BADM 449 - Exam 2 Questions with
Correct Answers
Cost Leadership: Risks (3) - ANSWER-- STANDARDIZATION can increase risk of
obscolscene and decrease ability to adapt to technological shifts in market or
chaging times
- INFERIOR QUALITY
- Social, political, economic risk of outsourcing
So, you need to understand the definition of "integration strategy" and the conditions
under which it results in "stuck in the middle" (Chapter 6.5) - ANSWER-
Integration Strategy:
Value Innovation and 4 Action Framework? - ANSWER-Succesfully combines
differentiation and cost leadership using value innovation to reconcile tradeoffs
Value Innovation: Lower costs while increasing perceived consumer benefits
Lower Costs:
1. ELIMINATE (factors to be eliminated)
2. REDUCE (which factor should be reduced below industry std)
Increase Consumer benefits:
3. RAISE factors above industry standard
4. CREATE new factors
When can the integration strategy get stuck in the middle? - ANSWER-When the
value curve starts to zig zag all over the strategy canvas
leads to inferior performance and competitive disadvantage
Basic Principles of Strategy:
(1) Value Based Strategy - ANSWER-- The amount of value that a firm can claim
cannot exceed its ADDED value (unrestricted bargaining)
- Key to a firm achieving a positive added value is the existence of a favorable
asymmetry between firm and competition
Balance:
Buyer - WTP, Price
Supplier - Cost, Opportunity Cost
,Harnischfeger Example - ANSWER-Designed a portal crane which was a huge
invention, meant to disrupt industry and make huge profits and gains but didn't end
up happening
Couldn't reach full potential because there was an IMITATOR/ COMPETITOR
WTP: Firm high, Competition low
Opportunity Cost: Firm low, Competition high
(2) Four Strategies - ANSWER-Four "value based" strategies to enjoying a favorable
asymmetry between firm and competitiors in terms of buyer WTP and supplier
opportunity cost
(3) Strategic Fit (match between...) - ANSWER-Business Strategy should be
designed to match:
- COMPETITIVE FORCES in industry
- Firm's RESOURCES and CAPABILITIES
(4) Basic Tradeoffs (between two things) - ANSWER-Cost - Quality
High perceived quality - High Cost,
Low perceived quality -- low cost
(5) - ANSWER-
Testing the Quality of Strategy - ANSWER-1. Does your strategy EXPLOT your key
RESOURCES?
2. Does your strategy fit with current INDUSTRY CONDITIONS
3. Will your differentiatiors be SUSTAINABLE (not easy to imitate)
4. Are the elements of your strategy CONSISTENT and aligned with your
STRATEGIC POSITION
5. Can your strategy be IMPLEMENTED?
Chapter 7: Innovation and Strategy - ANSWER-
Innovation Process (4 I's) - ANSWER-Idea --> Invention --> Innovation --> Imitation
Industry Evolution - ANSWER-All industries evolve and mature
All industry's life cycle is the pattern of evolution it follows from inception through to
its current state and possible future states
Industry Life Cycle Sequence (5) - ANSWER-1. Introduction
2. Growth
3. Shakeout
, 4. Maturity
5. Decline
Introduction
1) Core Competency
2) Type and Level of Innovation
3) Market Growth
4) Market Size
5) Price
6)) Number of Competitors
7) Mode of Competition
8) Type of Buyers
9) Business Level Strategy
10) Strategic Objective - ANSWER-1) Core Competency - R&D, some marketing
2) Type and Level of Innovation - PRODUCT innovation at a maximum, process
innovation minimum
3) Market Growth - SLOW
4) Market Size - SMALL
5) Price - HIGH
6) Number of Competitors - FEW (if any)
7) Mode of Competition - NON PRICE competition
8) Type of Buyers - technology enthusiasts
9) Business Level Strategy - DIFFERENTIATION
10) Strategic Objective - achieving market ACCEPTANCE
Growth
1) Core Competency
2) Type and Level of Innovation
3) Market Growth
4) Market Size
5) Price
6)) Number of Competitors
7) Mode of Competition
8) Type of Buyers
9) Business Level Strategy
10) Strategic Objective
* market growth accelerates - ANSWER-1) Core Competency
R&D, some manufacturing, marketing
