is the actions and moves to gain a competitive edge over rivals in the marketplace. The heart and soul of any strategy is the actions and moves in the marketplace that managers are taking to gain a competitive edge over rivals. Five of the most frequently used and dependable strategic approaches to setting a company apart from rivals and winning sustainable competitive advantage are: 1. Low-Cost Provider Strategy 2. Broad Differentiation Strategy 3. Focused Low-Cost Strategy 4. Focused Differentiation Strategy 5. Best-Cost Provider Strategy

When evaluating proposed or existing strategies managers should a. evaluate the firm's business model at least every three years. b. scrutinize their company's existing strategies on a regular basis to ensure that they offer a good strategic fit, create a competitive advantage, and result in above-average performance. c. ensure core capabilities are incorporated synergistically for establishing a competitive advantage. d. align existing strategies with new strategies to emphasize incremental gains e. initiate new strategies even though they don't seem to match the company's internal and external situation.

b. scrutinize their company's existing strategies on a regular basis to ensure that they offer a good strategic fit, create a competitive advantage, and result in above-average performance.

A company's strategy consists of the action plan that management executes in order to a. compete against rivals and achieve sustainable profitability. b. stake out a unique market position and compete differently. c. develop a more appealing business model than rival firms. d. become better than the leader in one particular area that counts heavily with buyers. e. become better than the leader in one particular area that counts heavily with buyers.

b. stake out a unique market position and compete differently.

When can a company achieve a sustainable competitive advantage? a. whenever it possesses the most profitable business model in the industry and can satisfy shareholder expectations better than its competitors b. when elements of the strategy give buyers lasting reasons to prefer a company's products or services over those of competitors c. when it is able to produce better products for fewer costs than its rivals d. when it consistently achieves both its long-term and short-term strategic and financial objectives e. if it can translate its vision, mission, and values into a well-crafted strategy

b. when elements of the strategy give buyers lasting reasons to prefer a company's products or services over those of competitors Core Concept: A company achieves a sustainable competitive advantage when an attractively large number of buyers develop a durable preference for its products or services over the offerings of competitors, despite the efforts of competitors to overcome or erode its advantage.

Chapter 1: Exercises for Simulation Participants If you are participating in a strategy simulation exercise during the academic term, you may be instructed to complete the following exercise. Your company's strategy in the business simulation for this course should include choices about what types of issues? a. whether to enter international markets b. whether the company will compete by creating superior value, pursuing product superiority, achieve lower costs than rivals, or whether to focus on one part of the industry's value chain c. the company should address their financial situation and whether they can compete in this industry d. the company must focus on ensuring they have a solid leadership team e. the company must address how each business unit contributes to the overall corporate strategy

b. whether the company will compete by creating superior value, pursuing product superiority, achieve lower costs than rivals, or whether to focus on one part of the industry's value chain

Francesca owns a company that produces private-label vitamins and nutritional supplements for chain supermarkets. The consumers who typically purchase her products are those who are willing to buy "generic" products at a lower price than branded products. Her company is using a ______ strategy. a focused differentiation b break-even c focused low-cost d broad differentiation

c focused low-cost

et Foods Inc. sells cat and dog products directly to pet owners via a website. Given pricing strategy described in the customer value proposition, the firm can increase its profits by a offering free shipping. b broadening the selection of products. c lowering costs. d improving its customer service.

c lowering costs.

A strategy that does not give a company a lasting advantage over its rivals fails which of the following tests of a winning strategy? a. "Does the strategy result in long-term profitability?" b. "Is the strategy producing good company performance?" c. "Is the strategy helping the company achieve a sustainable competitive advantage?" d. "How well does the strategy fit the company's situation?"

c. "Is the strategy helping the company achieve a sustainable competitive advantage?"

A strategy that improves the company's profitability and strengthens its market position meets which of the following tests of a winning strategy? a. "How well does the strategy fit the company's situation?" b. "Does the strategy increase shareholder wealth?" c. "Is the strategy helping the company achieve a sustainable competitive advantage?" d. "Is the strategy producing good company performance?"

c. "Is the strategy helping the company achieve a sustainable competitive advantage?" Reason for C: Recall that a sustainable competitive advantage is long lasting. The example given does not indicate the period of time. Reason why not A: This is a test of whether the strategy is suitable for both the external and internal aspects of the company's situation.

A strategy that improves the company's profitability and strengthens its market position meets which of the following tests of a winning strategy? a. "Does the strategy increase shareholder wealth?" b. "Is the strategy helping the company achieve a sustainable competitive advantage?" c. "Is the strategy producing good company performance?" d. "How well does the strategy fit the company's situation?"

c. "Is the strategy producing good company performance?"

