BUSA 4900 - Exam II
According to the VRIO framework, in order for a firm to gain a temporary competitive advantage, a resource must be at least both ______.
rare and valuable
The ______ is a theoretical model that explains and predicts what resource attributes underpin competitive advantage. It identifies which types of resources are key to firm performance.
VRIO framework
The business structure that is linear and has producers at one end and consumers at the other is known as a(n) ______.
pipeline
What are questions that managers must answer when pursuing value innovation?
which product factors to reduce below the industry standard; which product factors to eliminate; which product factors to raise above the industry standard; which new product factors to create
Walmart producing private-label brands, such as Equate health and beauty items and Parent's choice baby products, is an example of ______.
backward integration
First-mover disadvantages can include...
the need to educate potential customers about the product's benefits; the need to continuously perfect a product; the need to find distribution channels
The resource-based model views resources as ______.
the main driver of firm performance
What question is asked along the horizontal axis of the markets-and-technology framework?
Does the innovation build on existing technologies or create new ones?
Which capability is required to create superior product features?
R&D
A firm that increases its output of a given product and experiences a simultaneous decrease in per unit costs is taking advantage of ______.
economies of scale
Primary activities include...
operations, supply chain management
Which of the following statements are true concerning a firm's business model?
It indicates the way the firm works with buyers and suppliers; It essentially explains how the firm intends to make money; It details the firm's competitive tactics and initiatives.
In the dynamic capabilities perspective, competitive advantage derives from ______.
actively modifying of the resource base
When implementing the razor-razor blade strategy, companies make their profit from ______.
complementary goods
Value drivers known as ______ add value to a product or service when they are consumed in tandem with the focal product.
complements
The primary objective of firms during the introductory stage of the industry life cycle is to ______.
establish themselves as a market participant and position themselves for future growth
Premium services that cost money, with complementary basic services, is a description of which type of business model?
freemium
Which type of innovation applies to existing markets and existing technologies?
incremental
What are examples of ways that a large retailing firm can increase the perceived value of its offerings by focusing on customer service?
offering a "no questions asked" return policy; maintaining a domestic call center that is open 24 hours per day
What are true statements about creating and implementing an effective business model?
Firms must transform their competitive strategy into a blueprint of initiatives and actions that support their goals. Firms must implement their competitive strategy blueprint through processes, procedures, culture, and structure.
True or false: The freemium business model can be considered an evolutionary variation on the razor-razor blade model.
TRUE
Which industries use a subscription model?
Internet providers, cellphone providers, magazines
What statement best describes the speed of innovation over the past hundred years?
It has accelerated dramatically.
Everybody can use the basic version of Dropbox for free, but needs to pay for premium services. Dropbox operates on a ______ business model.
freemium
The weaker the five forces in Porter's model, the ______ the industry's profit potential.
greater
At which stage of the industry life cycle does the size of the market expand rapidly?
growth
What factors help determine competitive industry structure?
height of entry barriers; firms' degree of pricing power; size and number of competitors
Increases in the value of a product or service that result from a corresponding increase in the number of users are known as ___.
network effects
In the five forces model, threat of entry refers to the risk ______.
of potential competitors entering the industry.
A core competency can help a company achieve what?
offer products of comparable value at lower cost than rivals can; create higher value for the consumer; differentiate its products and services
When a company offers video-game consoles at a steep discount, but charges customers high fees for games, they are operating on a ______ business model.
razor-razor blade
A cost leader can achieve a competitive advantage by ______.
reducing costs below those of competitors while maintaining a similar value
The core competencies of a business are generated by the interaction of ______.
resources and capabilities
Research and development, information systems and human resources are examples of ______ activities.
support
Unlike capabilities, resources can be both ______.
tangible and intangible
A business model in which companies can obtain a large part of their revenues by selling a small number of units from among almost unlimited choice is referred to as _____.
the long tail
What is most likely to produce a radical innovation?
a new sportswear company with a handful of employees that perform a number of loosely defined roles
In a subscription-based business model, customers pay for ______.
access to a product or service
The most rigorous means of investigating the profit potential within a specific industry is to conduct ______.
an industry analysis.
Using known components, based on existing technologies, in a new configuration to create a new market is known as ______.
architectural innovation
According to the VRIO framework, to fully exploit the competitive potential of its resources, capabilities, and competencies, a firm must ______.
be organized to capture value
A firm uses the ______ business model when it sells a set of products that have different levels of demand for a price less than their total combined prices.
bundling
Netflix had a successful business model based on a large library of streaming content but then achieved even more success by also producing and distributing original content. This is an example of the potential value of ______.
business model innovation
The introductory stage of the industry life cycle is often a ______-intensive process.
capital
______ has a greater chance of arising from intangible resources than from tangible resources.
competitive advantage
The explosive growth of the Apple iPhone was due in part to the network effects created by ______.
complementary apps
The negative effect of innovative ride-sharing services, such as Uber and Lyft, on traditional taxi cab companies is an example of ______.
creative destruction
The process by which word-processor manufacturer Wang Laboratories captured the market from typewriter manufacturers, and which explains how it was later replaced by PC manufacturers and mobile-phone companies, is known as ______.
creative destruction
An industry analysis provides...
