MGT 400 Exam #1 Advanced Answer.

Competitive Advantage Example: Google has a competitive advantage over Microsoft, Yahoo, and others competing in the online search and advertising business. - correct answer A firm that formulates and implements a strategy that leads to superior performance relative to other competitors in the same industry average Sustainable Competitive Advantage Example: Google has a sustainable competitive advantage because it has outperformed its rivals consistently over time. Past performance is no guarantee of future performance. Google's competitors are working hard to neutralize Google's competitive advantage. - correct answer A firm that is able to outperform its competitors or the industry average over a prolonged period of time Competitive Disadvantage - correct answer A firm underperforms its rivals or the industry average. Competitive Parity - correct answer Two or more firms perform at the same level. Strategy The firm that possesses competitive advantage provides superior value to customers at a competitive price or acceptable value at a lower price. The important point here is that strategy is about creating superior value, while containing the cost to create it. - correct answer Describes the goal-directed actions a firm intends to take in its quest to gain and sustain competitive advantage. Co-Opetition - correct answer When competitors cooperate with one another to achieve strategic objectives. Strategy as a theory of how to compete In the competitive world, managers yet their theories in the marketplace. Ex: Apple Netwon flops, iPhone a huge success, Sam Walton's assumptions about low prices and high volume, and auto industry differences between U.S. and Japan. - correct answer Provides managers with a roadmap to navigate the competitive territory. The more accurate the map, the better strategic decisions managers can make. Firm Effects - correct answer The results of managers' actions to influence firm performance Industry Effects - correct answer The results attributed to the choice of industry in which to compete Firm effects - correct answer What is more important? Firm effects or industry effects? 30-45% - correct answer Superior firm performance is explained by ____% of firm effects. 20% - correct answer Superior firm performance is explained by ____% of industry effects. 35-50% - correct answer Superior firm performance is explained by ____% of other effects. Business Model - correct answer Organizational plan that details the firm's competitive tactics and initiatives; in short, how the firm intends to make money. Razor-Razor-Blade business model - correct answer What model is the idea to give away or sell for a small fee the product and make money on the replacement part needed. Subscription Model - correct answer What model recoups the subsidy provided for a smartphone by rehiring customers to sign up for lengthy service plans. Strategic Management Process - correct answer Describes the method by which managers conceive of and implement a strategy that can lead to sustainable competitive advantage. 1. Strategic Planning 2. Scenario Planning 3. Strategy as Planned Emergence - correct answer What does the strategic management process consist of? - what is our vision? - what is our mission? - what are our values? - correct answer What three things should managers ask themselves to begin the strategic management process? Vision One day, all children in this nation will have the opportunity to attain an excellent education - correct answer Statement about what an organization ultimately wants to accomplish. Mission Eliminate educational inequality by enlisting our nation's most promising future leaders in the effort - correct answer Describes what an organization actually does - the products and services it plans to provide and the markets in which it will compete Values - Relentless pursuit of results - Sense of possibility - Disciplined thought - Respect and humility - Integrity - correct answer Ethical standards and norms that govern the behavior of individuals within a firm or organization (and within society). Strategic (long-range) planning - correct answer A rational, top-down process through which management can program future success; typically concentrates strategic intelligence and decision-making responsibilities in the office of the CEO.