MANA 4101 Exam 1
What is a Substitute?**
A product that meets the need of the customer in a different way from your product ex: Going to a football game vs. a Soccer game to meet the need of entertainment
What is Value Chain analysis?
A strategy tool used to analyze internal firm activities to recognize which activities are the most valuable to the firm and which ones could be improved to provide competitive advantage
What is Sustainable Competitive Advantage?
A sustained competitive advantage that a firm holds in an industry long enough that competitors repreatedly fail or stop trying to duplicate the strategy - Does not last forever - Not measured in calendar time (a ST CA can be very profitable)
How do you protect Intellectual Property?
Copyrights and trademarks and Patents
What is scenario analysis? What are the key questions to answer when building a scenario analysis? (2x2 scenario analysis)**
Scenario analysis - preparing responses to imagined changes in conditions. Key Questions: 1. How will the world and our business look in this scenario in the future? 2. What actions should be taken in this scenario?
What kinds of information is tracked in environmental monitoring?
Soft Trends - Something that might happen ex: Interest rates Hard Trends - Something that will happen ex: An aging population
What purpose do strategic objectives serve? What are the characteristics of a good objective?**
Strategic Objectives operationalize the mission statement. Provide guidance on how the organization can fulfill or move towards the higher goals - SMART Objectives ex: By the end of the year, our business will be #1 or #2 in market share
What are primary and support activities in a Value Chain analysis and what is the intent of doing a Value Chain analysis?**
Support Activities - General Admin, HR Management, Technology Development, Procurement (Process of buying goods and services) Primary Activities - Inbound logistics (Receiving, storing, inventory control), Operations (all activities associated with transforming inputs into final products), Outbound Logistics, Marketing and Sales, Service (All activities that maintain and enhance the product's value - customer support, repair services, installation, training)
What perspectives does the balanced scorecard consider?
(CLIF) 1. Customer perspective (how do customers see us?) 2. Innovation and Learning perspective (can we continue to imnprove and create value?) 3. Internal Business Perspective (what must we excel at?) 4. Financial Perspectve (How do we look to shareholders?)
What are the categories of general environment factors? What are examples of specific factors and what are the implications of the factors to companies' strategies?
(DSPTEG) 1. Demographic - Measurable, easier to measure 2. Sociocultural - deal more with behaviors 3. Political/Legal - regulations and laws 4. Technological - advancements in an industry 5. Economic - GDP Growth, wages, int rates 6. Global - What's going on between different countries ex: trade
What kinds of activities should an organization perform to be environmentally aware (4)?**
(EECM) 1. Environmental Scanning - Predicting environmental changes and detect changes already underway - Alerts company to critical trends and events before changes are a pattern and competitors recognize them 2. Environmental Monitoring - Tracks the evolution of environmental trends, sequences of events or streams of activities 3. Competitive Intelligence - Collecting and interpreting data on competitors, defining and understanding the industry and identifying competitors' strengths and weaknesses - Have to do this ethically - no hacking 4. Forecasts - Developing plausible projections about the direction, scope, speed and intensity of an environmental change
What are the five forces considered in the model?**
(PBS SI) 1. Potential Entrants 2. Buyers 3. Substitutes 4. Suppliers 5. Industry Competitors
What are the key attributes of strategic management?
(RCP) Resources Capabilities and Priorities
What are the limits of Porter's Five Forces analysis?**
- Assumes zero-sum game (you win , I lose) and doesn't consider win-win scenarios with customers and supplier - Static Analysis, so it is an analysis in one time, it does not change with the times. So it will not be useful in the future, only in the present
When is the Threat of New Entrants high?**
- Economies of scale are low so new entrants don't have to produce in large scale to compete - Capital Investment to get into the business is low - Product differentiation is low so there is no loyalty of customers to a brand to overcome
What are the resource, assets and capabilities that give Pixar a competitive advantage? Which of these create temporary of sustained competitive advantage?**
- Ed Catmull and Steve Jobs (Provided Capital) - Luxo animation software - Their reputation built by the other films that they have made - Quality of human and social capital Sustained Competitive Advantage - Pixar's reputation because it is inimitable and has causal ambiguity
What are or have been the key challenges facing Netflix as discussed in the cases?
- Expanding internationally and competing with giants already established and competing on price there - Separating the DVD and streaming business, there was a lot of backlash from paying separately. - Slowing growth in the US market compared to their international market - trying to please shareholders
What are or have been the key challenges facing Pixar as discussed in the cases?
