MGNT 3600 - Chapter 6

Bargaining power of suppliers

a measure of the influence that suppliers of parts, materials, and services to firms in an industry have on the prices of these inputs

Character of the rivalry

a measure of the intensity of competitive behavior between companies in an industry

attack

a move designed to reduce a rival's market share or profits

risk-avoiding strategy

aims to protect an existing competitive advantage

Bob's Assembly is a hardware manufacturer. It specializes in hardware for doors, cabinets, windows, and bathrooms. Bob's Assembly products are economical and more durable than 95% of its competitors' products. This scenario illustrates the concept of _____.

distinctive competence

Funsase, a clothing company in Rockbourne, manufactures clothing with micro-cool, a special type of fabric that can absorb heat and keep the individual wearing the clothes cool in the summer. None of its competitors have been able to manufacture this type of clothing. This ability to produce superior quality clothing is the company's _____.

distinctive competence

risk-seeking strategy

extend or create a sustainable competitive advantage

HBO dominated cable/satellite TV for four decades. However, it largely missed the dramatic shift to TV streaming services. This is an example of _____.

competitive inertia

unrelated diversification

involves creating or acquiring companies in completely unrelated businesses

Grand Strategy

is a broad strategic plan used to help an organization achieve its strategic goals

response

is a countermove that is prompted by an attack designed to defend or improve a company's market share or profits

retrenchment/recovery

is intended to help a business reduce the size and scope of its business then return to a growth strategy

Growth

is intended to increase the profits, revenues, market share, or locations in which a company operates

stability

is intended to maintain an organization's market share and current strategy

core capability

is the internal, organizational cultures that determine how efficiently inputs are turned into outputs

Adapative strategy

is to choose an industry-level strategy that is best suited to changes in the organization's external environment

Focus/Niche Strategy

is used when a company targets a limited group of customers in a geographic region or market segment

Cash Cows (BCG Matrix)

low growth, high market share

Dogs (BCG Matrix)

low growth, low market share

positioning strategy

protect your company from the negative effects of industry-wide competition and to create a sustainable competitive advantage

Inspire Brands, parent of Arby's Restaurant Group, merged with casual dining chain Buffalo Wild Wings in a $2.9 billion deal. This is an example of _____.

related diversification

Levels of Strategy

1. Corporate 2. Industry 3. Firm

Strategy Making Process

1. assess need for strategic change 2. conduct situational analysis 3. choose strategic alternatives

TagWear, a company that manufactures shoes, offers customized lightweight and durable shoes in different colors and sizes to compete with its rival company's shoes. In this scenario, which of the following strategies is TagWear using to reduce its rival's market share?

Attack strategy

Break Technologies has five strategic business units (SBUs)—computers, refrigerators, washing machines, air conditioners, and televisions. Its computers unit is quite profitable in spite of operating in a slow-growing market, and it is profitable enough to provide funds for the operation of the other business units as well. In the context of the BCG matrix, which of the following categories of SBUs best describes the computers unit?

Cash cows

Which of the following is the last step of a strategy-making process?

Choosing strategic alternatives

Heeleo Inc. is a television manufacturer that has been in the market for several years. Most television companies are now manufacturing LED and smart televisions because they provide more utility and a better viewing experience when compared to direct view televisions. Heeleo, however, has been reluctant to adopt new strategies because it thinks its direct view televisions were selling well when it first started and will continue to sell the same way even if new competitors and better products enter the market. Which of the following concepts is illustrated in this scenario?

Competitive inertia

In the context of direct competition between firms, which of the following largely affects response capability, that is, how quickly and forcefully a company can respond to an attack?

Resource similarity

Diversification

Spreading out investments to reduce risk

Which of the following are the targets that managers use to measure whether their firm has developed the core competencies that it needs to achieve a sustainable competitive advantage?

Strategic reference points

In the context of adaptive strategies, which of the following best describes prospectors?

