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STMG191 Ch. 9
Strategy & Competitive advantage
| Question | Answer |
|---|---|
| What does a competitive advantage do? | Allows an organization to deal with markets and environmental forces better than its competitors |
| What is 'sustainability'? | The use of resources to satisfy the needs of the present without compromising the ability of future generations to provide for themselves |
| What are four ways that activities can be sustainable? | 1. Extend the productive life of organizations and maintain high levels of performance; 2. improve level of welfare for present and future generations; 3. Enhance society's ability to solve major problems; 4. Enhance planet's biosphere and protect species |
| What is the 'quadruple bottom line' composed of? | Longterm maintenance of environmental, social, cultural, and economic systems |
| What is a 'strategy'? | A pattern in a stream of organizational decisions |
| What does 'strategic intent' do? | Focuses and applies organizational energies on a unifying and compelling goal |
| What is 'strategic management'? | The process of formulating and implementing strategies |
| What is special about 'above average returns'? | They exceed what could be earned from alternative investments of equivalent risk |
| What does a monopoly environment look like? | There is only one organization and no competition |
| What does an oligopoly environment look like? | A small number of competitors feel themselves constrained more by the actions of their rivals than by those of their customers |
| There is only one organization and no competition - what environment? | Monopoly |
| A small number of competitors feel themselves constrained more by the actions of their rivals than by those of their customers - what environment? | Oligopoly |
| What is an environment of hypercompetition? | Where there are at least several players who directly compete with one another |
| An environment where there are at least several players who directly compete with one another is what type of environment? | Environment of hypercompetition |
| what is strategy formulation? | The process of creating strategies |
| What is strategy implementation? | The process of putting strategies into action |
| What are five questions that Peter Drucker associates with Strategy Formulation? | What is our business mission? Who are our customers? What do our customers consider value? What have been our results? What is our plan? |
| What is mission of a company? | The organization's reason for existence in society |
| Who are stakeholders? | Individuals, groups, and institutions directly affected by an organization's performance |
| What is organizational culture? | The system of shared beliefs and values that develops within an organization and guides the behavior of its members |
| What do 'operational objectives' do? | Direct activities toward specific performance results |
| What are eight examples of organizational objective aspects? | Profitability, market share, human talent, financial health, cost efficiency, product quality, innovation, social responsibility |
| What does a SWOT analysis do? | Examines organizational strengths and weaknesses and environmental opportunities and threats |
| What examines organizational strengths and weaknesses and environmental opportunities and threats? | SWOT analysis |
| What are 'core competencies'? | Special strengths that give an organization a competitive advantage |
| What are macroenvironmental factors? | Technology, government, social structures, population demographics, global economy, natural environment |
| What are industry environmental factors? | Resource suppliers, competitors, and customers |
| What are the five definitive factors in industry structure in Porter's Five Forces? | Industry competitors, new entrants, suppliers, customers, substitutes |
| What do Porter's Five Forces model focus on? | Industry competition |
| What defines the industry competitors factor in PFF? | The intensity of rivalry among firms in the industry |
| What defines the new entrants factor in PFF? | The threat of new competitors entering the market |
| What defines the supplier factor in PFF? | The bargaining power of suppliers |
| What defines the substitute factor in PFF? | The threat of substitute products or services |
| In PFF, what does an 'attractive industry' look like? | Less existing competitors, few threats of new entrants and substitutes, and low bargaining power among suppliers and buyers |
| In PFF, what does an 'unattractive industry' look like? | Rivalry among competitors is intense, substantial threats exist in the form of possible new entrants and substitute products, high supplier and buyer bargaining power |
| What are the three levels of strategy used by organizations? | Corporate strategy, business strategy, functional strategy |
| What does corporate strategy do? | Sets the long-term direction of the enterprise |
| What does business strategy do? | Identifies how a division or unit will compete in its product or service domain |
| What does functional strategy do? | Guides activities within one specific area of operations |
| What is a 'strategic business unit' (SBU)? | A major business area that operates with some autonomy |
| What do growth strategies involve? | Expansion of organization's current operations |
| Growth through concentration occurs where? | Within the same business area |
| Growth through diversification occurs how? | By acquisition of or investment in new and different business areas |
| What are the two types of diversification? | Related and unrelated diversification |
| What is related diversification? | Involves growth by acquiring new businesses or entering business areas that are related to what the organization already does |
| What is unrelated diversification? | Involves growth by acquiring businesses or entering business areas that are different from what the organization already does. |
| What is 'vertical integration'? | Growth achieved through acquisition of suppliers or distributors |
| What is backwards vertical integration? | Acquisition of suppliers |
| What is forwards vertical integration? | Acquisition of distributors |
| What does a retrenchment strategy involve? | Reducing the scale of current operations |
| What does restructuring involve? | Changing the scale and/or mix of operations to gain efficiency and improve performance |
| What does downsizing do? | Decreased the size of operations with the intention of becoming more streamlined |
| What does divestiture do? | Sells of parts of the organization to focus attention and resources on core business areas |
| What happens in a strategic alliance? | Organizations join together in partnership to pursue an area of mutual interest |
| What is one form of strategic alliance | International joint ventures |
| What does an e-business strategy do? | Strategically uses the internet to gain competitive advantage |
| What is a 'sustainable competitive advantage'? | An advantage that exists through realizing cost and quality, knowledge and speed, creating a market stronghold and protecting financial resources |
