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50 Cards in this Set
- Front
- Back
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Describe the I/O Model
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industry in which a company choose to compete has a stronger influence on performance than do choices managers make inside their organization.
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What are the 4 underlying assumptions of the I/O model?
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1. external environment is assumed to impose pressures and constraints that determine the strategies that would result in above average returns.
2. most firms competing with an industry are assumed to control similar strategically relevant resources and to to pursue similar strategies in light of those resources. 3. resources used to implement strategies are assumed to be highly mobile across firms, so any resource differences that might develop between firms will be short lived. 4. Org. decision makers are assumed to be rational and committed in acting in the firm's best interests, as shown y their profit maximizing behaviors. |
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What are the 5 steps of the I/O model?
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1. External environment
2. Attractive Industry 3. Strategy Formulation 4. Assets and skills 5. Strategy Implementation Leads to Superior Returns |
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Define Stakeholders
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somebody with invested interest in the success of the corporation
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What are the 3 classifications of stakeholders?
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1. Capital Market: shareholders
2. Product Market: primary customers, suppliers, 3. Organizational: Employees |
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The Resource-based model of above-average returns assumes what?
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that each organization is a collection of unique resources and capabilities, and its uniqueness determines its ability to earn above average returns.
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What are the steps in resource-based model?
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1. Resources
2. Capability 3. Competitive Advantage 4. Attractive Industry 5. Strategy Formulation and Implementation Leads to Superior Returns |
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What are the 7 parts of the External Environment?
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1. Demographic- population
2 Economic- interest rates 3 Political- taxation laws 4 Socioculture- women in workforce 5 Technological- product innovations 6 Global- newly industrialized cultures 7 Physical Environment- energy consumption |
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What is the Industry Environment used for, and what are the 5 factors?
(5 forces model) |
set of factors that directly influences a firm and its competitive actions and competitive responses:
1 Threat of new entrants 2 Power of suppliers 3 power of buyers 4 Product Substitutes 5 Intensity of rivalry among competitors |
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What are the 4 components of the External Environmental Analysis?
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Scanning, Monitoring, Forecasting, Assessing
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Define Economies of Scale
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are the cost advantages that a business obtains due to expansion. They are factors that cause a producer’s average cost per unit to fall as scale is increased. Economies of scale is a long run concept and refers to reductions in unit cost as the size of a facility, or scale, increases.
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What are tangible resources?
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assets that can be observed and quantified. Financial, organizational, physical, technological.
ex. chairs, desks |
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What are intangible resources?
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relatively difficult for competitors to analyze and imitate.
ex. knowledge, trust, ideas |
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What are the 4 criteria of Sustainable Competitive Advantage?
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1. Valuable
2. Rare 3. Costly- to- Imitate 4. Non-substitutable |
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What are the two parts of a Value Chain analysis?
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Primary activities- involved with a product's physical creation, its sale and distribution to buyers, and its services after the sale.
(inbound logistics, operations, outbound logistics, marketing and sales, service) Support activities- provide the assistance necessary for the primary activities to take place. (procurement, technological development, human resource management, firm infrastructure) |
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What do retained earnings link?
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1. Balance Sheet- what you own at a point in time (assets, liabilities)
2. Income Statement- revenues, expenses (profit/loss) |
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Current Ratio:
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Current assets/ Current Liabilities
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Quick Ratio:
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Current Assets- Liabilities/ Current Liabilities
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Percent Change
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Y2-Y1/Y1 (100%)
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Describe the Cost Leadership Strategy:
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integrated set of actions take to produce goods or services with features that are acceptable to customers at the lowest cost; mainly use with generic, high volume goods. Economies of scale and low production cost
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Describe the Differentiation Strategy:
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produce goods or services(at an acceptable cost) that customers perceive as being different in ways that are important to them, and willing to pay for it. (desirable image)
-Desirable image for an acceptable cost. |
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Describe Focus or Market/Niche Strategy:
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competing in a market when no one else is there. Higher return due low amount of competitors.
ex. particular buyer group, different geographic market. |
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What is a first mover and its advantages?
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firm that takes an initial competitive action in order to build or defend its competitive advantages or to improve its market position.
Advantages: competitive advantage in market share; chance to set the rules; reputation effect-strong brand recognition; drive cost down; lock up scarce assets; create product differentiation BEFORE competitors |
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What are the disadvantages of being a first mover?
