STRA 5370 Midterm 2 Exam Study Guide
Resources - ANSWER An asset, may be observable or tradeable, that contributes to
producing a firm's outputs
Characteristics: observable, tradeable in mkt
improves value, lowers cost or both
provides an advantage if difficult to imitate or substitute for
Examples: Tacit or intangible: human capital, brand, proprietary processes
Tangible: natural resources, patent stock, distribution network, location
Capabilities - ANSWER Managerial and organizational skills that a company uses to
organize and deploy its resources- transforming inputs to outputs
Characteristics: unobservable, difficult to trade or price in the mkt
improves value, lowers cost or both
develop by people through coordinated action and independently of resources
less stable than resource
Examples: marketing, product development, or forecasting capabilities
Strategy Execution - ANSWER Building the resources and capabilities that lead to
competitive advantage. The action.
Goal: improve cost and value drivers. create isolating mechanisms.
Strategy Planning - ANSWER The process of articulating the firm's strategy and the
programs necessary to implement it. Required for execution.
Sustainable competitive advantage - ANSWER Uses resources/capabilities to create a
superior market position (value/cost drivers) and a defendable market position
(retention/prevention)
Makadok's model for acquiring resources - ANSWER Best to worst ways of being more
profitable in bidding:
1) have stronger complementarities
2) have stronger capabilities that increase the returns
3) develop a better forecast (must be kept secret)
, Capability development - ANSWER Build capabilities through activities and
organizational dimensions, and some of the resources you have
Activity Systems - ANSWER Basically the policies and decisions a firm makes
Interconnected components that contribute to mkt position: policies, programs &
decisions, value chain activities, product characteristics, key resources, firm's
structure & culture.
These link to the capabilities
The system gives a framework to analyze execution of a strategy (complementarity,
consistency, preventing imitation, etc)
Organizational dimensions of execution - ANSWER complementarity:
resources/capabilities produce more effective outcome together than independently
consistency: R&C's align with the goals (high consistency firms have a hard time
evolving, changing mkt position)
control: financial (allocation of finances) & operational (material and people allocation
and performance measurement)
coordination: how projects will be executed across units (teams, joint planning,
standardized procedures)
compensation/incentive: compensated to execute strategy
org culture/learning: What is valued and how they problem solve
Functional Org structure - ANSWER Activities are organized by function (mkting, R&D,
etc.) Do one thing, do it well, generic
Advantages: Lower costs, higher value, strong growth
Disadvantages: potential conflicts between local and corporate mngmnt,
inconsistencies in strategies
Customer-based org structure - ANSWER Activities are organized by well-defined
customer segments. Think you can offer a better product for a lower price
Advantages: benefits from a unique understanding of customer preferences and mkting
req'ts
Disadvantages: knowledge sharing and coordination is difficult, competition between
units can lead to S-T thinking
Geographic org structure - ANSWER Activities are organized by geography
Advantages: May increase value, lower cost or both stemming from unique local
competitors, suppliers, customer preferences
Resources - ANSWER An asset, may be observable or tradeable, that contributes to
producing a firm's outputs
Characteristics: observable, tradeable in mkt
improves value, lowers cost or both
provides an advantage if difficult to imitate or substitute for
Examples: Tacit or intangible: human capital, brand, proprietary processes
Tangible: natural resources, patent stock, distribution network, location
Capabilities - ANSWER Managerial and organizational skills that a company uses to
organize and deploy its resources- transforming inputs to outputs
Characteristics: unobservable, difficult to trade or price in the mkt
improves value, lowers cost or both
develop by people through coordinated action and independently of resources
less stable than resource
Examples: marketing, product development, or forecasting capabilities
Strategy Execution - ANSWER Building the resources and capabilities that lead to
competitive advantage. The action.
Goal: improve cost and value drivers. create isolating mechanisms.
Strategy Planning - ANSWER The process of articulating the firm's strategy and the
programs necessary to implement it. Required for execution.
Sustainable competitive advantage - ANSWER Uses resources/capabilities to create a
superior market position (value/cost drivers) and a defendable market position
(retention/prevention)
Makadok's model for acquiring resources - ANSWER Best to worst ways of being more
profitable in bidding:
1) have stronger complementarities
2) have stronger capabilities that increase the returns
3) develop a better forecast (must be kept secret)
, Capability development - ANSWER Build capabilities through activities and
organizational dimensions, and some of the resources you have
Activity Systems - ANSWER Basically the policies and decisions a firm makes
Interconnected components that contribute to mkt position: policies, programs &
decisions, value chain activities, product characteristics, key resources, firm's
structure & culture.
These link to the capabilities
The system gives a framework to analyze execution of a strategy (complementarity,
consistency, preventing imitation, etc)
Organizational dimensions of execution - ANSWER complementarity:
resources/capabilities produce more effective outcome together than independently
consistency: R&C's align with the goals (high consistency firms have a hard time
evolving, changing mkt position)
control: financial (allocation of finances) & operational (material and people allocation
and performance measurement)
coordination: how projects will be executed across units (teams, joint planning,
standardized procedures)
compensation/incentive: compensated to execute strategy
org culture/learning: What is valued and how they problem solve
Functional Org structure - ANSWER Activities are organized by function (mkting, R&D,
etc.) Do one thing, do it well, generic
Advantages: Lower costs, higher value, strong growth
Disadvantages: potential conflicts between local and corporate mngmnt,
inconsistencies in strategies
Customer-based org structure - ANSWER Activities are organized by well-defined
customer segments. Think you can offer a better product for a lower price
Advantages: benefits from a unique understanding of customer preferences and mkting
req'ts
Disadvantages: knowledge sharing and coordination is difficult, competition between
units can lead to S-T thinking
Geographic org structure - ANSWER Activities are organized by geography
Advantages: May increase value, lower cost or both stemming from unique local
competitors, suppliers, customer preferences