2) Type and Level of Innovation
Correct Answers
Cost Leadership: Risks (3) - ANSWER-- STANDARDIZATION can increase risk of
obscolscene and decrease ability to adapt to technological shifts in market or
chaging times
- INFERIOR QUALITY
- Social, political, economic risk of outsourcing
So, you need to understand the definition of "integration strategy" and the conditions
under which it results in "stuck in the middle" (Chapter 6.5) - ANSWER-
Integration Strategy:
Value Innovation and 4 Action Framework? - ANSWER-Succesfully combines
differentiation and cost leadership using value innovation to reconcile tradeoffs
Value Innovation: Lower costs while increasing perceived consumer benefits
Lower Costs:
1. ELIMINATE (factors to be eliminated)
2. REDUCE (which factor should be reduced below industry std)
Increase Consumer benefits:
3. RAISE factors above industry standard
4. CREATE new factors
When can the integration strategy get stuck in the middle? - ANSWER-When the
value curve starts to zig zag all over the strategy canvas
leads to inferior performance and competitive disadvantage
Basic Principles of Strategy:
(1) Value Based Strategy - ANSWER-- The amount of value that a firm can claim
cannot exceed its ADDED value (unrestricted bargaining)
- Key to a firm achieving a positive added value is the existence of a favorable
asymmetry between firm and competition
Balance:
Buyer - WTP, Price
Supplier - Cost, Opportunity Cost
,Harnischfeger Example - ANSWER-Designed a portal crane which was a huge
invention, meant to disrupt industry and make huge profits and gains but didn't end
up happening
Couldn't reach full potential because there was an IMITATOR/ COMPETITOR
WTP: Firm high, Competition low
Opportunity Cost: Firm low, Competition high
(2) Four Strategies - ANSWER-Four "value based" strategies to enjoying a favorable
asymmetry between firm and competitiors in terms of buyer WTP and supplier
opportunity cost
(3) Strategic Fit (match between...) - ANSWER-Business Strategy should be
designed to match:
- COMPETITIVE FORCES in industry
- Firm's RESOURCES and CAPABILITIES
(4) Basic Tradeoffs (between two things) - ANSWER-Cost - Quality
High perceived quality - High Cost,
Low perceived quality -- low cost
(5) - ANSWER-
Testing the Quality of Strategy - ANSWER-1. Does your strategy EXPLOT your key
RESOURCES?
2. Does your strategy fit with current INDUSTRY CONDITIONS
3. Will your differentiatiors be SUSTAINABLE (not easy to imitate)
4. Are the elements of your strategy CONSISTENT and aligned with your
STRATEGIC POSITION
5. Can your strategy be IMPLEMENTED?
Chapter 7: Innovation and Strategy - ANSWER-
Innovation Process (4 I's) - ANSWER-Idea --> Invention --> Innovation --> Imitation
Industry Evolution - ANSWER-All industries evolve and mature
All industry's life cycle is the pattern of evolution it follows from inception through to
its current state and possible future states
Industry Life Cycle Sequence (5) - ANSWER-1. Introduction
2. Growth
3. Shakeout
, 4. Maturity
5. Decline
Introduction
1) Core Competency
2) Type and Level of Innovation
3) Market Growth
4) Market Size
5) Price
6)) Number of Competitors
7) Mode of Competition
8) Type of Buyers
9) Business Level Strategy
10) Strategic Objective - ANSWER-1) Core Competency - R&D, some marketing
2) Type and Level of Innovation - PRODUCT innovation at a maximum, process
innovation minimum
3) Market Growth - SLOW
4) Market Size - SMALL
5) Price - HIGH
6) Number of Competitors - FEW (if any)
7) Mode of Competition - NON PRICE competition
8) Type of Buyers - technology enthusiasts
9) Business Level Strategy - DIFFERENTIATION
10) Strategic Objective - achieving market ACCEPTANCE
Growth
1) Core Competency
2) Type and Level of Innovation
3) Market Growth
4) Market Size
5) Price
6)) Number of Competitors
7) Mode of Competition
8) Type of Buyers
9) Business Level Strategy
10) Strategic Objective
* market growth accelerates - ANSWER-1) Core Competency
R&D, some manufacturing, marketing
2) Type and Level of Innovation
