Strategic Management Test 2

Front 1

What do you need to know to develop a business level strategy?

Back 1

Who(market segment), what(goods/services), how (core competencies/capabilities).

Front 2

What are business-level strategies concerned with?

Back 2

Effectively managing relationships with customers. The reach, richness, and affiliation with customers. Who, what and how to serve the customer.

Front 3

What are activity maps used for?

Back 3

To determine how business activities are integrated.

Front 4

What is cost leadership strategy?

Back 4

Goods or services produced at the lowest cost.

Front 5

What is the differentiation strategy?

Back 5

Goods or services produced to give a perceived benefit that is higher than competing products.

Front 6

What is the integrated cost leadership/differentiation strategy? What makes this strategy so challenging?

Back 6

Low cost and differentiation; may be difficult because firms can wind up in the middle.

Front 7

What business level should i choose when my firms resources can create different products than other firms?

Back 7

Differentiation strategy

Front 8

Define corporate-level strategy.

Back 8

What firms we should put in our portfolio of businesses to maximize profit and gain a competitive advantage

Front 9

single-business strategy

Back 9

95% or more of firm revenue from core business

Front 10

dominant business diversification

Back 10

70-90% of firm revenue from a core business

Front 11

related constrained diversification

Back 11

less than 70% from a related business with operational relatedness (link between resources)

Front 12

related linked diversification

Back 12

less than 70% from a related business with corporate relatedness (knowledge and competencies shared)

Front 13

unrelated diversification

Back 13

high level of diversification; no sharing of assets between businesses

Front 14

conglomerate

Back 14

a firm with several unrelated businesses

Front 15

Name and define the three reasons to diversify

Back 15

economies of scope (transfer of related resources across businesses); Value creation(operational and corporate relatedness); Value-neutral/negative(to increase firm size)

Front 16

Name and define the types of diversification

Back 16

related diversification (synergy and economies of scope to create value), unrelated strategy (create value through better allocation of firm financial assets)

Front 17

value-creating reasons to diversify

Back 17

economies of scope, market power, financial economies

Front 18

define multi point competition

Back 18

When two or more diversified firms compete in the same product markets or geographical area

Front 19

Is market power a benefit of related linked or related constrained diversification

Back 19

both

Front 20

What happens to an acquiring firm's share price when in begins the acquisition? What happens to the stock of the firm being acquired?

Back 20

acquiring firm - stock goes down; acquired firm - stock goes up

Front 21

What are the reasons a firm should acquire another firm?

Back 21

Increased market power, overcome entry barriers in other markets, lower production costs and time to market, lower development risk, increase diversification, change the firms competitive scope to reduce competitive rivalry, learn new capabilities

Front 22

Name and define the four types of acquisitions.

Back 22

Horizontal(competitor), Vertical(supply chain), Related(related firm), Cross-border(international)

Front 23

Name and define the four types of restructuring

Back 23

Restructuring(change firms structure), Downsizing(decrease firm size), Down scoping(divest in some businesses), Leveraged buyouts(buy with private equity)

Front 24

What helps in achieving a successful acquisition?

Back 24

firms have complementary resources, friendly acquisitions, strong due-diligence before purchase, financial slack and low debt, innovation/flexibility/adaptability

Front 25

Define problems associated with acquisitions.

Back 25

integration difficulties, inability to achieve synergy, poor target evaluation, large debt used to finance acquisitions, over diversification(over focus on financial controls, over focus on acquisitions(management attention diverted), firms become large (firm less innovative, too bureaucratic)

Front 26

Define an international strategy

Back 26

When a firm sells good outside of the domestic market

Front 27

Motives for going international

Back 27

Increased market size, improve ROI for goods/services with high R&D and other fixed costs, Economies of scale and learning, Location advantages

Front 28

Local responsiveness

Back 28

How responsive a firm is to its local environment

Front 29

R&D and international strategy

Back 29

Market size increase can compensate for R&D costs, host governments and R&D reqs, gain new knowledge from around the world

Front 30

Why is a large domestic market important for international growth?

Back 30

Home country resources allow the firm to establish operations in foreign markets.

Front 31

International business level strategy

Back 31

international business level strategy is contingent on factors in the home country; factors of production, demand conditions, related and supporting industries, firm strategy, structure, rivarly

Front 32

International corporate level strategy

Back 32

multi-domestic, global, transnational

Front 33

multi-domestic international corporate level strategy

Back 33

goal is for high local responsiveness

Front 34

global international corporate level strategy

Back 34

goal is for a standardized strategy across borders

Front 35

transnational international corporate level strategy

Back 35

high local responsiveness and standardized strategy (offers conflicting goals)

Front 36

define environmental trends like liability of foreignness and regionalization

Back 36

liability of foreigness - issues with being a foreign company; regionalization - choosing specific regions instead of the entire world(may be more profitable than the former option)

Front 37

Methods of entry for International Strategy

Back 37

Exporting, Licensing, Strategic alliances, acquisitions, new Wholly owned subsidary

Front 38

What is the difference between greenfield and brownfield ventures?

Back 38

Greenfield = New Wholly owned subsidary; Brownfield = Acquisition

Front 39

Competitive rivarly affects which strategy the most: business or corporate?

Back 39

business because competitive actions or rivals are a building block of business level strategy

Front 40

Multi market competition and its effects on firm actions

Back 40

When competitors share multiple markets, this tends to reduce rivalry since firms do not want to initiate attacks due to the likelihood of a negative response

Front 41

Market commonality

Back 41

the number and importance of markets shared by two firms

Front 42

resource similarity

Back 42

how close tangible and intangible resources of competing firms are to one another

Front 43

name and describe the types of competitive actions

Back 43

awareness (knowledge of competitors presence), motivation (desire for competing firm to attack), ability (capabilities of a competing firm for attack)

Front 44

response to awareness action

Back 44

increasing awareness leads to decrease in the likelihood of attack

Front 45

response to motivation action

Back 45

if the competing firm is motivated, attacks may decrease

Front 46

response to ability action

Back 46

increasing similarity increases the likelihood of response

Front 47

Define quality

Back 47

When a firm meets or needs a customers expectations

Front 48

Define slow, standard, and fast-cycle markets

Back 48

Slow cycle markets allows competitive advantages to last a long time since imitation is costly. Fast cycle markets are the opposite of slow cycle, and standard cycle markets are in the middle of the other two