click below
click below
Normal Size Small Size show me how
Vestal Mgt Test 1
Question | Answer |
---|---|
A good strategy consists of: (3 Steps) | 1. Analysis - Diagnosis of the competitive advantage. 2. Formulation - Guiding policy to address the competitive challenge 3. Implementation - Set of coherent actions to implement the firm's guiding policy |
What is Competitive Advantage? | Superior performance relative to other competitors in the same industry or the industry average. |
What is Sustainable Competitive Advantage? | Outperforming over a prolonged period. |
What two factors determine a firm's performance? | 1. Industry Effects - Firm performance attributed to the industry structure in which a firm competes. 2. Firm effects - Firm performance attributed to the actions managers take. |
What is Strategic Leadership? | The behaviors and styles of executives that influence others to achieve the organization's vision and mission. |
Vision vs. Mission | Vision - Aspiration of the firm that lays the foundation for its mission - "to" is a common word. Mission - What an organization does, including products, services, and which markets - "by" is a common word. |
Product-Oriented Vision Statements: | Defines a business in terms of a good or service. Tend to force managers to take a myopic view of the business landscape. |
Customer-Oriented Vision Statements: | Defines a business in terms of providing solutions to customer needs and are more flexible. |
What is Top-Down Strategic Planning? | Rational, top-down process aiding in programming for future success. Centralized strategic intelligence and decision-making. |
What is Scenario Planning? | When managers envision different what-if scenarios to anticipate plausible futures. |
Top-down and Bottom-up Strategy: | Top-down and scenario planning are too regimented and confining. Strategies can be planned or it can emerge from the bottom up. |
What are the six factors of the PESTEL analysis? | Political Environment, Economic Factors, Sociocultural Factors, Technological Factors, Ecological Factors, Legal Environment |
How does the POLITICAL environment affect the PESTEL model? | Processes/actions of the government can influence the decisions and behaviors of firms. |
How do ECONOMIC factors affect the PESTEL model? | Some economic factors that affect a firm's strategy are: Growth Rates, interest rates, levels of employment, price stability, and exchange rates. |
How do SOCIOCULTURAL factors affect the PESTEL model? | Industries must capture cultures, norms, and values for society; are dynamic and differ across groups. Demographic trends captures population characteristics related to age, gender, ethnicity, religion, etc. |
How do TECHNOLOGICAL factors affect the PESTEL model? | Industries capture the application of knowledge to create new processes and products. Innovations in process technology and technology revolution help shape a business. |
How do ECOLOGICAL factors affect the PESTEL model? | Broad environmental issues, such as the natural environment, global warming, and sustainable economic growth. |
How does the LEGAL environment affect the PESTEL model? | Laws, mandates, regulations, and court decisions all have a direct bearing on a firm's profit potential. |
List Porter's Five Forces: | Threat of New Entrants, Bargaining Power of Buyers, Bargaining Power of Suppliers, Threat of Substitute Products or Services, Rivalry Among Existing Competitors |
Explain the threat of new entrants. | Entry barriers are the risk that potential competitors will enter an industry. With new entrants, profit potential is depressed for incumbent firms. |
Explain the power of suppliers. | Powerful suppliers can demand higher prices for their inputs and can capture part (sometimes a LARGE part) of the economic value created. Signs of strong suppliers include: Concentrated industry, limited substitutes, differentiated products, etc. |
Explain the power of buyers. | Powerful buyers can demand a lower price or higher product quality. Powerful buyers can reduce industry profit potential: through price discounts or through increased quality/better service. |
Explain the threat of substitutes. | This threat derives from products/services fulfilling the needs of current customers OUTSIDE the industry. Power of substitutes is high when: There is an attractive trade-off or when the buyer's switching cost is low. |
Explain the rivalry among competitors. | The intensity of rivalry among existing competitors is determined largely by the following factors: Competitive industry structure, industry growth, strategic commitments, and exit barriers. |
Key points to remember in Netflix case: | Product oriented.. Original target market were customers who just purchased DVD players.. Top-down and bottom-up strategic planning.. Adapting to market led to growth (subscriptions, VOD, etc.).. Methods implemented (subscriptions, rating systems) |
Key points to remember on Cola Wars case: | Four major participants and their roles: Concentrate producers, bottlers, retail channels, and suppliers.. All the forces in the PESTEL model are low, allowing the industry to be very profitable. |
What is a Competitive Disadvantage? | When a firm underperforms its rivals or the industry average. |
What is Competitive Parity? | When two or more firms perform at the same level. |