MGMT 3302 Chapter 6

​_____ is a measure of the intensity of competitive behavior among companies in an industry.

Character of the Rivalry

​Ziff Corp. was a leading electronics firm for about three decades. As the competition changed, its product innovation stopped. The managers at Ziff Corp. are well aware of the strategies that lead to their company's success and they continue to follow the old strategies. This scenario is an example of _____.

Competitive Intertia

rare resource

a resource that is not controlled or possessed by many competing firms

_________ is a strategy for reducing risk by buying a variety of items so that the failure of one stock or one business does not doom the entire portfolio.

Diversification

​A(n) _____ is a competitive countermove, prompted by a rival's attack, to defend or improve a company's market share or profit.

Response

valuable resources

a resource that allows companies to improve efficiency and effectiveness

imperfectly imitable resource

a resource that is impossible or extremely costly or difficult for other firms to duplicate

non-substitutable resource

a resource that produces value or competitive advantage that has no equivalent substitutes or replacements

diversification

a strategy for reducing risk by buying a variety of items (stock or in the casse of a corporation, types of businesses) so that the failure of one stock or one business does not doom the entire portfolio

stability strategy

a strategy that focuses on improving the way in which the company sells the same products or services to the same customer

growth strategy

a strategy that focuses on increasing profits, revenues, market share, or the number of places in which the company does business

retrenchment strategy

a strategy that focuses on turning aroun very poor company performance by shrinking the size or scope of the business

core firms

the central companies in a strategic group

market commonality

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

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

Assessing the need for strategic change

​In the context of portfolio strategy, _____ is the purchase of a company by another company.

Acquisition

_________ is the positioning strategy of providing products or services sufficiently different from competitors' offerings that customers are willing to pay a premium cost for the extra value or performance that it provides.

Differentiation

Growth, stability, and retrenchment are all types of portfolio strategies.

False

Sanfase, a technology company in Rockbourne, manufactures microprocessors for computers. Its product is a lot more powerful than its competitors. This scenario is an example of competitive inertia.

False

​A competitive advantage becomes a sustainable competitive advantage when other companies start duplicating the value a firm is providing to customers.

False

_________ is a strategy that focuses on increasing profits, revenues, market share, or the number of places in which a company does business.

Growth Strategies

​The BCG matrix starts by recommending that while the substantial cash flows from cash cows last, they should be reinvested in stars to:

Help them grow even faster and obtain even more market share

​Which of the following best defines competitive inertia?

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

​Which of the following best defines a SWOT analysis?

It is an assessment of both the internal and external environments of an organization

​Which of the following statements is true of direct competition?

It is determined by two factors: market commonality and resource

​Which of the following best defines a distinctive competence?

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

​Which of the following conditions must be met if a firm's resources are to be used to achieve a sustainable competitive advantage?

The resources must be valuable, rare, imperfectly imitable, and non-substitution

​Which of the following conditions must be met if a firm's resources are to be used to achieve a sustainable competitive advantage?

The resources must be valuable, rare, imperfectly imitable, and non-substitutionable

​In the context of adaptive strategies, which of the following is true of defenders?

They aggressively hold their current strategic position by doing the best job they can to hold on to customers in a particular market segment

​Which of the following best defines cash cows?

They are companies that have a large share of slow-growing market

A situational analysis is an assessment of the strengths and weaknesses in an organization's internal environment and the opportunities and threats in its external environment.

True

Rare resources are resources that are not controlled or possessed by many competing firms and are necessary to sustain a competitive advantage.

True

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

Truth

grand strategy

a broad corporate level strategic plan used to achieve strategic goals and guide the strategic alternatives that managers of individual businesses or sub units may use

shadow-strategy task force

a committee within a company that analyzes the company's own weaknesses to determine how competitors could exploit them for competitive advantage

Star

a company with a large share of a fast-growing market

cash cow

a company with a large share of a slow-growing market

question mark

a company with a small share of a fast growing market

dog

a company with a small share of a slow growing market

sustainable competitive advantage

a competitive advantage that other companies have tried unsuccessfully to duplicate and have, for the moment, stopped trying to duplicate

response

a competitive counter move prompted by a rival's attack, to defend or improve a company's market share or profit

attack

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

firm-level strategy

a corporate strategy that addresses the question, "how should we compete against a particular firm?"

industrial level strategy

a corporate strategy that addresses the question, "how should we compete in this industry?"

portfolio strategy

a corporate-level strategy that minimizes risk by diversifying investment among various business or product lines

strategic dissonance

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

strategic group

a group of companies within an industry against which top managers compare, evaluate, and benchmark 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

threat of substitute products or services

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

bargaining power of buyers

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

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

BCG matrix

a portfolio strategy developed by Boston Consulting Group that categorizes a corporation's businesses by growth rate and relative market share and helps managers decide how to invest corporate funds

competitive intertia

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

situational (SWOT) analysis

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

resources

assets, capabilities, processes, employee time, information, and knowledge that an organization uses to improve its effectiveness and efficiency and create and sustain competitive advantage

reactors

companies that do not follow a consistent adaptive strategy but instead react to changes in the external environment after they occur

defenders

companies using an adaptive strategy aimed at defending 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

prospectors

companies using an adaptive strategy that seeks fast growth by searching for new market opportunities, encouraging risk taking, and being the first to bring innovative new products to the market

analyzers

companies using an adaptive strategy that seeks to minimize risk and maximize profits by following or imitating the proven successes of prospectors

unrelated diversification

creating or acquiring companies in completely unrelated businesses

related diversification

creating or acquiring companies that share similar products, manufacturing, marketing, technology or cultures

​Which of the following best defines cost leadership?

it is the positioning strategy of producing a product or service of acceptable quality at consistently lower production costs than competitors can so that a firm can offer the product or service at the lowest price in the industry

​A competitive advantage becomes a sustainable competitive advantage when:

other companies cannot duplicate the value a firm is providing to customers

​Organizations can achieve a competitive advantage by using their resources to _____.

provide greater value for customers than competitors can

competitive advantage

providing greater value for customers than competitors can

​A(n) _____ is a competitive countermove, prompted by a rival's attack, to defend or improve a company's market share or profit.

response

resource similarity

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

secondary firms

the firms in a strategic group that follow strategies related to but somewhat different from those of the core firms

core capabilities

the internal decision-making routines, problem solving processes and organizational cultures that determine how efficiently inputs can be turned into outputs

corporate-level

the overall organizational strategy that addresses the question "what business or businesses are we in or should we be in?"

cost leadership

the positioning strategy of producing a product or service of acceptable quality at consistently lower production costs than competitors can so that the firm can offer the product or service tat the lowest price in the industry

differentiation

the positioning strategy of providing a product or service that is sufficiently different from competitors' offerings that customers are willing to pay a premium price for

focus strategy

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

acquisition

the purchase of a company by another company

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

recovery

the strategic actions taken after retrenchment to return to a growth strategy

strategic reference points

the strategic targets managers use to measure whether a firm has developed the core competencies it needs to achieve a sustainable competitive advantage

​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

distinctive competence

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