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27 Cards in this Set

  • Front
  • Back
3 things that successful strategy requires
1. attractive market opportunity (external)
2. resources/capabilities to serve that market better than competitors can (internal)
3. execution/implementation
4 predatory acts to deter entry
1. limit pricing
2. predatory pricing
3. capacity expansion
4. wars of attrition
3 structural entry barriers
1. low demand
2. high capital requirements
3. limited access to resources
definitiion of prison's dilemma
situation where incentives of the individual and incentives of the group are in conflict
2 requirements of prisoner's dilemma game
1. all players have a dominant strategy
2. nash equilibrium is pareto inefficient
assumes price competition
assumes quantity competition
Porter's 5 Forces
-Threat of New Entrants
-Threat of Subsitutes
-Bargaining Power of Suppliers
-Bargaining Power of Buyers
-Rivalry Among Current Competitors
structural entry barriers
inherent natural advantages that incumbents have simply by virtue of incumbency (don't require any ongoing action by incumbents)
strategic entry barriers
active entry-deterring behavior by imcumbents
threat of new entrants is highest when
-Economies of scale are low
-Undifferentiated product
-Capital requirements are low
-low Switching Costs
-incumbents don't Control Supplies
-incumbents lack special Technology
threat of substitutes is highest when
-substitute is Superior (or catching up) in its price/performance relationship
-customers are highly Price Sensitive
power of suppliers is highest when
-suppliers are Highly Concentrated
-Substitutes for their products are unavailable
-suppliers can Forward integrate
-focal industry is Small Percent of suppliers' business
-suppliers products are highly Differentiated
-high Switching Costs between suppliers
power of buyers is highest when
-buyers are Concentrated and buy in high volumes
-Undifferentiated product
-buyers can Backward integrate
-buyers know Cost Structure
-product represents Large Percent of buyers' total costs
-product has little Impact of quality of buyer's final product
3 limitations of 5-force model
1. views parties only as threats, not allies
2. tells nothing about specific firms, differences in profitability within industry
3. provides no guidance on relative weights of various factors
strategy of resource-based view
discovering tangible and intangible resources and combining them to build capabilities to serve market needs
3 qualities of valuable resources
1. demand
2. scarcity
3. appropriation
3 components of demand (for RBV)
1. does is satisfy a real market need?
2. competitive superiority
3. synergy (fits effectively with firms other resources)
4 components of scarcity (for RBV)
1. rarity (can it be bought in market?)
2. imitability (hard for others to copy?)
3. substitutability (can it be trumped by other resources)
4. durability
5 barriers to imitation
1. hide superior performance
2. deterrence (threat to punish imitators)
3. preemption (lock up all profitable uses)
4. causal ambiguity (multiple resources to disguise source of advantage)
5. immobility (capacity embedded in firm's culture)
2 components of appropriation (for RBV)
1. mobility (how difficult to move b/w firms?)
2. resources often don't work in isolation - who owns other complimentary assets?
superior performance requires both
1. attractive market opportunity
2. capabilities needed to best serve that market
4 strateges for creating a revolutionary business model
1. challenge orthodoxy with alternative methods
2. view markets differently
3. invert market attractiveness
4. create new market space formula
when is diversification good?
when it creates economies of scale or synergies
performance ranking of different levels of business differentation
#1 related diversified
#2 single business
#3 urelated diversified
when is vertical integration good?
if it gives control over decisions critical to your competitive advantage
5 organizational structures
1. functional
2. geographic
3. decentralized line-of-business
4. strategic business units
5. matrix