- Good creative talent is a scarce resource, so they can't just hire more people and produce more films - There are streaming services like Netflix and Hulu that compete to give people entertainment - They face the challenge of seeking to produce more than one movie a year, but they are stuck at one a year
What are the resource, assets and capabilities that give Netflix a competitive advantage? Which of these create temporary of sustained competitive advantage?**
- In the beginning, it was the distribution centers that allowed them to achieve next-day delivery of DVDs - Their relationships with movie studios where they were known as the best source for distributing lesser-known movies - Their own shows that they create and stream on Netflix Sustained CA - Their own TV shows because they are inimitable and protected Temporary CA -
When is the Intensity of Competitive Rivalry high?**
- Industry growth is slow - Low product differentiation - Exit barriers are high
What are the limitations of the Balanced Scorecard?
- Not a quick fix, but a way of doing business that evolves - Requires strong executive sponsorship - Hard to sustain
What attributes can make a resource inimitable?** (VERY IMPORTANT)
- Physical Uniqueness - Looks different ex: Location of Sendiks on campus - Path Dependency - sequence of steps to do something ex: Pharma path to get a drup to market through the FDA - Causal Ambiguity - Can't express why this has value ex: Culture at SW airlines - Social Complexity - Cases in which knowing whom to work with along with trust and understanding is super important
What is the Threat of Substitutes?**
- Substitute products are available at a lower cost Most often the substitute products come from outside the industry
When is the Power of Suppliers high?**
- There are few dominant suppliers - The suppliers' product is differentiated - High switching costs between suppliers for buyers
When is the Power of Buyers high?**
- When there are few buyers relative to the nmber of providers - Buyers face few switching costs - More price sensitive than quality sensitive
What three types of resources does RBV consider?**
1. Tangible Resources - Financial, physical, technological 2. Intangible Resources - Human, reputation ex: Gucci reputation as quality 3. Organizational Capabilities - Competencies or skills to transform inputs into outputs ex: Customer service for Disney
What are the three types of strategic positioning?**
1. Variety-Based - There's no variety so everything is the same so it is very efficient ex: Model T Ford 2. Needs-Based - Positioning for a certain set of customers. ex: IKEA for price-conscious customers 3. Access-Based - Being in a place where there is not enough business for lots of competitors ex: Carmite theaters only in towns with less than 200,000 people
Knowledge Economy
An economy where wealth is created through the effective management of knowledge workers instead of the efficient control of physical and financial assets. ex: Microsoft
What is intellectual Property?
An owner's rights to intangible assets. Aften characterized by significant development costs and very low marginal costs
How is Human Capital attracted, developed and retained?**
Attracted - Hire for attitude, skills get you the interview - Put the right people to the right challenges and opportunities to learn a lot Develop - Mentoring - Give good job experiences that people get excited about - Giving feedback and evaluations, not manager because you want the person to be honest - Top-down (Manager to the employee) - 360 Degree feedback (Peers, Customer, and Top Down perspectives in one) Retain - Give employees respect - Provide new opportunities for employees - Give rewards and incentives
What are downsides to Social Capital?
Can fall into: 1. Groupthink - no devil's advocate and no alternative perspective. #HerdMentality 2. Hiring and rewarding the wrong people because of social capital
What is Corporate Governance? And who participates in Corporate Governance?
Corporate governance is the relationship among various participants in determining the direction (Shareholders, Management, and Board of Directors) All of the stakeholders should participate in Corporate Governance because they all have a stake in what the company does.
What are the firm and societal dilemmas related to intellectual property rights?
Different cultures have different ethics on IP, like China sees it differently than the US with the number of fake products. - Thus, issues with Outsourcing and suppliers and manufacturers may steal or share your IP Firms lose incentive to invest in R&D if the potential gains are reduced.
How do primary and support activities change for firms in different industries?**
Different industries require different steps and values. Retail partners with vendors, purchases goods, then manages inventory. Engineering services first do R&D, Engineering, and then Designs and solutions. Different processes but same step number.
Who should be involved with strategy formulation and implementation?
Everybody
What are the differences between explicit and tacit knowledge?
Explicit is easy to transfer knowledge, written down and arranged in a system (codified) ex: Training guide Implicit Knowledge exists in people's heads and is more difficult to transfer. - Often shared by talking - People have ot be willing to share that info ex: Company secrets not written down
What are the attributes a resource must have to provide a company with some form of competitive advantage? How does those attributes offer competitive parity? Temporary competitive advantage? Sustainable competitive advantage** (VERY IMPORTANT)
For Sustainable Competitive Advantage (RIVS) 1. Resources must be valuable 2.Resources must be rare - Uncommon relative to competitors 3. Resources must be inimitable - 4 Aspects of Inimitability (PPCS) 1. Physical Uniqueness 2. Path Dependency 3. Causal Ambiguity 4. Social Complexity 4. Substitutes must not be readily available ex: Charismatic leader, outstanding marketing strategy substituting for a recognized brand name, highly sophistcated diagnostic software substituting for a skilled an dexperienced tech support group
Who is Grameen and what is their mission?
