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34 Cards in this Set
- Front
- Back
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I have related diversification, if it is vertical it: |
Has to be related |
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Why might a firm mistakenly overestimate the benefits of outsourcing? |
*Benefits are more immediate than costs *Illusion of cost savings (vs. value creation) |
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What are the risks of outsourcing? |
*Decreases learning *Decreases quality control *Opportunism *Currency exchange rate volatility |
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What are the benefits shown in outsourcing? |
Right away (immediate results) |
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What are transaction costs? |
Expenses that occur as firms share resources between themselves rather than controlling all activity internally (Trust undermines transaction costs) |
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What is Arbitrage? |
Taking a resource where it's plentiful and cheap and bring it to a location where it is scarce and expensive |
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What is the 5 Forces model used for? |
Gives managers an estimate of the profitability in a given industry for an average firm |
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What is the VRINE model used for? |
Primarily used to determine wheather firm resources will have long or short-term value |
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What are the factors of the 5 Forces model? |
*Buyer power *Supplier power *Threat of new entrants *Threat of substitutes *Rivalry |
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What is the E in the VRINE model ? |
Exploitability |
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Describe a substitute for an IPOD? |
*CD Player *laptop *Live concert |
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What is a prime benefit of the VRINE model? |
It helps identify which individual firm resources are likely to have long vs short term value |
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Name a complementor to the auto industry |
Gasoline |
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Dynamic capabilities describe what? |
The ability of firms to reconfigure existing resources to achieve new sources of competitive advantage (example: IBM used to mfg computers, and now they do consulting) |
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When industry growth is low or declining & exit barriers are high, what is the likely effect? |
Rivarly will be high |
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Describe any 1 of the 3 main assumptions of the dynamic perspective |
*Industries are too large & complex for a single manager to understand *Resources are created over time through accumulated investment & knowledge *Completley new resources are costly to develop |
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How to deal with dynamism and & complexity? (2 prescriptions) |
1. A bottom up flow of information, and a top-down flow of goals & objectives
or
2. Probing |
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What did Warren Buffet say? |
"Fail cheap and fail often" |
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What is probing? |
Making multiple investments that are low cost and different from each other, then waiting to see which shows the most potential |
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According to the VRINE model, what is produced if firms only have valuable and rare resources? |
High, short term profits |
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According to the VRINE model, what is produced if firms have valuable, rare resources that are also inimitable and nonsubstitutional |
High, long-term profits |
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What entry vehicle is used when one firm is to take an investment into another firm? |
Equity Alliance |
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What type of entry vehicle is primarily used when time is a major concern? |
Acquisition |
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Which type of Entry Vehicle is associated with the lowest level of risk but also generates the lowerst amount of knowledge and is the least profitable? |
Exporting |
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When compared to the dynamic perspective, both the internal & external perspectives have what major weaknesses? |
Top down planning and coordination |
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Which of the following is a substitute for a Tesla? |
A southwest airlines ticket |
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When there are very few potential buyer firms & very many seller firms, we can assume that there is: |
Buyer power |
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Market dynamism change favors what type of firm? |
Small or young firms (because large firms are largely invested in the status quo) |
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When defining an industry for a 5 Forces model, what would analysts be more effective in calling it: US Farming Industry or US Organic Farming Industry |
US Organic Farming Industry |
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What is probing? |
Multiple low cost investments that are different from each other, then waiting to see which shows the most potential. |
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When time is an issue the most difficult entry barrier to overcome is likely to be |
Knowledge Barriers (under Barriers to Entry) |
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Describe one way that a firm considers imitability |
1. Patent Protection 2. Knowledge Barriers 3. Size advantages 4. Secrecy |
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Which type of entry vechicle has the highest initial investment, but also has the highest level of knowledge generation? |
Greenfield |
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What kind of entry vehicle did PEIPC use with Canada World? |
Contractual Agreement |