Which of the following is not true of strategy? a. An effective and well-executed strategy improves a firm's chances of performing well in the marketplace. b. Companies that imitate the strategies of rivals will struggle to maintain a competitive advantage. c. A brilliant strategy, even if poorly executed, will lead to outstanding market performance. d. A sound strategy and good strategy execution are the best indicators of effective management.

c. A brilliant strategy, even if poorly executed, will lead to outstanding market performance.

Which of the following statements about a company's realized strategy is true? a. A company's realized strategy is usually kept secret. b. A company's realized strategy is typically planned well in advance and usually deviates little from the planned set of actions. c. A company's realized strategy is typically a blend of deliberate and planned initiatives, and emergent and unplanned reactive strategy elements. d. A company's realized strategy generally changes very little over time unless a newly appointed CEO decides to take the company in a new direction with a new strategy. e. A company's realized strategy is developed mostly on a day-to-day basis because of the constant efforts of managers to keep rival companies at a disadvantage.

c. A company's realized strategy is typically a blend of deliberate and planned initiatives, and emergent and unplanned reactive strategy elements. Core Concept: A company's realized strategy is a combination of deliberate planned elements and unplanned emergent elements. Some components of a company's deliberate strategy will fail in the marketplace and become abandoned strategy elements.

Select all that apply: Which of the following statement(s) are true regarding the evolution of a company's strategy? a. Crafting strategy is usually a one-time process. b. Changes in strategy are typically major shifts in response to failure of the current strategy or dramatic changes in market conditions. c. Crafting strategy is always a work in progress. d. Most of the time, changes in strategy are small adjustments rather than major shifts.

c. Crafting strategy is always a work in progress. d. Most of the time, changes in strategy are small adjustments rather than major shifts.

In a ______ strategy, a company seeks to satisfy the needs of a narrow group of customers by offering affordable prices on goods produced at a low cost. a best-cost provider b focused differentiation c focused low-cost provider d low-cost provider

c. Focused Low-Cost Strategy: concentrating on a narrow buyer segment (or market niche) and out-competing rivals by having lower costs than rivals and thus being able to serve and nutritional supplements use their low-cost advantage to offer supermarket buyers low prices than those demanded by producers of branded products.

A company achieves a sustainable competitive advantage when a. its revenue reaches a specified target. b. it is profitable for a period of ten years or more. c. a significant number of customers develop a strong and lasting preference for its products or services. d. it achieves a market share of over 50%, thereby limiting opportunities for competitors.

c. a significant number of customers develop a strong and lasting preference for its products or services.

Banana Computers manufacturers products that appeal to a wide target market, and they remain competitive because they frequently introduce innovative new products that are difficult for their competitors to copy. Banana is most likely using which of the following strategies? a. focused low-cost b. focused differentiation c. broad differentiation d. best-cost provider

c. broad differentiation (This strategy concentrates on a narrow buyer segment)

In answering the question "How well does the strategy fit the company's situation," management must be willing and ready to address such issues as a. developing a sound business model and customer base. b. emergent strategy elements, deliberate strategy elements, and abandoned strategy elements. c. changing market conditions, development of internal capabilities and competencies, and allocation of financial resources. d. determining where the company is now and where does the company want to go. e. determining where the company is now and where does the company want to go.

c. changing market conditions, development of internal capabilities and competencies, and allocation of financial resources.

A sustainable competitive advantage is important because a. it ensures that a company meets short-term profit objectives. b. it defines the company's strategic vision. c. it allows a company to earn higher profits than competitors over the long term. d. it allows the company to justify hiring more employees and expanding operations.

c. it allows a company to earn higher profits than competitors over the long term.

Mimicking a competitor's strategies by copying its products or marketing approach is a. the best approach for achieving competitive advantage in a crowded industry. b. a competitive strategy that has been tested over time by many successful manufacturers. c. one of the least effective strategies for achieving sustained profitability. d. usually successful in fending off threats from new competition.

c. one of the least effective strategies for achieving sustained profitability.

