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59 Cards in this Set

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The central, comprehensive, integrated and externally oriented set of choices of how a company will achieve its objectives
A company needs to be able to decide which businesses it wants to be in
A properly stated strategy also needs to include the vehicles (approaches) a company will use to create a presence in specific markets or products
A company also needs to decide what ways it will use to win over customers
Differentiators/Economic Logic
A company also needs to decide in what sequence and at what pace major decisions will be made
Basic ways to achieve and sustain competitive advantage
Generic Strategies
When a company can outmatch its rivals in attracting and maintaining its targeted customers
Competitive advantage
Providing superior value to customers

•Ex.: BMW competing in the world market by providing high-quality and performance sports cars
Differentiation stretegy
Producing at a lower cost than competitors

•Ex.: Korean semiconductor firms
Low-cost strategy
Customers often pay a higher price for extra value
Additional profits come from cost savings
How narrow or broadly a firm targets its products or services
Competitive scope
A firm can gain competitive advantage by finding ______ or ______ in its activities
Differentiation or low cost
All the activities that a firm used to design, produce, market, deliver, and support its product.

A convenient way of looking at the firm’s activities.
Value Chain
What are the components of the value chain?
Primary activities, upstream, downstream, support activities
Early activities in the value chain
•Dealing with suppliers
Later value chain activities
•Sales and dealing with distribution channels
Physical actions of creating, selling, and after-sale service of products
Primary activities
Systems for human resources management, organizational design and control, and technology
Support activities
A deliberate decision to have outsiders or strategic allies perform certain activities in the value chain
When should a multinational company outsource?
•Outsourcing makes sense if an outsider can perform a value-chain task better or more cheaply

•However, tasks that are outsourced should the ones that are not crucial to the company’s ability to achieve competitive advantage
Strengths that allow companies to outperform rivals

-Ex.: Quality, innovation, customer service
Distinctive Competencies
Inputs into the production or service processes

-Ex.: Buildings, land, equipment, employees
Ability to assemble and coordinate resources effectively
Resources provide the organization with potential capabilities.
For long-term success, capabilities must lead to sustainable competitive advantage.
Strategies not easily defeated by competitors
Strategic moves multinationals use to defeat competitors
Competitive strategies
Direct attacks to capture market share
Offensive competitive strategies
Attempts to discourage offensive strategies
Defensive competitive strategies
Fending off a competitor’s attack in one country by attacking in another country
What are the Offensive strategies?
Direct attacks, end-run offensives, preemptive competitive strategies, acquisitions
Price cutting, adding new features, or going after poorly served markets
Direct attacks
Being first to obtain particular advantageous position
Preemptive competitive strategies
Seeking unoccupied markets
End-run offensives
Buying out a competitor
Defensive strategies?
• Attempts to reduce risks of being attacked
• Convince an attacking firm to seek other targets
• Blunt the impacts of any attack
• Exclusive contracts with best suppliers
• New models to match competitor’s lower prices
• Public announcements about the willingness to fight
•Popular strategy for multinationals

•Respond to attack by attacking competitor in another country

•Ex.: Kodak—When Fuji attacked Kodak in the U.S., Kodak retaliated by attacking Fuji in Japan.

•Goodyear also attacked Michelin in Europe as response to attack in U.S.
Strategies for a single business operation
Business-level strategies
How companies choose their mixture of different businesses (a portfolio view).
Corporate-level strategies
Companies acquire businesses that are similar in some way to their original or core business

•Ex.: Nike adding clothing line to its shoe operations
Related diversification
Firms acquire businesses in any industry

•Main concern is whether it’s a good financial investment
Unrelated diversification
Process by which managers select the strategies to be used by their company
Strategy formulation
What are four popular analysis techniques for strategy formulation?
•Competitive dynamics of the industry

•Company’s competitive position in the industry

•Opportunities and threats faced by their company

•Company’s strengths and weaknesses

**(industry/sector & company level swot analyses)
A popular technique that can help a multinational firm understand the major forces at work in the industry and the degree of attractiveness of the industry
Porter's five forces model
What are the five forces in Porter's Five Forces Model?
•The degree of competition among existing competitors in the industry

•The threat of new entrants

•The bargaining power of buyers

•The bargaining power of suppliers

•The threat of substitutes
Industry & Competitive Analysis

•Must understand economic characteristics of industries. Economic characteristics include: (three things)
-Market size
-Ease of entry-f
-Opportunities for economies of scale
•Important characteristics of a company or its product that lead to success in an industry
Kay Success Factgors
Key success factors include what?
- Innovative technology or products
- Broad product line
- Effective distribution channels
- Price advantages
- Effective promotion
- Superior physical facilities or skilled labor
- Experience of firm in business
- Cost position for raw materials
- Cost position for production
- R&D quality
- Financial assets
- Product quality
- Quality of human resources
Profiles of competitor's strategies and objectives.
Competitor analysis
What are the four steps of competitor analysis?
•Identify strategic intent of competitors

•Identify current and anticipated generic strategies

•Identify current and anticipated offensive and defensive competitive strategies

•Assess current positions of competitors
SWOT is what?
•Strengths: distinctive capability, resource or skill

•Weaknesses: competitive disadvantage compared to competitors

•Opportunities: favorable conditions in the environment

•Threats: unfavorable conditions in the environment
The basic tool of corporate strategy selection is what and what is the most popular tool?
Basic tool: matrix analyses

Most popular: growth share matrix of the Boston Consulting Group
Division into four categories based on market share and relative market share
BCGT Share Matrix: s stars, dogs, cash cows, problem child
The most successful firm
Businesses in slow-growth industries where company has strong market-share position
Cash cows
Businesses with low market shares in low-growth industries
Businesses in high-growth industries where company has a poor market share
Problem child
Increasing similarity of management practices

Most apparent with transnational firms

• Multinational firms competing in the same industry tend to have similar structures and strategies regardless of the location of the company’s headquarters
How does Globalization pushes organizations to be more similar
-Global customers and products

-Growing levels of industrialization and economic development

-Global competition and global trade

-Gross-border mergers, acquisitions, and alliances

-Cross-national mobility of managers

-Internationalization of business education