MGMT 4842
When an activity becomes something a company has learned to perform proficiently and capably, the company is said to have a...
Competence
When a company has become proficient in modifying, upgrading, or deepening the company's resources and capabilities in response to its changing environment and market opportunities, it is called the company's
Core competence
Under Armour, a multinational sports apparel company saw its sales drop in North America while sales in the Asia/Pacific rose 12 percent that same year. The company plans an entry into a new geographical location, Vietnam—which is considered an emerging market and also a potential supplier—with its established and best-selling product line: women's running shorts. If you were advising Under Armour, what would you least be likely to recommend to this company?
Create a sales plan that aims to enhance initial sales and market penetration with low prices based on high operational costs.
Good strategy combined with good strategy execution
Is the clearest indicator of good management
What does a company specifically exhibit when it relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective?
Strategic Intent
A winning strategy must pass which three tests?
The Fit Test, the Competitive Advantage Test, and the Performance Test
What does the scope of the firm refer to?
The range of activities the firm performs internally and the breadth of its product offerings, the extent of its geographic market, and its mix of businesses
Managers of all types of business organizations must develop a clear answer for which of the following questions?
What is the set of actions that we need to take to outperform competitors and achieve superior profitability?
A company's mission statement typically addresses which question?
Who are we and what do we do?
A company's strategic vision concerns
a company's directional path and future product-customer-market-technology focus.
The strategically relevant factors outside a company's industry boundaries—economic conditions, political factors, sociocultural forces, technological factors, environmental factors, and legal/regulatory conditions—are known as
a company's macro-environment.
What are value drivers?
a set of factors (analogous to cost drivers) that are particularly effective in having a strong differentiation effect
Changing circumstances and ongoing managerial efforts to improve the strategy
account for why a company's strategy evolves over time.
The "driving forces" in an industry
are major underlying causes of changing industry and competitive conditions and have the biggest influences in reshaping the industry landscape and altering competitive conditions.
A company needs financial objectives
because without adequate profitability and financial strength, the company's ultimate survival is jeopardized.
Using the five forces model of competition to determine the character and strength of the competitive forces within a given industry involves
building the picture of competition in three steps: (1) identify the different parties involved, along with specific factors that bring about competitive pressures; (2) evaluate how strong the pressures stemming from each of the five forces are (strong, moderate or weak); and (3) determine whether the collective impact of the five competitive forces is conducive to earning attractive profits in the industry.
A company that lacks a stand-alone resource that is competitively powerful may attempt to develop a competitive advantage through
bundled resources that enable superior performance of cross-functional capabilities that can be leveraged to support its business model and strategy.
Opportunities to differentiate a company's product offering
can exist in activities all along an industry's value chain.
Successful broad differentiation allows a firm to
command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand.
In evaluating how well a company's strategy is working, the two best indicators are
competitive strength and financial ratio analyses
A creative, distinctive strategy that delivers a sustainable competitive advantage is important because
crafting a strategy that yields a competitive advantage over rivals is a company's most reliable means of achieving above-average profitability and financial performance.
A resource of a firm is considered to be:
deployed to develop and enable a firm's capabilities.
As a rule, the collective impact of competitive pressures associated with the five competitive forces
determines the extent of the competitive pressure on industry profitability.
When evaluating whether an industry's environment presents a company with an above-average profitability and an attractive business opportunity, it primarily involves
determining the industry's outlook for future profitability.
Integral parts of the managerial process of crafting and executing strategy include
developing a strategic vision, strategic management, and crafting a strategy.
To complement and supplement the choice of one of the five generic competitive strategies, Amazon, Apple, Facebook, and Google pursue offensive actions such as
employing the element of surprise as opposed to doing what rivals expect and are prepared for
Companies like Dell in personal computers and Ducati in motorcycles pursue close coordination and collaboration with their channel suppliers in order to
enhance differentiation throughout the value chain system to better address customer needs.
Strategic offensives should, as a general rule, be based on
exploiting a company's strongest competitive assets—its most valuable resources and capabilities.
Vertical integration strategies
extend a company's competitive scope within the same industry by expanding its operations across multiple segments or stages of the industry value chain.