Strategy measures that seek to improve a firm's finances or achieve a competitive advantage are known as ______ moves. a. defensive b. emergent c. proactive d. reactive

c. proactive

As part of a company's business model, the ______ describes the costs a company is willing to accept in producing a good or service given the pricing model described in the customer value proposition. value formula competitive strategy profit formula pricing structure

c. profit formula

Why does a company's strategy evolve over time?

changing circumstances and ongoing management efforts to improve the company's strategy. Managers must be willing and ready to modify the strategy in response to the unexpected moves of competitors, shifting buyer needs and preferences, emerging market opportunities, new ideas for improving the strategy, and mounting evidence that the strategy is not working well. Most of the time, a company's strategy evolves incrementally as management fine-tunes various pieces of the strategy and adjusts the strategy to respond to unfolding events. However, on occasion, major strategy shifts are called for, such as when the strategy is clearly failing or when industry conditions change in dramatic ways. Crafting a strategy is not a one-time event but is always a work in progress.

strategy that achieves ______ is likely to help a company excel for an extended period of time. a. a permanent competitive advantage b. a profit c. strong revenues d. a sustainable competitive advantage

d. a sustainable competitive advantage

A company's strategy should a. be a one-time event. b. never be incremental. c. be changed only in response to major crises or dramatic events. d. be a work in progress.

d. be a work in progress.

A ______ strategy seeks to distinguish a company's product or services from competitors by adding innovative features or developing a reputation that appeals to a wide range of consumers. a. low-cost provider b. focused differentiation c. best-cost provider d. broad differentiation

d. broad differentiation

A ______ outlines the ways in which a company will deliver a valuable product or service to consumers while remaining profitable. a. competitive advantage b. company strategy c. sale plan d. business model

d. business model

As part of a company's business model, the company's ______ describes the company's plan for meeting customer needs at a price that buyers consider a good value. a. cost strategy b. profit formula c. target niche strategy d. customer value proposition

d. customer value proposition

Small Tech Inc. decided to develop new product features in order to respond to an innovative product that was unexpectedly introduced by their closest competitor. This is an example of a(n) ______ strategy. a. planned initiative b. proactive c. abandoned d. emergent

d. emergent Note: A proactive approach is to anticipate something before it actually occurs.

d. the internet

Which of the following is not typically a trigger to an evolving strategy? a. the need to respond to the newly initiated actions and competitive moves of rival firms b. the need to abandon some strategy features that are no longer working well c. the proactive efforts of company managers to fine-tune and improve one or more pieces of the strategy as conditions warrant d. the need to respond to short-term swings in the stock market. e. the need to keep strategy in step with changing circumstances, market conditions, and changing customer needs and expectations

d. the need to respond to short-term swings in the stock market.

Role of Strategy in a Firm's Quest for Competitive Advantage Strategy, which is inherently competitive, is a juxtaposition of competitive challenges and the resources that can be marshaled by the firm. This activity is important because as a manager, you must be able to articulate the role of strategy in a firm's quest for competitive advantage. The goal of this exercise is to bring forward the main concepts that illustrate the role of strategy in a firm's quest for competitive advantage. The video explains the military origins of the term strategy but then goes on to explain how Michael Porter closed the gap between military and business thinking with his definition of business strategy. Select the option that best defines strategy in the context of business. a. Generals win wars by degrading the enemy's ability and willingness to fight. Businesses win market share by degrading a competitor's ability and willingness to compete. b. Generals are trying to win battles, against enemy combatants. Business leaders are trying to win market share against competitors. c. Battle plans often need to be changed by field commanders due to shifting battlefield realities. Business strategies often have to adapt to changing competitive conditions. d. Generals can be so removed from the front lines that they lose touch with the common soldiers. Senior executives can be so insulated by the organization hierarchy that they don't understand the realities of the common worker. e. Generals make battle plans based upon the forces available to them and their understanding of the enemy's forces. Business leaders create strategies based upon their firm's resources and capabilities and their understanding of their competitors' capabilities.

e. Generals make battle plans based upon the forces available to them and their understanding of the enemy's forces. Business leaders create strategies based upon their firm's resources and capabilities and their understanding of their competitors' capabilities.

Strategy, which is inherently competitive, is a juxtaposition of competitive challenges and the resources that can be marshaled by the firm. This activity is important because as a manager, you must be able to articulate the role of strategy in a firm's quest for competitive advantage. The goal of this exercise is to bring forward the main concepts that illustrate the role of strategy in a firm's quest for competitive advantage. Click the ► button to watch the video. Then, answer the questions that follow. In the video, business strategy was identified as a decision to choose "a different set of activities to deliver a unique mix of value." Which of the automotive firms follows this proposition most closely? a. Ford b. GM c. Hyundai d. Toyota e. Tesla

e. Tesla

Granville Transportation, a designer and manufacturer of self-driving buses and streetcars, is working on developing the next generation of electric vehicles. Granville has chosen to focus on a narrow buyer segment of medium-sized cities with populations between 100,000 and 1,000,000, and is outcompeting rivals by manufacturing its vehicles at a lower cost via artificial intelligence-guided robots. Which of the five basic strategic approaches has Granville Transportation decided upon? a. broad differentiation b. focused differentiation c. focused low-cost provider d. low-cost provider e. best-cost provider

e. best-cost provider

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