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Get locked into old technology; free ride effect (second mouse gets the cheese), can't predict the future; costly; uncertainty of market; first in - first to fail; lack of vision as to how to use the product; not in for the long haul, just the thrill of hunt
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What is second mover and its advantages?
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firm that responds to the first mover's competitive action, through imitation.
Adv: time to develop processes and technologies that are more efficient than those used by the first mover; better strategic choices, eliminate problems of product; develop better vision for the long run |
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What are the disadvantages of the second mover?
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can't respond to first mover too fast (so they can fully analyze the first mover's actions) or too slow (so they do not give the first mover time to correct its mistakes and lock in customer loyalty)
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What is a Late mover and its adv/disadvantages?
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firm that responds to competitive action a significant amount of time after the first and second mover's actions. Disadvantages: any success achieved from the late competitive response tends to be considerably less than that achieved by first and second.
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In competitive dynamics, what are slow-cycle markets?
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those in which the firm's competitive advantages are shielded from imitation commonly for long periods of time and where imitation is costly.
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What are fast cycle markets?
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where imitation is often rapid and inexpensive. recognize the importance of speed.
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What are standard cycle markets?
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markets in which the firm's competitive advantages are moderately shielded from imitation and where imitation is moderately costly. Imitation is faster and less costly for firms here than in slow cycle, however slower and more expensive than in fast.
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What is a corporate level strategy?
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Diversify and compete businesses in different markets.Help companies select new strategic positions that are expected to increase the firm's value.
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What is conglomerate discount?
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when the company gets too big for the market (too many subsidiaries), so the shares are marked lower. Bigger company that holds smaller companies are worth more than smaller companies alone.
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What is a take over premium?
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when something is being bought higher than FMV to take over shares
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What are economies of scope?
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cost savings that the firm creates by successfully sharing some of its resources and capabilities or transferring one or more corporate-level core competencies that were developed in one of its businesses to another of its businesses.
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What are corporate level core competencies?
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complex sets of resources and capabilities that link different businesses through managerial and technological knowledge, experience, and expertise.
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What are financial economies?
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cost savings realized through improved allocations of financial resources based on investments inside or outside the firm.
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What is a merger?
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strategy through which two firms agree to integrate their operations on a relatively coequal basis.
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What is an acquisition?
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strategy through which one firm buys a controlling, or 100%, interest in another firm with the intent of making the acquired firm a subsidiary business within its portfolio.
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What is a takeover?
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special type of acquisition wherein the target firm does not solicit the acquiring firm's bid; thus, takeovers are unfriendly acquisitions.
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What are the 7 reasons for acquisitions?
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1. Increased market power
2 overcoming entry barriers 3 cost of new product development 4 lower risk compared to developing new products 5 increased diversification 6 reshaping the firm's competitive scope 7 learning and developing new capabilities |
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What are the 8 problems in Achieving success?
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1 Integration difficulties
2 Inadequate evaluation of target 3 large or extraordinary debt 4 inability to achieve synergy 5 too much diversification 6 managers overly focused on acquisitions 7 too large 8 Pay too much |
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What is restructuring?
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strategy through which a firm changes its financial structure.
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What is downsizing?
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reduction in the number of a firm's employees, and in the number of its operating units.
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What is downscoping?
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eliminating businesses that are unrelated to a firm's core businesses.More positive than downsizing because firms commonly find that downscoping causes them to refocus on their core business.
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What are motives for firms to become multinational?
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secure needed resources (key supplies of raw material),
pressure has increased for a global integration of operations; demand market is too similar, Increases in global communication media Increased Market size Return on Investment Location advantages |
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What is a multidomestic Strategy?
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international strategy in which strategic and operating decisions are decentralized to the strategic business unit in each country so as to allow that unit to tailor products to the local market.
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What is a global strategy?
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international strategy through which the firm offers standardized products across the world, with competitive strategy being dictated at home.
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What is transnational strategy?
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international strategy through which the firm seeks to achieve both global efficiency and local responsiveness.
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What are the 5 types of entry in Global Market?
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Exporting
Liscensing Strategic alliances Acquisition New wholly owned subsidiary |
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The I/O model has what four underlying assumptions?
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1. the external environment imposes pressures and constraints that determine strategies that result in above average returns.
2. firms competing in the industry are assumed to have similar strategically relevant resources and pursue similar strategy. 3. resources are assumed to be highly mobile across firms, therefore any resource differences that might develop between firms are short lived. 4. org decision makers are assumed to be rational and committed to acting in the firms best interest as shown by their profit maximizing interest behavior |
