BA 569

Functional structure

An organizational structure composed of all the departments that an organization requires to produce its goods or services. Services the average customer and targets largest market sector possible

Steeper learning curve implies

Competitive advantage, more successful learning process

A resource that is V but not RIO

Competitive parity

Advantage of organizing economic activity within firms

Coordination of complex tasks to allow for specialized division of labor.

Which organization type requires lowest investment and control

Franchising

R&D Intensity and Marketing intensity are low, meaning

Generating more fixed assets, faster inventory turnover, gets paid faster while paying creditors slowly

What is a feature of a monopolistically competitive competition?

Differentiated products

Top down strategic planning

Formulation of strategy is separate from implementation. Thinking about strategy is separate from doing it.

Fragmented industry structures typically offer _____ profitability potential

Low. Fragmented industries have many small firms and generate low profitability

What is a transnational strategy?

MNEs use when they want to pursue an integration strategy at the business level by attempting to reconcile product/services differentiation at low cost.

Internal Transaction cost

Occur within the firm. Costs of recruiting and retaining employees, paying salaries, maintaining production unit, etc.

What happens when an industry is at the end of its life cycle

Procsses innovation reaches its maximum, product innovation is at its minimum

Foreign acquisitions/greenfield plants have what advantages

Reduce a firms exposure to loss of reputation and loss of intelectual property

What is an unintended side effect of a high degree of specialization in an organization?

Reduced employee satisfaction due to repetition of tasks

Economies of scope

Savings that come from producing two or more outputs at less cost than producing each output individually.

These assets are typically developed or obtained over long periods of time and are difficult to imitate

Intangible assets

External transaction cost

Transact in the open market, searching for someone to contract, and then negotiate, monitor, and enforce the contract.

Core competencies are unique strengths embedded deep within a firm and cannot be benchmarked from rivals

True

Horizontal integration affects surviving firms by...

Strengthening bargaining power over suppliers and buyers, reduces threat of entry, reducing rivalry

A resource that is V and R

Temp. competitive advantage

Lower payable turnover means -

collecting revenue from customers faster than what is required to pay creditors. AMounts to interest-free loans

Firms that compete within a strategic group ____ use similar strategies

always

Global-standardization strategy arises from a combination of

high pressure for cost reduction and low pressure for local responsiveness

Globalization hypothesis

consumer needs and preferences throughout the world are converging and thus becoming increasingly homogenous.

Strategy is primarily about

creating superior value.

Economies of scale

decrease in cost per unit as output increases

Industry effects

the results attributed to the choice of industry in which to compete

Corporate governance

the system of governing a company so that the interests of corporate owners and other stakeholders are protected. Ensures an enterprise pursues strategic goals successfully and legally

A mission describes ____________.

what a business actually does and why it does it

The ups and downs within industries and corporations suggest that competitive advantage

will likely be transitory (fleeting).

Cross-border strategic alliances benefits and risks

Can benefit from local expertise and contacts, but exposed to risk of proprietary know-how may be appropriated by foreign partner.

Long tail phenomenon

80% of sales in a given product category come ffrom 20% of offerings.

Forward vertical integration

Moving ownership of activities closer to the customer

Which strategy matches best with multidivisional structure?

Multidomestic or global standardization

Firm Effects

Results of managers' actions to influence firm performance

What is the translation of strategy that details the firm's competitive tactics and initiatives?

The business model

Questions in the balanced scorecard

(1) How do customers view us? (2) How do we create value? (3) What core competencies do we need? (4) How do shareholders view us?

Strategy planning typically begins with managers...

Brainstorming to identify multiple plausible features. Input from several different hierarchies/functional areas is critical

Based on historical analysis, what do we know about firm and industry effects?

Firm effects have more impact on performance than industry effects.

Strong five forces leads to what?

Least profitable industries

competitive rivalry among firms in the same strategic group are generally...

More intense than competition between strategic groups (direct competitors)

Organic organizations is employed by firms that

Pursue differentiation strategy. Often firms that have high rate of entrepreneurship and innovation.

Differentiation parity

Same perceived value as rival firm

Polycentric innovation strategy

a strategy in which MNEs now draw on multiple, equally important innovation hubs throughout the world