fghft

A firm's strategic position is likely to be strong when

D) the gap between the value the firm's product generates and the cost to produce it is large.

Keeping in mind the five forces in the airline industry, which of the following best explains the difficulty airlines have in generating a profit?

) Substitutes are readily available in the form of trains, buses, and cars, thus reducing the profit potential in the industry

STRATEGY - Where & Which Unique Direction! (Position, Resource Allocation)When, What for & For How Long! (What Timing, What returns, What Next)

- TACTICS How we get there! (Process, Actions, Skill)

Economic Logic

A clear idea of how profits above the cost of capital will

PORTER'S FIVE FORCES MODEL

A framework for identifying the five forces that determine industry profit potential and help shape firm competitive strategy This model intersects: • Theory: industrial organization economics with • Practice: hundreds of case studies § Managers can predict industry profit potential and position their firms for sustainable competitive advantage.

How does causal ambiguity act as an isolating mechanism for organizations?

A) It makes it difficult for the competitors to understand why a company has been so successful.

Which of the following is likely to happen due to horizontal mergers between competitors such as Delta and Northwest airlines?

A) The overall industry profitability will increase.

In an industry, the threat of entry is high when

A) capital requirements are low.

The Five Major Elements of Strategy

Arena .Staging .Economic.Logic. Vehicles .Differentiators

____ describes a process in which the options one faces in a current situation are limited by decisions made in the pa

B) Path dependence

Which of the following statements accurately brings out the difference between tangible and intangible resources

B) Tangible assets can be bought on the open market by anyone with the necessary cash, whereas intangible assets cannot be easily purchase

According to the value chain analysis, which of the following is a primary activity?

D) marketing and sales

Which of the following is the best characterization of sociocultural forces?

B) a society's culture, norms, and values

The competitive advantage that one firm has will be short-lived in an industry in which

B) perfect competition exists.

The primary objective of Porter's five forces model is to

B) understand the profit potential of industries.

Differentiators

Best combination of differentiating dimensions from competitors to attract customers (and suppliers) to support your business

Blue Ocean Strategy! Perspective (C

Build execution into strategy using fair process to mobilize the organization.

_______ are barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy

C) Isolating mechanisms

Which of the following is a macroeconomic factor that can affect a firm's strategy?

C) levels of employment

Amazon.com's network of distribution centers allow it to drastically reduce its delivery times compared to other online retailers. These distribution centers are examples of Amazon

C) tangible resources.

Which of the following statements accurately brings out the difference between monopolistic competition and an oligopoly

D) In monopolistic competition, many firms compete against each other; in an oligopoly, there are few large firms competing against each other

The ________ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment

D) PESTEL framework

Organizational and managerial skills that find their expression in a company's structure, routines,and culture are referred to asA

D) capabilities.

n the context of SWOT analysis, which of the following best exemplifies a firm's internal weakness?

D) decline in the firm's market share

The management of a company is assessing the value of all the tangible resources the company owns. Which of the following will be included in this assessment

D) the punch presses that produce parts

Economic Factors

Economy-wide phenomena, consisting of the following five macroeconomic factors affecting firm strategy: • Growth rates • Interest rates • Levels of employment • Price stability (inflation and deflation) • Currency exchange rates

Hybrid / Iterative Approach!

More effective to allow strategy to be initiated and coordinated by the top with ample feedback loops for every level to participate. Engagement and good communication are key to ensuring fair process.

PESTEL

POLITICAL ECONOMIC SOCIOCULTURAL TECHNOLOGICAl ECOLOGICAL LEGAL POLITICAL

Political/Legal Factors

Political environment - gov Legal environment - law, mandate, decisions

Sociocultural Factors

Sociocultural factors • Capture cultures, norms, and values for society; are dynamic and differ across groups. • Implications for firm strategy must be considered Demographic trends

BOTTOM-UP APPROACH

The "organic" method allows a company to get the entire organization involved in the strategy process. but it is time consuming and could cause difficulty when assembling all views into one coherent strategy as it bubbles up to the corporate level. May risk getting stuck with tactical issues. Creates individual ownership and 'buyin' from employees doing the implementation • Accountability and trust at all levels • People in the front-lines are closest to the customer and "in touch" with the business

Vehicles

The means by which arenas are entered matters greatly and should not be viewed as a mere implementation detail or done in afterthought

Arena

The most fundamental of choices - A result of deep analysis and should not be one of broad generalities

Economies of scale are cost advantages that accrue for firms with

larger output.

PORTER'S FIVE FORCES MODEL

threat of new entrants bargaining power of buyers bargaining power of suppliers threat of substitute products or services rivalry among existing competitors

The PESTEL Framework

¦Managers mitigate threats and exploit opportunities by analyzing the external environmental forces. ¦Factors are interdependent. to scan, monitor, and evaluate important external factors/trends

Ecological Factors

§ Broad environmental issues, e.g., the natural environment, global warming, and sustainable economic growth § Business and natural worlds are interdependent and inextricably linked.

Technological Factors

§ Innovations in process technology § Nanotechnology revolution

Strategy provides a firm advantage over its competitors.

• Define its market and systematically pursue its goals • Figure out the best course of action to advance its position relative to the competition • unify the organization behind shared objectives • coordinate the various activities in a coherent manner • stay focused and on-target ("what not to do" as much as "what to do") • Keep the "Big Picture" in mind

ANTI-STRATEGY

• Operational Effectiveness is not strategy • Constant improvement in operational effectiveness is necessary, but not sufficient • OE Competition raises the bar for everyone but leads to relative improvement for no one • Strategic positioning means performing different activities from rivals' or performing similar activities in a different way • A company can only outperform rivals only if it can estab

Staging

• Resource constraints • Urgency (window of opp) • Credibility (to attract other stakeholders) • Need for early wins