SM test 2 Study guide turned into a stack

Question Answer
Define Business level strategy? An action the form takes to gain/sustain a competitive advantage in a specific product market/single geographical market
what is the relationship between the firms customers and its business level strategy? (3 things) a. Who will be served.b. What customer needs the firm will satisfy.c. How those customer needs will be satisfied.
What are the three generic strategies? How do they differ? Cost Leadership: produces G/S with acceptable features at lowest costDifferentiation: produce G/S with unique features at acceptable cost.Focus: Include the other, except for a particular competitive segment.
What are the two Scopes of the BL matrix? Industry Wide and Niche. Niche includes buyer group, product line, and geographic market.
in the BL matrix what are the three competitive basis's? Price, Features, Integrated.
In which Scope of the BL matrix do you use a 'Focus' strategy? Niche
What are the industry 5 forces? Industry Forces: Rivalry, New entrants, substitute products, Buyers, and suppliers.
What are the Risks associated with Cost leadership? Risks: Processes could become obsolete, Competitive levels of differentiation, and imitation.
What are the Risks associated with Differentiation? Risks: Price differential too large, imitation, Experience narrows customers perception, and counterfeiting.
What are the Risks associated with Focus Focus within focus, attract industry wide competitor, and changing consumer needs.
What are the Risks associated with an Integrated Strategy? Stuck in the middle: Jack of all trades, master of none.
Define corporate level strategy An action the firm takes to gain/sustain a competitive advantage in a multiple product market/single geographic market.
The corporate level strategy addresses what 2 issues? What businesses a corporation should compete in. And how these businesses should be managed to create synergy
Vocab: Financial Economies Cost of savings realized through improved allocation of financial resources based on investments inside or outside the firm.
Vocab: Multi-point competition Exists when 2 or more diversified firms simultaneously compete in the same product areas or geographic markets. (another approach to gaining market power through diversification)
Vocab: Synergy Added Value (the whole is greater than the sum of its parts) e.g. 1+1=3 or 2+2=5
Vocab: Cross subsidization Financial resources accumulated in one part of the world used to fight a competitive battle in another part of the world. it is used to undermine strong domestic market share.
What are the 2 corporate level strategies? Related Diversification and Unrelated Diversification.
What are the first 2 parts of related diversification? Leveraging core competencies: the transferring of accumulated skills and expertise across a corporations business units.Sharing activities: The sharing of tangible activities across a firms business units. e.g. Manufacturing facilities, distribution etc
What are the last 2 parts of related diversification? Pooled negotiation power: refers to similar businesses working together (or with a parent business) to strengthen the firms bargaining power.Vertical integration: refers to extending the firm by integrating preceding or successive productive processes.
What is the first part of unrelated diversification? Restructuring: corporation seeks firms with unrealized potential with the goal of improving their efficiency to sell for a profit.
What is the second part of unrelated diversification? Corporate parenting: the parent company creates value through its management expertise by improving the efficiency/effectiveness of the subsidiary.
What is the third/last part of unrelated diversification? Portfolio management/analysis: the corporate office seeks to balance (minimize the risk of) its portfolio of businesses.
There are 3 means to achieve diversification or pursue corporate level strategies, what are they? Mergers and acquisitions: purchase the assets and competencies of other firms.Strategic alliances and joint ventures: Partner/Pool resources to achieve a common end.Internal Development.
What are the limits to vertical integration? An outside supplier might be able to produce the product at a lower cost. Bureaucratic costs may occur. It can reduce the firms flexibility because it requires substantial investments in specific technologies. Changes in demand may create capacity issues
What are the advantages and disadvantages of single business, dominant business, and diversified business? Single business: more than 90% of revenue from a single businessDominant business: 70-95% of revenue from a single business.Diversified Business: less than 70% of revenue from a single business.
What incentives encourage diversification? a. External incentives: Anti-Trust regulation and tax lawsb. Internal incentives: Low performance, uncertain future cash flows
What resources encourage diversification? c. Tangible resources: Financial resources, free cash flowd. Intangible resources: Plant and Equipment, sales force
Define international level strategy An action the firm takes to gain/sustain a competitive advantage in multiple product markets/multiple geographic markets.
Why do firms expand internationally? Products life cycle, resources, low cost factors, universal demand, reduce costs, economies of scale, location of value chain activity, increase size of potential markets, enter developing markets.
Define factors of production. The inputs necessary to compete in any industry — land, labor, capital, natural resources, and infrastructure.
What are the factors of Michael porters Diamond of National Advantage? Factors of production, Demand Conditions, Related and supporting industries, and firm strategy, structure, and rivalry.
What are the types of factors of production? Basic: natural and labor resourcesAdvanced: highly educated work forceGeneralized: needed by all industries e.g. highways.Specialized: skilled personnel in specific industry.
What two factors of production equal a national advantage? Advanced + Specialized.
Define demand conditions The nature of size of buyers needs in the home market for the industry’s goods and services
Define related and supporting industries refers to the presence/absence of related/supplier industries that are internationally competitive
Define Firm strategy, structure, and rivalry national conditions that govern how firms are created, organized, and managed and the nature of domestic rivalry.
What are the 3 international corporate level strategies? Multi-domestic, Global, and Transnational.
Of the three international strategies, how do they differ? Global: focuses on economies of scale.Multi Domestic: focuses on competition within each countryTransnational: focuses on global efficiency and local responsiveness.
What are the risks of international expansion? Political and economic risk. Currency Risk. and Management Risk.
Define Political and economic risk Forces such as military turmoil, terrorism, and social unrest can pose serious threats to the organization
Define Currency risk Currency fluctuations can pose significant risks to a company with operations in several countries. Company must monitor exchange rates between currencies.
Define management risk This is the risk that managers will respond inappropriately to the difference encountered in foreign markets. e.g. Culture, language, customer preferences, etc.
What are the five choices of international entry mode Exporting, licensing, strategic alliances, acquisitions, and wholly owned subsidiary.
Define Exporting. ship products to satisfy foreign demand
Define licensing Allow foreign firm to manufacture and sell the firms product in a country
Define strategic alliances partner with foreign firm to enter international markets
define acquisitions acquire foreign firm to gain access to new market.
Define wholly owned subsidiary build plant in a new market.
What is entrepreneurship? Entrepreneurship is a process of “creative destruction” through which existing products or methods are destroyed and replaced with new ones. Thus, entrepreneurship is concerned with the discovery and exploitation of profitable opportunities.
What are the two parts of opportunity recognition? Discovery and formation
Define Discovery This may occur unintentionally or as the result of a deliberate search for creative solutions to business problems or new venture opportunities
Define formation Involves evaluating an opportunity to determine if it is viable and strong enough to be developed into a full-fledge new venture. A viable opportunity must have four qualities.
What are the four qualities for a viable opportunity? a. Attractive = market demandb. Achievable = practical and physically possiblec. Durable = sufficient window of opportunity d. Value creating = Profitable
Define entrepreneurial orientation It is a mindset toward entrepreneurship that is reflected in both the firms operations and culture.
What are the components of entrepreneurial orientation? Autonomy, innovativeness, proactiveness, competitive aggressiveness, risk taking.
Who is the father of modern business? Drucker
What are the two theories of competitive advantage? I/O model and RBV
What is forward integration? Ownership over distribution
What is horizontal integration? New unrelated products
Types of innovative activity? Invention, Innovation, Imitation.
8 sub fields of strategy? Leadership, decision making, level strategies, organizational culture, entrepreneurship, strategic alliances, profit orientation, and ethics/values.

Leave a Reply

Your email address will not be published. Required fields are marked *