MGMT 4830
The book Hypercompetition was written by
D'Aveni.
According to D'Aveni's book, Hypercompetition, which of the following statements is true?
Except for a few stable industries, strategy initiatives do not provide sustainable competitive advantage.
Although Porter agrees that it is possible for a company to achieve low cost and differentiation simultaneously, he suggests that no company has been able to achieve this.
FALSE
One skill required of the cost leadership strategy is a strong marketing ability.
FALSE
SO strategies attempt to take advantage of opportunities by overcoming weaknesses.
FALSE
SWOT is an acronym that stands for Strategy, Weaknesses, Opportunities, and Threats.
FALSE
The ability to market a comparable product or service more efficiently than competitors is the one skill not required in a cost leadership strategy.
FALSE
The only way to gain competitive advantage within an industry is to use a competitive strategy.
FALSE
Those companies using cooperative strategies are generally not able to gain a competitive advantage.
FALSE
One company that has successfully found a propitious niche is
Frank J. Zamboni & Company.
What is the impact of hypercompetition on competitive advantage?
Hypercompetition reflects the increasing difficulty of sustaining a competitive advantage over time. As a result of this erosion of competitive advantage, companies must constantly work to improve their advantage. Firms must constantly seek new ways to lower costs and add value to their products and services.
Discuss competitive strategy differences between a fragmented and a consolidated industry.
In a fragmented industry, there are many small- and medium-sized local companies competing for relatively small shares of the total market. Focus strategies will likely predominate in a fragmented industry. Fragmented industries are typical for products in the early stages of their life cycle. If few economies are to be gained through size, no large firms will emerge and entry barriers will be low—allowing a stream of new entrants into the industry. As an industry matures, fragmentation is overcome and the industry tends to become a consolidated industry dominated by a few large companies. Although many industries begin fragmented, battles for market share and creative attempts to overcome local or niche market boundaries often increase the market share of a few companies. After product standards become established for minimum quality and features, competition shifts to a greater emphasis on cost and service. Slower growth, overcapacity, and knowledgeable buyers combine to put a premium on a firm's ability to achieve cost leadership or differentiation along the dimensions most desired by the market. Research and development shifts from product to process improvements. Overall product quality improves, and costs are reduced significantly.
What are the common elements of a well-crafted mission statement?
It must be short so that every employee can remember the statement. The design must be simple so that everyone in the company can understand what the senior leadership team desires. It has to provide direction to the activities of company employees. The statement should enable employees to knowing what the company does and what it does not do in an exact way. Finally, the statement should be measurable so that the company can visibly see progress.
According to Barney, under which condition would tacit collusion most likely be successful?
One firm tends to act as the price leader.
Which of the following is not one of the risks of a cost leadership strategy?
Pricing for higher quality that is too far above the price of the competition.
The matrix that summarizes an organization's strategic factors by combining the external factors from the EFAS Table with the internal factors from the IFAS Table is called a(n)
SFAS Matrix.
An acronym for the assessment of the external and internal environments of the business corporation in the process of strategy formulation/strategic planning is
SWOT
Which of the following is not cited as one of the questions that development of a competitive strategy should raise?
Should we compete by garnering political support of influential leaders?
A cost leader's lower costs allow it to continue to earn profits during times of heavy competition.
TRUE
An effective mission statement not only needs to be specific to that organization; it must enable a common thread to highlight and focus the energy of everyone in the organization in the direction that the top management team believes is best for the business.
TRUE
An example of a company following a cost focus strategy is Potlach Corporation, which makes house brands of toilet paper for Safeway and other grocery store chains.
TRUE
An example of a company that was "stuck in the middle" was K-Mart as the company tried to imitate both Walmart's low-cost strategy and Target's differentiation strategy.
TRUE
Business strategy focuses on improving the competitive position of a company's or business unit's products or services within the specific industry or market segment that the company or business unit serves.
TRUE
Collusion is the active cooperation of firms within an industry to reduce output and raise prices in order to get around the normal economic law of supply and demand.
TRUE
Cost leadership is the ability of a company or business unit to design, produce, and market a comparable product more efficiently than its competitors.
TRUE
If a mission does not provide a common thread for a corporation's businesses, managers might be unclear about where the company is heading.
TRUE
In tacit collusion, there is no direct communication among competing firms.
TRUE
Most entrepreneurial ventures attempt to follow focus strategies.
TRUE
Niches can grow and change over time.