| What are four opportunities for competitive advantage? | Cost and quality, knowledge and speed, barriers to entry, financial resources |
| What opportunity for competitive advantage is driven by an emphasis on operating efficiency and/or product or service quality? | Cost and quality |
| What opportunity for competitive advantage is driven by an emphasis on innovation and speed of delivery to market for new ideas? | Knowledge and speed |
| What opportunity for competitive advantage is driven by an emphasis on creating a market stronghold that is protected from entry by others? | Barriers to entry |
| What opportunity for competitive advantage is driven by an emphasis on investments and/or loss sustainment that competitors can't match? | Financial resources |
| What model of strategy formulation answers the question "Is this an attractive industry for us to compete in?" | Porter's Generic Strategies |
| According to Porter's Generic Strategy, business-level decisions are driven by what two basic factors? | Market scope and source of competitive advantage |
| What is 'market scope' in Porter's Generic Strategy? | How broad or narrow a market target is |
| What is the 'source of competitive advantage' in Porter's Generic Strategy? | Whether competitive advantage is governed by lower price or product uniqueness |
| What is a Differentiation Strategy? | A strategy that offers products that are unique and different from the competition |
| What is a Cost Leadership Strategy? | A strategy that seeks to operate with lower costs than competitors |
| Differentiation strategy is a factor in which strategy model? | Porter's Generic Strategy |
| Cost Leadership strategy is a factor in which strategy model? | Porter's Generic Strategy |
| Focussed differentiation is a factor in which strategic model? | Porter's Generic Strategy |
| Focussed cost leadership is a factor in which strategic model? | Porter's Generic Strategy |
| What does 'focussed differentiation' offer to increase competitive advantage? | A unique product to a special market segment |
| What does 'focussed cost leadership' offer to increase competitive advantage? | The lowest cost of operations within a special market segment |
| What is a product life cycle? | The series of stages a product or service goes through in the 'life' of its marketability |
| What are the five stages of a product life cycle? | New product development, introduction, growth, maturity, decline |
| New product development, introduction, growth, maturity, and decline are all stages of what? | The product life cycle |
| What is a portfolio planning approach? | An approach that seeks the best mix of investments among alternative business opportunities |
| An approach that seeks the best mix of investments among alternative business opportunities is what? | A portfolio planning approach |
| Who developed the BCG Matrix | The Boston Consulting Group |
| What does the BCG Matrix do? | Analyses business opportunities according to market growth rate and market share |
| What are the four business conditions according to the BCG Matrix? | Stars, cash cows, question marks, and dogs |
| What is a 'dog' according to the BCG Matrix? | Business with a low market share in a low growth market |
| What portfolio planning approach "Analyses business opportunities according to market growth rate and market share"? | BCG Matrix |
| What is a 'star' according to the BCG Matrix? | Business with a high market share in a high growth market |
| What is a 'question mark' according to the BCG Matrix? | Business with a low market share in a high growth market |
| What is a 'cash cow' according to the BCG Matrix? | Business with high market share in a low growth market |
| What portfolio planning approach "analyses business strength and industry attractiveness for strategy formulation"? | General Electric (GE) Business Screen |
| The GE Business Screen does what? | Analyses business strength and industry attractiveness for strategy formulation |
| The BCG Matrix does what? | Analyses business opportunities according to market growth rate and market share |
| What are the five classifications for businesses in the GE Business Screen? | Winners, question marks, average businesses, profit producers, losers |
| Who created the Adaptive Model of strategy formulation? | Miles & Snow |
| What is the 'prospector' strategy in the Adaptive Model? | Strategy that involves pursuing innovation and new opportunities in the face of risk with prospects for growth |
| What does the Adaptive Model suggest? | That organizations should pursue product or market strategies congruent with their external environments |
| What is the 'defender' strategy in the Adaptive Model? | Strategy where an organization avoids change by emphasizing existing products and current market share without seeking growth |
| What is the 'analyzer' strategy in the Adaptive Model? | Strategy that seeks to maintain the stability of the core business while exploring selective opportunities for innovation and change |
| What is the 'reactor' strategy in the Adaptive Model? | Strategy where organizations are mainly responding to competitive pressures in order to survive |
| What are the four strategies in Miles & Snow's Adaptive Model | The prospector, defender, analyzer, and reactor strategies |
| Who established the process of incrementation? | James B. Quinn |
| What is incrementation? | Where modest and incremental changes in strategy occur as managers learn from experience and make adjustments |
| Who established emergent strategies? | Mintzberg |
| What are emergent strategies? | Strategies that develop over time as managers learn from and respond to experience |
| What are some common strategic planning pitfalls? | Failures of substance, failures of process, lack of participation error |
| Define "failures of substance" in regard to strategy implementation? | Inadequate attention to the major strategic planning elements |
| Define "failures of process" in regard to strategy implementation? | Poor handling of the ways in which the various aspects of strategic planning were accomplished |
| Define "lack of participation error" in regard to strategy implementation? | Failure to include key people in the strategic planning effort |
| What is 'corporate governance'? | The system of control and performance monitoring of top management |
| Who are 'inside directors' in the context of corporate governance? | Those chosen from the senior management of the organization |
| Who are 'outside directors' in the context of corporate governance? | Those who are chosen from other organizations and positions external to the organization |
| What does strategic leadership strive to do? | Enthuse people to continuously change, refine, and improve strategies and their implementation |
| What are the roles of a strategic leader? | To be a; guardian of trade-offs; create a sense of urgency; make sure everyone understands the strategy; be a teacher; be a great communicator |
Created by:
ginamaye
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