They seek fast growth by searching for new market opportunities, encouraging risk taking, and being the first to bring innovative new products to market.

strategic dissonance

a discrepancy between a company's intended strategy and the strategic actions managers take

strategic groups

a group of other companies that top managers used to compare and estimate the strategic threats and opportunities

Threat of new entrants

a measure of the degree to which barriers to entry make it easy or difficult for new companies to get started in an industry

Bargaining power of buyers

a measure of the influence that customers have on a firm's prices

Cost Leadership

a product or service of acceptable quality is produced at consistently lower production costs than competitors

competitive inertia

a reluctance to change strategies or competitive practices that have been successful in the past

Situational Analysis (SWOT analysis)

an assessment of the strengths and weaknesses in an organization's internal environment and the opportunities and threats in its external environment

Spade and Marcher Corp. manufactures and sells toy guns. These toy guns are a perfect imitation of real weapons. Inspired by Spade and Marcher's success, Hudy & Sons, an arms manufacturer in Korowlla, also starts to manufacture toy guns. Which of the following adaptive strategies is used by Hudy & Sons?

analyzers

In the context of sustainable competitive advantage, unlike rare resources, imperfectly imitable resources _____.

are impossible or extremely difficult to duplicate

Unlike valuable resources, rare resources _____.

are not controlled or possessed by many competing firms.

strategic reference points

are targets used to measure whether a firm as developed the core competencies it needs to achieve a sustainable competitive advantage

strategic moves

attack and response

Which of the following are companies using an adaptive strategy aimed at protecting strategic positions by seeking moderate, steady growth and by offering a limited range of high-quality products and services to a well-defined set of customers?

defenders

The positioning strategy of using cost leadership or differentiation to produce a specialized product or service for a limited, specially targeted group of customers in a particular geographic region or market segment is called a _____.

focus strategy

portfolio strategy

focuses on diversification

Stars (BCG Matrix)

high growth, high market share - definite keepers

Question Marks (BCG Matrix)

high growth, low market share

secondary firms

lowes & ace hardware

core firms

lowes & home depot

Threat of Substitute Products

measures the ease with which customers can find substitutes for an industry's products or services

sustainable competitive advantage

must be able to use resources to provide greater value for customers than competitors have

Reactors

one does not have a consistent

prospectors

one would seek fast growth by searching new market opportunities, encouraging risk-taking, and being the first to bring innovative new products to market.

Analyzers

one would seek moderate, steady growth and limited opportunities for fast growth

Defenders

one would seek moderate, steady growth by offering a limited range of products and services to a well-defined set of customers

PeoplePapers, a greeting card manufacturing company, has retail stores in most parts of the country. It hires its employees from the best universities around the world and uses the best equipment in its manufacturing processes. In this scenario, the organization's processes, its employees, and its equipment are examples of its_____.

resources

Bennyson Corp. has five strategic business units (SBUs)—information technology, construction, education, consumer products, and energy. Its energy unit has a large market share in the industry and generates the majority of its profits. Bennyson is also considering investing more funds into the unit because the industry has been rapidly growing. In the context of the BCG matrix, which of the following categories of SBUs best describes the energy unit?

stars

Hankson Corp. has five strategic business units (SBUs)—information technology, insurance, publishing, fine arts, and tourism. It invests the majority of its funds in the information technology unit because the unit has a large market share and generates large amounts of its profits in a fast-growing market. In the context of the BCG matrix, which of the following categories of SBUs best describes the information technology unit?

stars

market commonality

the degree to which two companies have overlapping products, services, or customers in multiple markets

resource similarity

the extent to which a competitor has similar amounts and kinds of resources

Direct Competition

the rivalry between two companies that offer similar products and services, acknowledge each other as rivals, and act and react to each other's strategic actions

BCG Matrix

to categorize its businesses based on growth rate and market share

Newell Brands, founded in 1903 as a curtain rod manufacturer, acquired dozens of companies, including Sharpie markers, Rubbermaid Brands, Baby Jogger, Elmer's Glue, Coleman outdoors products, and Sunbeam appliances. This is an example of _____.

unrelated diversification

Differentiation

used when making a product or service sufficiently different from competitors' products or services so that customers are willing to pay a premium price

distinctive competence

what a company can make, do, or perform better than its competitors