TRUE
One company that has successfully found a propitious niche (extremely favorable niche) is Frank J. Zamboni & Company, the manufacturer of the machines that smooth the ice at ice skating rinks.
TRUE
One danger of D'Aveni's concept of hypercompetition is that it may lead to an overemphasis on short-term tactics over long-term strategy.
TRUE
One of the first steps in good strategy design should include crafting the mission statement for the organization.
TRUE
One risk of a cost leadership strategy is that the technology for production or of products may change.
TRUE
Populating a SWOT chart, by itself, is just the start of a strategic analysis.
TRUE
Rollups are not synonymous with traditional mergers and acquisitions.
TRUE
The SFAS Matrix summarizes an organization's strategic factors by combining the external factors from the IFAS Table with the internal factors from the EFAS Table.
TRUE
The first firm through a strategic window can occupy an extremely favorable niche and discourage competition (if the firm has the required internal strengths).
TRUE
The goal of strategy is to find an extremely favorable niche so well suited to the firm's internal and external environment that other corporations are not likely to challenge or dislodge it.
TRUE
The strategic rollup was developed in the mid-1990s as an efficient way to quickly consolidate a fragmented industry with the resulting large firm creating economies of scale.
TRUE
The two general types of cooperative strategies are collusion and strategic alliances.
TRUE
Tight cost control is an organizational requirement for a cost leadership strategy.
TRUE
A secret salary cap was the contention in a 2012 collusion lawsuit filed against
The National Football League.
Research suggests that a differentiation strategy is more likely to generate higher profits than a lower cost strategy because differentiation creates
a better entry barrier.
In a SFAS Matrix,
a factor may be listed as both a strength and a weakness.
When Facebook partnered with nine news organizations to allow the news organizations (including powerhouses like the New York Times and NBC News) to post stories on the Facebook site, they engaged in
a value-chain partnership.
What is a propitious niche? Provide an example of a firm that has been able to occupy a propitious niche successfully.
an extremely favorable niche that is so well suited to the firm's competitive advantages that other corporations are not likely to challenge or dislodge it. A niche is propitious to the extent that it currently is just large enough for one firm to satisfy demand. After a firm has found and filled that niche, it is not worth a potential competitor's time or money to also go after the same niche.
The active cooperation of firms within an industry to reduce output and raise prices to get around the normal law of supply and demand is referred to as
collusion.
As an industry becomes hypercompetitive, firms initially respond by
competing on cost and quality.
Which strategy raises the questions of whether to compete on the basis of lower cost or differentiation and whether to compete for the biggest market or a niche market?
competitive
Business strategy is composed of
competitive and cooperative strategy.
According to Porter, the term that applies to the breadth of a company's or business unit's target market is called
competitive scope.
When firms follow each other's lead to reduce the level of competition such as GE and Westinghouse did in steam turbines, it is referred to as
conscious parallelism.
As an industry matures while overcoming fragmentation and becomes dominated by a small number of large companies, it tends to become a(n)
consolidated industry.
One desired outcome of analyzing strategic factors is identifying niches where an organization can use its ________ to take advantage of a particular market opportunity.
core competencies.
In manufacturing toilet paper for grocery store chains (and avoiding competing directly against Charmin), Potlach has followed which of Porter's generic competitive strategies?
cost focus
Which of Porter's competitive strategies is likely to predominate in a fragmented industry?
cost focus
hich of Porter's competitive strategies recommends that a company emphasize a particular buyer group or geographic market and attempts to seek a cost advantage in its targeted segment?
cost focus
Incentives based on meeting strict quantitative targets are a common organizational requirement for which of Porter's generic competitive strategies?
cost leadership
Intense supervision of labor, sustained capital investment and access to capital are commonly required skills and resources for which of Porter's generic competitive strategies?
cost leadership
Strict targets to improve efficiency are likely to be found in organizations following which of Porter's generic competitive strategies?
cost leadership
Walmart, as a discount retailer, is an example of a company following which of Porter's competitive strategies?
cost leadership
Which of Porter's broad mass market competitive strategies requires tight cost control, frequent detailed control reports, and cost minimization in areas like R&D, service and advertising?
cost leadership
What are the three generic competitive strategies that Porter promotes as the means for outperforming other corporations in a particular industry?
cost leadership, differentiation, and focus
According to Porter, the generic competitive strategy that reflects the ability of the corporation or its business unit to design, produce, and market a comparable product more efficiently than its competitors is called
cost leadership.
When a company following a differentiation strategy ensures that the higher price it charges for its higher quality is not priced too far above the price of the competition, the company is using the process of
cost proximity.