A rigorous way of identifying the industry's profit potential; Insight into a firm's strategic position within an industry; The level of profitability that can be expected for the average firm in the industry
In terms of productivity, which of the following is true of learning curves?
They go down.
What are examples of input factors?
capital, labor, information technology services, raw materials
A disruptive innovation is more likely to be successful if it ______.
captures the low end of the market first
Combining the razor-razor blade model and the subscription model means that telecom providers make their money through lengthy service plans, which in turn means that it is crucial that they keep their ______ rate, or the proportion of subscribers who leave, down.
churn
What are the stages of the industry life cycle?
introduction, growth, shakeout, maturity, decline
Netflix was able to attract subscribers and grow largely because ______.
media executives did not view it as a threat
Radical innovations are usually introduced by ______.
new entrepreneurial ventures
When you join the vehicle sharing company Zoooomm, you are allowed to use a motorized scooter whenever you like, though you do not have to own the machine. You have to pay by the hours of usage. Zoooomm operates on a ______ model.
pay-as-you-go
What best exemplifies a company that successfully uses a differentiation strategy?
A company strengthens its brand by marketing a product with an innovative feature.
What describes how Amazon disrupted the traditional wholesale model for book publishers?
Amazon sold e-books for its e-reader device at a loss to promote sales of the e-reader.
What tactic did Amazon use when entering the book selling space and introducing the Kindle?
Amazon used disruption.
What were the resources and capabilities that helped Five Guys gain a competitive advantage and develop into a successful restaurant chain?
Carefully choosing the supplier of the potatoes for their fries; Focusing on such details as store layout and design
Capabilities include...
a company's routines; a company's culture; a company's organizational structure
Under a wholesale model, RETAILERS (not the wholesalers) sell goods for ______.
any price they want
What are some examples of business activities?
delivery of products; order taking; invoicing customers
For a firm to sustain any competitive advantage over time, the fit between its internal strengths and external environment needs to be ______.
dynamic
Tesla has an 80% learning curve, which means that ______.
per-unit cost drops 20% whenever output doubles
What are the three most important value drivers that managers can use to create a competitive advantage?
product features, complements, customer service
Because it targeted a new market and used new technologies, the first mass-produced automobile is considered a(n) ______ innovation.
radical
Wholesaling is considered a(n) ______ business model.
traditional
True or false: The best measure of competitive advantage can be found in the performance of specific departments.
FALSE
True or false: When a user values two products equally, they are negatively correlated.
FALSE
Which of the following statements is likely to be true about a fragmented industry?
It consists of small firms.
What best describes the core competency of the Five Guys Burgers and Fries company?
Making high-quality burgers without limiting costs
Which statement about supplier power in the airline industry is true?
Supplier power is strong.
True or false: Tesla's high stock market valuation is partly justified by the company's learning curve.
TRUE
In a highly competitive industry, what are the likely consequences of a firm neglecting its current core competencies?
Competitors will outperform the firm by creating competitive advantage; Competitors will gain market share; Competitors will develop equivalent or superior skills
A customized strategy that considers the unique resources of the company while considering the external environment creates ______.
a strategic fit between them
When a buyer moves upstream in the industry value chain, into the suppliers' business, ______ occurs.
backward integration
What are examples of resources for a firm?
buildings, intellectual property, cash
A firm that hopes to achieve a competitive advantage by maintaining an efficient supply chain and taking advantage of economies of scale and a well-trained staff is focusing on ______.
cost drivers
According to the VRIO framework, a rare resource is ______ if firms that do not possess the resource are unable to develop or buy the resource at a comparable cost.
costly to imitate
Managers implement the blueprint of their business model through what factors?
culture, structures, processes
A firm that offers a liberal return policy and free shipping on goods ordered online hopes to increase its perceived value by focusing on ______.
customer service
The concept of a(n) ______ attempts to combine both learning effects and process improvements.
experience curve
What are the four most important cost drivers that managers can manipulate?
experience curve effects; learning curve effects; economies of scale; cost of input factors
What are the three aspects of mapping strategic groups?
graphing the firms in the strategic group and indicating each firm's market share; choosing two key dimensions for the horizontal and vertical axes; identifying the most important strategic dimensions
What allows a firm to redefine a market in its favor by introducing change that other firms must respond to?
innovation
What is the commercialization of an invention called?
innovation
When a company introduces a new product or process or business model with the intent of gaining a competitive advantage, that company is engaging in ______.
innovation
An auto manufacturer that has access to cheaper labor and raw materials than its rivals will have a competitive advantage regarding lower cost of ______ factors.
input
The value chain describes ______ of a firm.
internal activities
A resource is considered ______ if it helps a firm to deal with an external threat.
valuable
When managers understand the forces in the external environment, they are better able to _______.
mitigate threats and leverage opportunities
An enterprise that creates value by matching external producers and consumers in a way that creates value for all participants and that depends on the infrastructure that the platform manages is a(n) ______.
platform business
According to the five forces model, a firm seeking to compete in an established industry should seek to do which of the following?
position itself in a way that relaxes the constraints of strong forces; position itself in a way that leverages weak forces
______ activities add value directly by transforming inputs into outputs as the firm moves a product or service horizontally along the internal value chain.
primary
What are the important strategic dimensions in mapping strategic groups?
product and service offerings; expenditures on research and development; cost structure