The strategy-making, strategy-executing process is shaped by
external factors such as the industry's economic and competitive conditions and internal factors such as the company's collection of resources and capabilities.
Market circumstances that make a focused low-cost or focused differentiation strategy attractive are characterized by
few, if any, rivals that are attempting to specialize in the same target segment.
A winning strategy is one that
fits the company's internal and external situation, builds sustainable competitive advantage, and improves company performance.
The wording of a company's vision statement should commonly be
flexible—adjustable according to changing circumstances.
A sustainable competitive advantage is gained when a company
has durable competitive assets that are central to its strategy and superior to those of rival firms.
:The best example of a company resource is
having proven technological expertise and an ability to churn out new and improved products on a regular basis.
Product and service segments that the firm serves within its market form an important dimension of firm scope that has relevance for business-level strategy and is known as
horizontal scope.
Tangible resources do not include
human assets
The purposes of a defensive strategy do not include
increasing the risk of having to defend an attack.
A blue-ocean strategy
involves abandoning efforts to beat out competitors in existing markets and instead inventing a new industry or new market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand.
An outsourcing strategy
involves farming out certain value chain activities presently performed in-house to outside vendors.
The difference between a resource and a capability is a resource
is a productive input or competitive asset, whereas a capability is the capacity of the firm to perform some internal activity competently.
A competitive environment where there is weak to moderate rivalry among sellers, high entry barriers, weak competition from substitute products, and little bargaining leverage on the part of both suppliers and customers
is conducive to industry members earning attractive profits.
A company's business model
is management's blueprint for how it will generate revenues sufficient to cover costs and yield an attractive profit.
Market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry
is the strongest force among the five forces that drive profitability in an industry.
A company's strategy stands a better chance of succeeding when
it is predicated on competitive moves aimed at appealing to buyers in ways that set the company apart from rivals.
A strategic vision constitutes management's view and conclusions about the company's
long-term direction and what product-market-customer mix seems optimal.
Merger and acquisition strategies
may offer considerable cost-saving opportunities and can also be beneficial in helping a company try to invent a new industry.
An emergent strategy is best exemplified by a(n)
microbrewer that invests in building community water wells during a drought.
A primary reason why mergers and acquisitions sometimes fail is due to the
misinterpretation of the cultural differences, like employee disenchantment and low morale, differences in management styles and operating procedures, and operations integration decision mistakes.
The difference between the concept of a company mission statement and the concept of a strategic vision is that a
mission statement typically concerns a company's purpose and its present business scope, whereas the principal concern of a strategic vision is a company's aspirations for its future.
Whether a broad differentiation strategy ends up enhancing a company's profitability depends mainly on whether
most buyers accept the customer value proposition as unique and the product can produce sufficient unit sales to cover the costs of achieving the differentiation.
A competitive strategy of striving to be the low-cost provider is particularly attractive when
most buyers use the product in much the same ways, with user requirements calling for a standardized product.
In crafting a company's strategy, managers
need to come up with a sustainable competitive advantage that draws in customers and produces a competitive edge over rivals.
The essence of a broad differentiation strategy is to
offer unique product attributes in ways that are valuable and appealing and that buyers consider the cost worth it.
A differentiation-based competitive advantage
often hinges on incorporating features that raise the performance of the product or lower the buyer's overall costs of using the company's product, or enhances buyer satisfaction in intangible or noneconomic ways, or delivers value to customers by differentiating on the basis of competencies and capabilities that rivals can't match.
A dynamic capability is the:
ongoing capacity to modify existing resources and capabilities to create new ones.
A company's strategy is a "work in progress" and evolves over time because of the
ongoing need of company managers to react and respond to changing market and competitive conditions.
The worst targets for an offensive-minded company to target are
other offensive-minded companies that possess a sizable war chest of cash and marketable securities.
A company's strategic plan
outlines the competitive moves and approaches to be used in achieving the desired business results.
A deliberate strategy is best exemplified by a(n)
popular downtown theater that has been staging plays and showing films decides to begin booking rock and roll acts.
