ISM 4011 EXAM 1 VERIFIED STUDY GUIDE
Porter's Five Forces - Answers - to identify how much profit potential exists in an
industry. includes threat of entry, threat of substitute, supplier power, buyer power, and
competitive rivalry
Competitive Strategy - Answers - methods through which a firm deals with its
competitive environment
4 Types of Competitive Strategy - Answers - cost, differentiation, focus strategy, and
focus cost
Cost Strategy - Answers - a type of competitive strategy where companies offer
products or services with acceptable quality at a low price
Differentiation Strategy - Answers - a type of competitive strategy where companies
attempt to convince customers to pay a premium price by providing unique or desirable
features; competition based on uniqueness rather than price
Focus Strategy - Answers - a type of competitive strategy where companies target a
relatively small segment of potential customers
Focus Cost - Answers - a firm following this competitive strategy doesn't necessarily
charge the lowest price in the industry, but instead charges low prices relative to other
firms that compete in the target market
Best Cost Strategy - Answers - a business-level strategy followed by firms that charge
relatively low prices and offers substantial differentiation
Value Chain - Answers - the set of activities through which a product or service is
created and delivered to customers
Primary Activities - Answers - part of the value chain that relates directly to creation,
sale, maintenance, and support of a product or service. i.e., inbound logistics,
operations, outbound logistics, marketing & sales, and serivce.
Support Activities - Answers - part of the value chain that provides support for the
primary functions. includes the Input > Process > Output, infrastructure for the firm
(accounting, finance, management), HR, tech development (R&D), and procurement.
Value Created - Answers - cost of creating that value = margin
Best Value Chains - Answers - don't fixate on a single metric but instead, relative to
peers, focus on the total value added to the customer.
, Linkages - Answers - In Porter's model of business activities, interactions across value
chain activities.
7 Sources of Waste in Manufacturing - Answers - overproduction, waiting, transporting,
inappropriate processing, unnecessary inventory, unnecessary/excess motion, and
defects.
Overproduction - Answers - manufacture an item before it is actually required
Waiting - Answers - whenever goods are not moving or being processed
Margin - Answers - the difference between the value that an activity generates and the
cost of the activity
Non-Value Added Activities - Answers - it adds cost but no value to customers you want
to minimize as much as possible
Resource Based Theory - Answers - you want not just a competitive advantage, but a
sustained competitive advantage that will last over time
4 Characteristics of Strategic Resources - Answers - valuable, rare, difficult to imitate,
and non-substitutable
Valuable - Answers - a strategic resource characteristic that aids in improving
effectiveness and efficiency
Rare - Answers - a strategic resource characteristic; held by few or no other
competitors.
Difficult to Imitate - Answers - a strategic resource characteristic; protected in some
manner, perhaps legally by patents, trademarks, etc. might be so technologically
advanced it would take significant time or cost to copy.
Non-substitutable - Answers - other firms cannot duplicate the strategy of a particular
firm
Competitive Advantage and IS - Answers - an organization should be using IS for
competitive advantage
Product Implementations - Answers - - create new product or service
- enhance products or services
- differentiate products or services
Process Implementations - Answers - - lock in customers and buyers
- lock in suppliers
Porter's Five Forces - Answers - to identify how much profit potential exists in an
industry. includes threat of entry, threat of substitute, supplier power, buyer power, and
competitive rivalry
Competitive Strategy - Answers - methods through which a firm deals with its
competitive environment
4 Types of Competitive Strategy - Answers - cost, differentiation, focus strategy, and
focus cost
Cost Strategy - Answers - a type of competitive strategy where companies offer
products or services with acceptable quality at a low price
Differentiation Strategy - Answers - a type of competitive strategy where companies
attempt to convince customers to pay a premium price by providing unique or desirable
features; competition based on uniqueness rather than price
Focus Strategy - Answers - a type of competitive strategy where companies target a
relatively small segment of potential customers
Focus Cost - Answers - a firm following this competitive strategy doesn't necessarily
charge the lowest price in the industry, but instead charges low prices relative to other
firms that compete in the target market
Best Cost Strategy - Answers - a business-level strategy followed by firms that charge
relatively low prices and offers substantial differentiation
Value Chain - Answers - the set of activities through which a product or service is
created and delivered to customers
Primary Activities - Answers - part of the value chain that relates directly to creation,
sale, maintenance, and support of a product or service. i.e., inbound logistics,
operations, outbound logistics, marketing & sales, and serivce.
Support Activities - Answers - part of the value chain that provides support for the
primary functions. includes the Input > Process > Output, infrastructure for the firm
(accounting, finance, management), HR, tech development (R&D), and procurement.
Value Created - Answers - cost of creating that value = margin
Best Value Chains - Answers - don't fixate on a single metric but instead, relative to
peers, focus on the total value added to the customer.
, Linkages - Answers - In Porter's model of business activities, interactions across value
chain activities.
7 Sources of Waste in Manufacturing - Answers - overproduction, waiting, transporting,
inappropriate processing, unnecessary inventory, unnecessary/excess motion, and
defects.
Overproduction - Answers - manufacture an item before it is actually required
Waiting - Answers - whenever goods are not moving or being processed
Margin - Answers - the difference between the value that an activity generates and the
cost of the activity
Non-Value Added Activities - Answers - it adds cost but no value to customers you want
to minimize as much as possible
Resource Based Theory - Answers - you want not just a competitive advantage, but a
sustained competitive advantage that will last over time
4 Characteristics of Strategic Resources - Answers - valuable, rare, difficult to imitate,
and non-substitutable
Valuable - Answers - a strategic resource characteristic that aids in improving
effectiveness and efficiency
Rare - Answers - a strategic resource characteristic; held by few or no other
competitors.
Difficult to Imitate - Answers - a strategic resource characteristic; protected in some
manner, perhaps legally by patents, trademarks, etc. might be so technologically
advanced it would take significant time or cost to copy.
Non-substitutable - Answers - other firms cannot duplicate the strategy of a particular
firm
Competitive Advantage and IS - Answers - an organization should be using IS for
competitive advantage
Product Implementations - Answers - - create new product or service
- enhance products or services
- differentiate products or services
Process Implementations - Answers - - lock in customers and buyers
- lock in suppliers
