Capstone Midterm
5 business level strategies
broad cost leadership, broad differentiation, focused cost leadership, focused differentiation, integration
firms that compete within a similar strategic group follow similar
business level strategies
firms that are close on a SGM are more
competitive
comparing the return on invested capital to other firms will help a company determine if it has a
competitive advantage
the Z variable in strategic group map measures
competitive advantage
oligopoly
consolidated with few (large) firms, differentiated products, high barriers to entry, and some degree of pricing power. competing firms are interdependent ex.) car rental industry
the unique strength that is deeply embedded within a firm that creates higher value and can lead a firm towards competitive advantage
core competency
The X and Y variables in a SGM should never be this
correlated
is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage
strategic management
vision
what a firm wants to accomplish
market cap=number of outstanding shares x share price
30 million shares x $100= $3 billion
How is a cost-leader protected from threats from powerful suppliers?
A cost-leader is fairly well isolated from threats of powerful suppliers to increase input prices, because it is more able to absorb price increases through accepting lower profit margins.
strategic position
A firm's ability to create value (V) for customers while containing costs (C)
core rigidity
The inability of a firm to adapt to changing market or technological conditions because of its attachments to its core practices and customers
tool used to confirm if a firm has a temporary or sustained competitive advantage
VRIO
VRIO
Value, Rarity, Imitability, Organization
industry convergence
a process whereby formerly unrelated industries begin to satisfy the same customer need
mission
describes how the vision is accomplished
value drivers support a ______ strategy while cost drivers support a _____ strategy
differentiation, low cost
companies in the same strategic group are
direct competitors
3 ways competitive advantage is measured
economic value creation, accounting profitability, shareholder wealth
do industry or firm effects have the biggest impact
firm effects
perfect competition
fragmented and has many small firms, a commodity product, ease of entry, and little or no ability for each individual firm to raise its prices ex.) iron ore industry
most common value chain activity linked to low cost strategy
inbound/outbound logistics
the question porter's five forces addresses
industry attractiveness
"economies of scope"
integration
changing minimum labor law to $55,000
political factor
Porter's 5 Forces
power of buyers, power of suppliers, threat of new entrants, intensity of competition, threat of substitutes
9 activities of porter's value chain are separated into two distinct components
primary and support
value chain activity attempts to source the best possible suppliers for a firm
procurement
SWOT Analysis
strengths, weaknesses, opportunities, threats
two resources that make up the resource based view theory
tangible and intangible
razor razor blade business model
the initial product is often sold at a loss or given away for free in order to drive demand for complementary goods
Value Chain
the series of internal departments that carry out value-creating activities to design, produce, market, deliver, and support a firm's products