Well-stated objectives are
quantifiable or measurable, and contain deadlines for achievement
Dramatic cost advantages can often emerge from
redesigning the company's value chain system in ways that eliminate costly work steps and entirely bypass certain cost-producing value chain activities.
Strategic objectives
relate to strengthening a company's overall market standing and competitive position.
A company's strategy is increasingly effective the more it can match the company strategy to competitive conditions, so the firm can
shift the competitive battle in favor of the firm by altering the underlying factors driving the five forces.
An engaging and convincing strategic vision
should be done in language that inspires and motivates company personnel to unite behind executive efforts to get the company moving in the intended direction
SWOT analysis is a simple but powerful tool for:
sizing up a company's resources and capabilities, strengths and deficiencies, its market opportunities, and the external threats to its future well-being.
The culture of a company can be a cost-efficient value chain activity because it can
spur worker pride in productivity and continuous improvement.
A company's strategy is not concerned with management's choices about how to
stake out the same market position as successful rival companies.
Managers can deliberately set challenging performance targets at levels high enough to promote outstanding company performance by establishing
stretch objectives that challenge the organization to deliver stretch gains in performance.
A differentiation strategy works best when
technological change is fast-paced and competition revolves around rapidly evolving product features.
The competitive battles among rival sellers striving for better market positions, higher sales and market shares, and competitive advantage suggest the rivalry force
tends to intensify when strong companies with sizable financial resources, proven competitive capabilities, and respected brand names hurdle entry barriers looking for growth opportunities and launch aggressive, well-funded moves to transform into strong market contenders.
A company's values or core values concern
the beliefs, traits, and behavioral norms that company personnel are expected to display in conducting the company's business and pursuing its strategic vision and mission
One important indicator of how well a company's present strategy is working is whether
the company is achieving its financial and strategic objectives and is an above-average industry performer.
What makes the marketplace a competitive battlefield?
the constant rivalry of firms to strengthen their standing with buyers and win a competitive edge over rivals
A company's resources and capabilities represent
the firm's competitive assets that determine its competitiveness and ability to succeed in the marketplace.
The value net framework includes an analysis of
the firm, suppliers, customers, competitors, and driving forces.
The most powerful and widely used conceptual tool for diagnosing the principal competitive pressures in a market is
the five forces framework.
A broad differentiation strategy improves profitability when
the higher price the product commands exceeds the added costs of achieving the differentiation.
Which of the following is particularly pertinent in evaluating whether an industry presents a sufficiently attractive business opportunity?
the industry's growth potential, whether competition appears destined to become stronger or weaker, and whether the industry's overall profit prospects are above average, average, or below average
Strategy is about competing differently than rivals; thus, strategy success is about
the sources of sustained advantages and superior profitability.
A strategically relevant political factor in the macro-environment that will influence the performance of all firms across the board is most likely to be
the strength of the federal banking system.
What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is
their concentrated attention on serving the needs of buyers in a narrow piece of the overall market.
The competitive pressures on companies within an industry come from all of the following except
those associated with environmental factors such as water shortages.
What is the goal of signaling a challenger that strong retaliation is likely in the event of an attack?
to dissuade challengers from attacking or diverting them into using less-threatening options
Strategic offensives make sense when a company is
trying to whittle away at a rival's competitive advantage.
To fend off a competitive attack, defensive-minded companies
use innovation and intellectual property protection to obtain product line exclusivity to force competitors to use other distributors.
How can a capital-intensive company achieve a cost advantage by revamping its value chain?
via higher rates of capacity utilization to allow depreciation and other fixed costs to be spread over a larger unit volume, thereby lowering fixed costs per unit
The spotlight in analyzing a company's resources, internal circumstances, and competitiveness includes such questions/concerns as
what the company's resource strengths and weaknesses are in relation to the market opportunities and external threats.
Being a first mover is not particularly advantageous under which circumstance?
when markets are slow to accept the innovative product offering of a first mover, and fast followers possess sufficient resources and marketing muscle to overtake a first mover
When strategic managers assess the competitive power of company resources, what matters is
whether the resource is really competitively valuable, if it is rare and something competitors lack, how hard it is to copy or imitate, and how easily it can be trumped by the substitute resource strengths and competitive capabilities of rivals.
