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43 Cards in this Set
- Front
- Back
What is Strategy?
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Strategy is the quest to create, capture and
sustain competitive advantage. Also: - It is about being different from your rivals. - It is about creating value while containing cost. - It is about deciding what to do, and what not to do. |
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Economic value can be created through which drivers?
Name a few examples for each driver. |
Revenue drivers
Cost drivers Risk drivers |
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Name a few examples for cost & value drivers.
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- Value
Technology Quality Network Externalities - Cost Economies of scale Economies of scope Vertical Integration |
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Name the 3 strategy levels and explain what the mean.
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Corporate strategy:
Where to compete (e.g headquarters)? Business strategy: How to compete (e.g. business unit)? Functional strategy: How to implement (e.g. business function)? |
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Who is deciding about the board of directors?
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The shareholders.
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What is the company mission statement NOT?
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To make profit.
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Characteristics of a vision?
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- Charts a company’s future strategic course
- Defines the business makeup for 5 years (or more) - Specifies future technology product-customer focus |
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Characteristics of a mission?
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- Conveys Who we are, What we do, and Where we are now
- Company specific, not generic —so as to give a company its own identity |
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What are Porter`s 5 forces?
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see image
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What are 3 key influences to profitability?
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- The value of the product to customers
- The intensity of competition - Relative bargaining power at different levels within the value chain. |
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What is an industry?
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If industry structure for two products/services is the same(same buyers,suppliers, barriers, substitutes, regulation) they belong to the same industry.
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Understand the industry structure matrix
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see image
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How does the 5 forces framework make statements about profits in the industry?
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Potential threats of entry?
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- Minimum efficient scale relative to the size of the market
- Government policies that favor the incumbents - Brand loyalty of consumers and value placed by consumers on reputation |
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Factors for threat fo entry?
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- Steepness of the learning curve
- Network externalities that give the incumbents the benefit of a large installed base - Entry barrier may also be strategic: incumbents maintain excess capacity or threaten to slash prices. |
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Demarcated substitutes and complements!
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- Availability of substitutes erode the demand for the
industry’s output - Complements boost industry demand - When the price elasticity of demand is large, pressure from substitutes will be significant |
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What's indirect and direct power of suppliers and customers?
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- indirect power in competitive markets
- Supplier has direct power if the upstream industry is concentrated - Buyer concentration or relationship specific assets can lead to direct power |
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All of Porter’s wisdom regarding the five forces is
reflected in the economic identity: ... |
Profit = (Price –Average Cost) * Quantity
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Name an animal.
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Hamster.
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Name some complementary products/services
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Providers of complementary products and
services Hardware and software Cars and auto loans VCRs and movies Intel and the wireless Internet |
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What are sources of first mover advantages?
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Economies of Scale
Experience or Learning Curve Effects Brand Equity “Network Externalities” |
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Why did Walmart succeed that well in first place?
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Due to its expansion strategy: Creating local monopolies.
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What is entry deterrence?
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The incumbent firm must convince any
potential competitor that entry will be unprofitable. |
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Name the four dimensions of the framework for competitor analysis!
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- Objectives
- Strategy - Assumptions - Resources & Capabilities |
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How does strategy connect the firm with the industry environment?
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See image.
Focus in the fields: The firm: - Goals and Values - Resources and Capabilities - Structure and Systems The Micro environment - Competitors - Customers - Suppliers |
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When do Resources & capabilities provide a good secure basis of strategy?
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When the external environment is subject to rapid change,
internal resources and capabilities offer a more secure basis for strategy than market focus. |
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How are resources and capabilities defined?
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- Resources: inputs into a firm’s operations so as
to produce goods and services. - Capabilities: The ability to perform a task or activity that involves complex patterns of coordination and cooperation. |
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How does core competence link to strategic assets?
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Core competence -> distinctive capabilities -> strategic assets
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Example of Res. & Cap. @ Ikea?
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Resources: Contracts with suppliers, brand name,
prizes, large base of customers, motivated employees, the founder, etc. Capabilities: Design of modern and cheap pieces of furniture, managing international network of providers, bargaining ability with suppliers, etc. |
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Draw the links between Resources, Capabilities
and Competitive Advantage |
see image
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Describe the value of core competence in a few words.
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- inimitable
- durable - unsubstitutable - appropriate - competitively superior |
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What are primary and secondary value chain elements according to Porter?
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See image.
Primary activities: directly concerned with the creation orthe delivery. Support activities: help to improve the effectiveness or efficiency of primary activities. |
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What are the key activities leading to the unique capabilities of Zara? Draw in a activity map.
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see image.
- Very frequent product changes - Cutting edge fashion at moderate price & qualiy - Word-of-mouth marketing - Prime store locations in high-traffic areas - Very flexible production system |
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How to identify key success factors? Describe an approach (3 analysis fields)
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Analyze:
- General prerequisites for success (What is the player's advantage?) - Analysis of customers and demand - Analysis of competition --> KSF |
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Name examples how to develop capabilities!
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- Acquire and develop the underlying resources.
--Internally through developing individual skills - Acquire/access capabilities externally through acquisition or alliance - Build team-based capabilities through training and team development (i.e. develop organizational routines) - Product sequencing (Intel , Sony, Hyundai) - Knowledge Management (systematic approaches to acquiring, storing, replicating, and accessing knowledge) |
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How to get from Res. & cap. to strategy?
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1. Identify the res & cap of the firm
2. Find linkages between res & cap. 3. Elaborate the potential for SCA from strategic importance and relative strength 4. Develop strategy implications based on 3. |
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What are Walmart's top 5 activities leading to leadership?
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- Rural strategy
- Lower average costs than competitors in almost every area of business! - Worker commitment - Organizational culture (top management sets tone) - Technology leadership |
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In which two ways can competitive advantage be generated?
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- Cost advantage
- Differentiation advantage |
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Name a few resources and organization requirements for cost leadership.
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Access to capital
Process engineering skills Tight cost control etc. |
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Name a few resources and organizational requirements for differentiation.
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Marketing abilities
Product engineering skills Creativity Research capability |
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Draw an exemplary value creation frontier.
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Name some drivers for cost leadership!
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Economies of scale
Economies of learning Production techniques Production Design Input costs (e.g. from nonunion labor or bargaining power) |
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What are potential threats for cost leadership?
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- Being overly aggressive in cutting price
- Becoming too fixated on reducing costs and ignoring other success dimensions - Technological breakthroughs open up cost reductions for rivals |