Grameen is a microfinance bank in Bangladesh that gives microfinance products to mostly poor women. Their mission is to empower women because oftentimes women don't make money in poor, rural environments and don't get opportunities. Grameen gives them a chance at this and to prove to the men that they can do more than they think.
What is the Balanced Scorecard? What are its advantages?
It is a way to evaluate performance by bringing in different KPIs to see the score of how the business is really doing. It is a full firm view of what's important and how we will get there. Tracks metrics for all objectives and makes them visible Aligned objectives
What are Strategic Groups and what is the value of the strategic group concept?
It is culusters of companies that share similar strategies - Identifies factors that protect a group from attacks by other groups - Helps chart future directions - Identifies where competitive position is marginal
What is the purpose of a company's mission statement? What are its characteristics?**
It is the organizational goals that include the purpose of the company, its scope of operations and the basis of its competitive advantage. - More specific than vision - Focused on means of how company will compete - Incorporate stakeholder management ex: "To give ordinary folk the chance to buy the same thing as rich people." - Wal-Mart
Who is Netflix and what do they do?
Netflix is an entertainment streaming company that started out as a movie rental company to compete with Blockbuster. Now, they create their own content
What are the measures of Competitive Advantage?
ROA (Better because Asset prices don't fluctuate as much as equity) and ROE
What is the relationship between operational effectiveness and strategic position??**
Operational effectiveness is not strategy and is not enough, you must have strategic positioning. A company can outperform rivals only if it can establish a difference that it can preserve.
What is Strategic Positioning?
Performing different activities from competitors
What is Operational Efficiency?
Performing similar activities better than rivals. ex: Constant improvement
What are the positives and negatives regarding microfinance institutions going public?
Positives: - More money for more loans going to people - More opportunity to empower women - Increased transparency of how funds are being used to combat corruption Negatives: - Shareholders can pressure bank to increase interest rates and dividends - Dilemma to put repayments in deposit accounts or to shareholders - The bank not owned by borrowers, but by third parties who may not know the best for the bank
What is a complementor?
Products tha have a positive impact on your products.
What is a company vision? What are its characteristics?**
The fundamental statement of the organization's values, aspiration, and goals. A company vision defines what the company stands for, not what the company will do. - Massively inspiring - Evokes passion - Long-term - Broader than Mission ex: "India will be free, you are merely guests in our land." - Mahatma Ghandi
What is social responsibility?
The idea that businesses should balance profit-making activities with activities that benefit society. Involved developing businesses with a positive relationship to the society in which they operate. Conflicting view - Milton Friedman Triple Bottom Line: People, Planet, Profits
What is Intellectual Capital?
The knowledge and innovation of a company's employees collectively. Intellectual Capital = Market Value - Book Value Companies in biotech or tech have lots of intellectual capital
What is Human Capital?**
The knowledge, skills, and abilities of the workers of a company. It is the foundation of intellectual capital, managed by HR. THE MOST IMPORTANT ASSET OF SUCCESSFUL ORGANIZATIONS
What is Social Capital?**
The relationships built within an organization where you can share information Building relationships to share knowledge
Why do visions sometimes fail?
The walk doesn't match the talk - It is irrelevant to the times - An ideal future is not reconciled with the present ex: Being an ethical company vision, but fraud in the past
Who is Pixar and what do they do?
They are a animated film company
What is the purpose of the Five-Forces Model?**
To look at the 5 forces that affect profitability and determine profit potential for the industry
What is Competitive Advantage?
When a company has higher profit than the industry average An advantage over other competitors gained by offering consumers greater value.
What is Backward integration?**
When the customer/buyer can provide for the need on their own without the company's help
What is Forward Integration?**
When the suppliers modify their business to the companies that they are supplying to business so they don't need the company
What are straddling and positioning tradeoffs?**
trade-offs create the needs for choice and protect against repositioners and straddlers because a trade-off means that more of one thing necessitates less of another. they arise because of inconsistencies in image or reputation or having different resources, conditions, skills, and activities. Straddling - Seeks to match the benefits of a successful position while maintaining its existing position. It grafts new features, services, or technologies onto the activities it already performs. (More common) ex: Continental Lite competing with Southwest - didn't work b/c undermining reputation Positioning - A re-positioning to match the superior performer. ex: JC Penney re-positioning from Sears clone to department store