Amenities to attract highly skilled labor, scientists, or creative people are a common organizational requirement for which of Porter's generic competitive strategies?
differentiation
Apple is an example of a company following which of Porter's generic competitive strategies?
differentiation
If it is to be successful, Porter advises that a division possess strong marketing abilities, product engineering, a creative flair, strong capability in basic research and a corporate reputation for quality or technological leadership, for which one of the following generic competitive strategies?
differentiation
Product engineering, creative flair, and strong cooperation from channels are commonly required skills and resources for which of Porter's generic strategies?
differentiation
Walt Disney Company competes successfully in the entertainment industry using which of Porter's competitive strategies?
differentiation
When a company is concerned that the higher price it charges for its higher quality is too far above the price of the competition, the company is likely addressing a risk of following which competitive strategy?
differentiation
Morgan Motor Car Company manufactures classic British sports cars. Which of Porter's strategies is this company following?
differentiation focus
Orphagenix, a small biotech firm, avoids head-to-head competition with large pharmaceutical companies by developing orphan drugs to target diseases that affect fewer than 200,000 people. This is an example of which of Porter's generic strategies?
differentiation focus
Which of Porter's competitive strategies concentrates on seeking differentiation in a particular buyer group, product line segment, or geographic market?
differentiation focus
Which strategy is a firm following if it provides a unique and superior value in a narrow market?
differentiation focus
According to Porter, the generic competitive strategy that reflects the ability to provide unique and superior value to the buyer in terms of product quality, special features, or after-sale service is called
differentiation.
Most entrepreneurial ventures follow
focus strategies.
The focus strategies will likely predominate when many small- and medium-sized local companies compete for relatively small shares of the total market in a(n)
fragmented industry.
Business strategy focuses on
improving the competitive position of a corporation's products or services within the industry or market segment served.
Tacit collusion
is seen with conscious parallelism as practiced by GE and Westinghouse in the pricing of turbine engines.
All of the following reflect criticisms of the SWOT analysis EXCEPT
it provides a rational link to strategy implementation.
In the development of an SFAS matrix, the first step is to
list the most important EFAS and IFAS items.
Differentiation is a viable strategy for earning above-average returns in a specific business because the resulting increased value to the customer
lowers price sensitivity.
Collusion
may be explicit or tacit.
Disadvantages of joint ventures include all of the following EXCEPT
mutual dependence.
The "cell" chip created by IBM, Sony Electronics, and Toshiba was a result of pooling their resources in a
mutual service consortium.
The text authors note that the essence of strategy is
opportunity divided by capacity.
What are Porter's three generic competitive strategies?
overall cost leadership, differentiation, and focus. Cost leadership is the ability of a company or a business unit to design, produce, and market a comparable product or service more efficiently than its competitors. Differentiation is the ability of a company to provide unique and superior value to the buyer. Differentiation may include areas such as product quality, special features, or after-sale service. Focus is the ability of a company to provide unique and superior value to a particular buyer group, segment of the market line, or geographic market.
The goal of strategy is to find a(n) ________ that is so well suited to the firm's competitive advantages that other organizations are not likely to challenge or dislodge it.
propitious niche.
Jet airplane manufacturers often enter into strategic alliances to
reduce financial risk.
Which of the following is true of an organization's mission statement?
should be short so every employee can remember it
Strategy formulation or strategic planning begins with a(n) ________, which is the process of finding a strategic fit between external opportunities and internal strengths while working around external threats and internal weaknesses.
situation analysis.
The two general types of cooperative strategies are
strategic alliances and collusion.
A method developed in the mid-1990s as an efficient means to quickly consolidate a fragmented industry can be referred to as a
strategic rollup.
According to the text, unique market opportunities that are available for only a particular time are called
strategic windows.
According to Porter, a business unit in a competitive marketplace with no generic competitive strategy is
stuck in the middle.
Competitive scope is
the breadth of the company's target market.
The T in SWOT represents
threat.
What are cooperative strategies?
used to gain competitive advantage within an industry by working with other firms. The two general types of cooperative strategies are collusion and strategic alliances. Collusion is the active cooperation of firms within an industry to reduce output and raise prices in order to get around the normal economic law of supply and demand. A strategic alliance is a partnership of two or more corporations or business units to achieve strategically significant objectives that are mutually beneficial
The last stage of a hypercompetitive industry is reached when the remaining large global competitors
work their way to a situation of perfect competition in which no one has any advantage and profits are minimal.
