Badm 449- Strategy Exam 2

Front 1

What is Invention?

Back 1

Creating new products or processes by developing new knowledge or combining existing knowledge in new ways

Front 2

What is Innovation?

Back 2

Commercialization of new good or service or new method of production

Front 3

What is Technology?

Back 3

1) Artifacts
2) Knowledge needed to create and operate them

Front 4

True or False: All firms have processes that depend on technology?

Back 4

True. ( e.g. IT, transportation, production process) So technology & innovation can transform any business, even a “low tech” industry like retail or steel

Front 5

Name the 3 phases in a typical industry life cycle

Back 5

1) Fluid Phase
2) Transitional Phase
3) Specific Phase

Front 6

What is the Fluid Phase?

Back 6

Many alternative designs are attempted, many firms enter and exit the industry

Front 7

What is the Transitional Phase?

Back 7

A dominant design emerges around a set of features that all products must offer

Front 8

What is Specific Phase?

Back 8

Industry characterized by a fairly stable set of firms designing products following the dominant design, concentrating on efficient production

Front 9

Dominant Design Selection is inherently a ___________, rather than a merely technical or economic optimization
choice.

Back 9

Sociopolitical process

Front 10

Where do product innovation and process innovation meet?

Back 10

Transitional Phase

Front 11

What is dominant design?

Back 11

A generally adopted configuration of
components that defines the look, functionality, and production criteria
for a product. (ex. qwerty typewriter, 35 mm camera, blue ray player)

Front 12

What are 4 ways in which innovation can be characterized?

Back 12

1) Technology
2) System Design
3) Target Markets
4) Capabilities

Front 13

Where do innovations come from?

Back 13

1) Companies own research
2) Suppliers
3) Customers

Front 14

Name 2 types of uncertainty.

Back 14

Technological uncertainty
Market uncertainty

Front 15

What are the the Advantages of a first mover in technology?

Back 15

1) If successful, the firm earns above-average returns until other competitors are able to respond effectively.
2) Develop customer loyalty
3) Start down teh learning curve earlier

Front 16

What are the Disadvantages of a first mover in technology?

Back 16

1) high risk
2) high development costs
3) high demand uncertainity

Front 17

What are the Advantages of a second mover in technology?

Back 17

1) Reduction in demand uncertainty
2) Market research to improve satisfying customer needs
3) Learn from the first mover’s successes and shortcomings
4) Gaining time for R&D to develop a superior product

Front 18

What are the Disadvantage of a second mover in technology?

Back 18

1) Loss of opportunity to establish brand loyalty
2) Learning curve gives up competitive advantage

Front 19

What are 4 network externalities?

Back 19

1) The value of a product to an individual depends on the number of other users of that product
2) Linkages between users
3) Complementary products
4) Switching costs

Front 20

True/False. Open standards decrease profit appropriation

Back 20

True. Rival imitate easily, loss of control

Front 21

What is the value of going overseas? List 4

Back 21

1) Gain Access to New Customers for Current Products or service
2) Gain Access to Low-Cost Factors of Production
3) Achieving global economies of scale
4) Leverage Core Competencies

Front 22

What are 2 drivers of performance overseas?

Back 22

Pressure of Local Responsiveness
Greater Global intergration (pressures for Cost Reduction)

Front 23

What is International Strategy?

Back 23

1) Good for firms starting their international expansion
2) Product is hard to localize, but marketing, etc
3) Less learning
(low local respnonse, low cost reduction)

Front 24

What is multidomestic Strategy? 4 things

Back 24

1) Products and services tailored to local markets
2) Focus on competition in each market
3) Prominent strategy among European firms due to broad variety of cultures and markets in Europe
4) Low learning
(high local response, low cost reduction)

Front 25

What is Global strategy?

Back 25

1) Products standardized across markets
2) Economies of scale
3) Not responsive to local markets
4) Requires resource sharing and coordination across borders
(low local response, high cost reduction)

Front 26

What is Transnational Strategy?

Back 26

1) Global efficiency and local responsiveness
2) Difficult to achieve
3) Strong central control and coordination to achieve efficiency and local flexibility
4) Decentralization to achieve local market responsiveness
(High local response, high cost reduction) EX. McDonalds

Front 27

What are strategic alliances?

Back 27

Partnerships betweeen firms whereby their resources, capabilities, and core competencies are combined to pursue mutual interests in designing, manufacturing, or distributing goods or services

Front 28

List 3 types of Strategic Alliances

Back 28

1) Diversifying Alliances
2) Synergistic Alliances
3) Franchising

Front 29

What are the advantages for a FRANCHISOR? list 4

Back 29

1) A national presence can be developed more quickly and with a smaller investment on the part of the franchisor
2) Qualifications for franchise ownership can be set and enforced
3) Money is obtained when goods are delivered rather than when they are sold.
4) Because franchisees are owners and not employees, they have a greater incentive to work hard

Front 30

What are the disadvantages for a FRANCHISOR?

