WPC 480 FINAL EXAM QUESTIONS WITH 100% CORRECT ANSWERS ALREADY GRADED A+

What is strategy? An integrated set of goal-directed actions a firm takes to gain and sustain competitive advantage. What are the 2 business analysis? Internal and External. What are the 3 business strategies? 1) Cost, 2) Differentiation, 3) Innovation. What is competitive advantage? Superior performance relative to other competitors in the same industry or the industry average. How do you assess competitive advantage? Compare firm performance to a benchmark. What is sustainable competitive advantage? Outperforming competitors or the industry average over a prolonged period of time. What is competitive disadvantage? Underperformance relative to other competitors in the same industry or the industry average. What is competitive parity? A performance of two or more firms at the same level. What is the key to successful strategy and gain competitive advantages? Combine activities for a unique position in an industry. Where does competitive advantage come from? 1) Performing different activities, or 2) Performing the same activities differently than rivals. What does strategic positioning require? Trade-offs. What is the fist step of a strategic goal to gain and sustain competitive advantage? Define a firm's vision, mission, and values. What is a firm's vision? What do we want to accomplish? What is a firm's mission? How do we accomplish our goals? What is a firm's values? What commitments do we make? What guardrails do we put in place? How can we act legally and ethically in pursuit of the vision and mission? What are the key aspects of an effective vision? 1) Capture an organization's aspiration . 2) Identifies what it ultimately wants to accomplish. 3) Motivates employees to aim for a target. 4) Leaves room for contributions. What is a product-oriented vision statement? Defines a business in terms of a good or service provided. What is a customer-oriented vision statement? Defines a business in terms of providing solutions to customer needs. What things can a firm do to vision statements and firm performance to be positively associated? 1) The vision is customer-oriented, 2) Internal stakeholders help define the vision, 3) Organizational structures align with the vision statement. What does a firm's mission statement do? 1) Describes how to accomplish goals and 2) Describes what the organization does (the products and services it provides and the markets in which it competes). What is the difference between vision and mission statements? Vision statements: WHAT an organization wants to accomplish (ie: to). Mission statements: HOW the vision will be accomplished (ie: by). What does establishing a firm's value do? Guides an organization to achieve its vision and fulfill its mission. Who are the stakeholders? Organizations, groups, individuals that can affect or are affected by a firm's actions and have a vested claim or interest in the performance and continued survival of the firm. What is a firm's stakeholder strategy? 1) Managing stakeholders in order to gain and sustain competitive advantage, 2) Benefits of effective stakeholder strategy to firm performance. What are the layers of the corporate social responsibility pyramid (from the top-down)? 1) Philanthropic responsibilities, 2) Ethical responsibilities, 3) Legal responsibilities, 4) Economic Responsibilities. What is strategic leadership? 1) Successful use of power and influence, 2) Directing the activities of others, 3) Pursuing an organization's goals, 4) Enabling organizational competitive advantage, 5) Upper Echelon's Theory (organizational outcomes reflect the values and attributes of the top management team). What is the AFI Framework for Top-Down strategic planning? Analysis, Formulation, Implementation What are the 3 types of strategies? 1) Intended strategy, 2) Emergent strategy, 3) Realized strategy. What is intended strategy? The outcome of a rational and structured top-down strategic plan. What is emergent strategy? Any unplanned strategic initiative, bubbles up from the bottom of the organization, can influence and shape a firm's overall strategy. (ie: Starbucks manager creating the frappuccino) What is realized strategy? Combination of intended and emergent strategy. What are the 2 EXTERNAL business analysis models? 1) The PESTEL Framework, 2) The 5 Forces Model (Porter's). Why do we want to use the PESTEL Framework in understanding the external environment? It helps us identify the threats and opportunities that a firm faces in its industry. What does PESTEL stand for? Political factors, Economic factors, Sociocultural factors, Technological factors, Ecological factors, Legal factors. What are the Political factors? Processes and actions of government bodies (lobbying, public relations, contributions, litigations). What are the Economic factors? Macro economic climates (growth rates, employment, interest rates, price stability, currency exchange rate). What are the Sociocultural factors? Demographic trends (cultures, norms, and values). What are the Technological factors? Innovations in process and product technology. What are the Ecological factors? Involve environmental issues (natural environment, global warming, sustainable economic growth). What are the Legal factors? Official outcomes of political processes ((de)regulations, court decisions, laws). What is an industry? Group of incumbent (current) companies with relatively the same set of suppliers and buyers and tend to offer similar products and services. What is the purpose of the Industry Analysis method? 1) To identify an industry's profit potential, and 2) Derive implications for a firm's strategic position. What does the 5 forces model help us determine? The overall attractiveness and the profit potential of an industry and shape a firm's competitive strategy. What are the 5 Forces? 1) Threat of Entry, 2) Threat of Substitutes, 3) Power of Suppliers, 4) Power of Buyers, 5) Rivalry among existing competitors. What are the 3 Competition and Rivalry forces? 1) Threat of Entry, 2) Rivalry among existing competitors, 3) Threat of Substitutes. What are the 3 Power and Dependence forces? 1) Power of Suppliers, 2) Rivalry among existing competitors, 3) Power of Buyers. What is Treat of Entry? Entry barriers - economies of scale, network effects, switching costs, capital requirements, advantage independent of scale, government regulation, credible threat of retaliation. What is Threat of Substitutes? 1) Substitutes offers an attractive price-performance trade-off, 2) Buyer's switching cost to the substitute. What is Power of Suppliers? 1) Concentrated (or limited) suppliers, 2) Suppliers dependence on the focal industry, 3) Incumbent firms supplier switching costs, 4) Suppliers offering differentiated products (no supplier substitutes), 5)Likelihood of forward integration. What is Power of Buyers? 1) Concentrated or limited number of buyers, 2) Standardization of products sold to buyers, 3) Buyers face low or no switching costs, 4) Likelihood of backward integration, 5) Buyers price sensitivity and pressure to achieve higher product quality. What is Rivalry among Incumbents? Intra-Industry Rivalry - 1) Competitive industry structure, 2) Industry growth, 3) Strategic commitments, 4) Exit barriers. What are the 4 Intra-Industry Rivalry Competitive industry structures? 1) Perfect Competition, 2) Monopolistic Competition, 3) Oligopoly, 4) Monopoly. What is Perfect Competition? Fragmented, low profit potential, many small firms, firms are price takers, commodity product, low entry barriers. What is Monopolistic Competition? Slightly fragmented, medium-low profit potential, many firms, some pricing power, differentiated product, medium entry barriers. What is Oligopoly? Slightly consolidated, medium-high profit potential, few (large) firms, some pricing power, differentiated product, high entry barriers. What is Monopoly? Consolidated, high profit potential, one firm, considerable pricing power, unique product, very high entry barriers.