Back 30

1) Individual franchisees can ruin the overall image and reputation of the franchise if they do not maintain company standards.
2) Lack of uniformity adversley affects customer loyalty
3) Intra-franchise competition is not desirable
4) The resale value of individual units is injured if franchisees perform poorly.

Front 31

What are the advantages for a FRANCHISEE? List 4

Back 31

1) An indivual buisnessperson can own and operate a retail enterprise with a relativley small capital investment
2) Franchissee acquires a well-known name and goods or service line
3) Standard ooperating procedures and management skills are taught to the franchisee.
4) Purchases may be made more cheaply because of volume.

Front 32

What are the disadvantages for a FRANCHISEE? list 4

Back 32

1) Oversaturation may occur if too many franchisees are located in one geographic area
2) Because overzealous selling of franchises, the franchisor might sell to underfunded or incompetent buyers
3) A franchisee may be locked into a contract purchasing provision requiring purchases through the franchisor or approved vendors
4) Franchise agreements may be of short duration.

Front 33

What is a network strategy?

Back 33

The alliance-related actions taken by a group of interrelated and comparable firms to serve the common interests of all partners.

Front 34

What were Google's values?

Back 34

Do no evil
Technology matters
We make our own rules

Front 35

How did Google gain success so early, competitive advantage?

Back 35

Algorithm, the best ever seen

Front 36

How did Google make money?

Back 36

Improved Overture's "cost-per-click" model.
Users see the most relevant ads.

Front 37

What was Googles main problem and what tool was used in the case?

Back 37

As Google continues to grow, what moves should it make next?

Network Externalities:
1) Products where users are linked to a network
2) Avaliablity of complementary products or services
3) Economizing on switching costs.

Front 38

What is Zara's stragegy?

Back 38

Being Fast at sensing and respoinding to market trends

Front 39

List Zara's main sources to their Competitive Advantange.

Back 39

1) Flexibility
2) Fashion Follower
3) Premium image w/o advertising
4) Globalization through LOCALIZATION (TRANSNATIONAL STRATEGY)

Front 40

T/F, Zara's growth choices have to CONSIDER SERIOUSLY strategic leverage (previous Resources & Capabilities, structures, personnel, etc)?

Back 40

True

Front 41

What type of tools were used in the Nucor case?

Back 41

Cash Flow analysis and Real options Valuation

Front 42

What did we learn from the Nucor case?

Back 42

That the cash flow numbers were based on assumptions and that we need to look beyond estimated figures to see if this significant investment is aligned with Nucor's strategy and helps improve their competitive advantage

Front 43

What is a stakeholder?

Back 43

Person or group that will be influenced by the actions you take to accomplish your goals.

Can be outside or inside your organization with positive or negative intrests

Front 44

How is the Stakeholder Analysis/Map determined?

Back 44

Rating your stakeholder's IMPORTANCE TO SUCCESS to the stakeholder's INTEREST/EXPECTATIONS

Low/negative = Monitor (min. effort)
High/negative = Keep Satisfied
Low/positive = Keep informed
High/positive = Manage Closely

Front 45

What tool was used in the Shell case?

Back 45

Applegate's Stakeholder Map/Analysis

Front 46

What was the main problem in the Shell Case?

Back 46

Ogoni tribe did not feel they were recieving enough money for Shell using their land, destroying pipe lines. Nigerian govt. did not really care, and they allow Shell to be in their country so conflict of interest.

Front 47

What do we take away from the Shell case?

Back 47

Stakeholders are much more salient than shareholders in the day to day operations of any business (YOU NEED TO LEARN HOW TO ASSESS THEIR INTERESTS AND DEAL WITH THEM ASAP!)

Front 48

What is the article Rethinking the Social Responsibility of Business all about?

Back 48

Deals with assumption that the only responsibility Business have is to increase profits. However, others disagree and state that some businesses put their customers first and when you do that the profits come. They also mention that their is no magical formula to how you weight the importance of your stakeholders because there needs change as your business blossoms too.

Front 49

What is the article Market Myopia about? Any examples?

Back 49

It shows what a thoroughly customer-oriented management can do to keep a growth industry grwoing, even after the obvious opportunities have been exhausted.

The railroad defined their industry incorrectly by thinking they were railroad-oriented (product oriented) and not transportation-oriented (customer oriented).

Front 50

List 4 strategies for exploiting innovations and highlight a strength and weakness for each.

Back 50

1) Licensing
a. Strength – small risk
b. Weakness – limited returns
2) Outsourcing certain functions
a. S – limits investment
b. W – dependence on supplier and partner
3) Strategic alliance
a. S – flexible
b. W – risk of informal structure
4) Joint venture
a. S – share investment and risk
b. W – partner conflict and culture clash

Front 51

What is important to remember about OPEN and CLOSED standards?

Back 51

Open standards increase market acceptance, however, this additional number of customers comes at a HIGH price because it becomes really difficult to APPROPRIATE the value you have created. If you choose a closed standard, then you can more easily appropriate the value you create but NOW this comes at a HIGH price of likely not having 'enough' customers/users. In sum, you have to balance APPROPRIATION & MARKET ACCEPTANCE when deciding whether to opt for a close or open standard for your new technology.