MGT 100 EXAM 2 QUESTIONS WITH VERIFIED
ANSWERS RECENTLY UPDATED
what is strategy?
set of guiding principles that generates a desired pattern of decision making.
How people make decisions and allocate resources
what are the two fundamental strategies firms can pursue?
cost leadership and product leadership
what is cost leadership strategy?
seeks to create the same or similar value for customers at a lower cost compared
to competitors
what is product leadership strategy?
providing superior value by offering a continuous stream of leading-edge
products and services; open to new ideas and solutions and bring them quickly
to the market
what factors have made apple successful?
-marketing abilities
-can pursue a product leadership strategy in an industry dominated by cost
leadership strategies
-brand dependability/loyalty (difficult to switch from apple)... everything is
connected
what are the three main apple eras that demonstrate the importance of pursuing
one of the fundamental strategies?
1) sculley era
2) spindlier/amerlio era
3) Steve Jobs era
describe apple during the sculley era (1985-1993)
,-computers
-15 different types (PL)
-most profitable
-PC market increase; microsoft
-IBM (CL)
-licensing
-market share went down
-profit margin went down
describe apple during the spindler/amerlio era (1993-1997)
-license 3rd parties
-cut costs
-international expansion
-decrease in workforce
-decrease R&D by ½
-branding image decrease
-NEX
-90 days close to bankruptcy
describe apple during the steve jobs era (1997-2011)
-product leadership
-focused product lines down to 4
-secretive production (people didn't know what they were working on... only
their component)
-streamline distribution
-rebrand/marketing
-increase in R&D spending
Why is it advisable for firms to pursue one of the two fundamental strategies?
Because the strategies are usually contradictory and there are tradeoffs
-
how do you calculate total value created?
(WTP-OC)
how do you calculate value added of each player?
, [TV-TV(without firm)]
how do you calculate whether there is bargaining in the game?
find sum of all the different added values and if they re more than the original
TV then there is bargaining power.. there I extra value that people can fight for
if you are given a market price and cost to firms, how do you calculate the share
of value (in $) that goes to buyers, firms, and suppliers
if you are given a market price and cost to firms, how do you calculate the profit
and revenue firms generate
how do you calculate the highest price a firm can charge?
profit (same thing as added value)=price-cost
how do the two fundamental strategies relate to the value-based game?
-product leadership increases WTP of buyers
-cost leadership tries to lower the input costs of production so the firm can
appropriate more value
how can firms increase their profit?
-increasing WTP or lowering costs
-adding value which would increase WTP
what are some examples of firms following product leader strategies?
what are some examples of firms following cost leader strategies?
what are porter's five forces?
threat of new entrants, threat of substitutes, bargaining power of buyers,
bargaining power of suppliers, rivalry among existing competitors
what do we use porter's "threat of new entrants" force for?
bring new capacity and a desire to gain market share that puts pressure on
prices, costs, and rate of investment necessary to compete.
what do we use porter's "bargaining power of supplier" force for?
capture more value for themselves (higher price - think apple marketing)
increase profits even if prices can not be raised
ANSWERS RECENTLY UPDATED
what is strategy?
set of guiding principles that generates a desired pattern of decision making.
How people make decisions and allocate resources
what are the two fundamental strategies firms can pursue?
cost leadership and product leadership
what is cost leadership strategy?
seeks to create the same or similar value for customers at a lower cost compared
to competitors
what is product leadership strategy?
providing superior value by offering a continuous stream of leading-edge
products and services; open to new ideas and solutions and bring them quickly
to the market
what factors have made apple successful?
-marketing abilities
-can pursue a product leadership strategy in an industry dominated by cost
leadership strategies
-brand dependability/loyalty (difficult to switch from apple)... everything is
connected
what are the three main apple eras that demonstrate the importance of pursuing
one of the fundamental strategies?
1) sculley era
2) spindlier/amerlio era
3) Steve Jobs era
describe apple during the sculley era (1985-1993)
,-computers
-15 different types (PL)
-most profitable
-PC market increase; microsoft
-IBM (CL)
-licensing
-market share went down
-profit margin went down
describe apple during the spindler/amerlio era (1993-1997)
-license 3rd parties
-cut costs
-international expansion
-decrease in workforce
-decrease R&D by ½
-branding image decrease
-NEX
-90 days close to bankruptcy
describe apple during the steve jobs era (1997-2011)
-product leadership
-focused product lines down to 4
-secretive production (people didn't know what they were working on... only
their component)
-streamline distribution
-rebrand/marketing
-increase in R&D spending
Why is it advisable for firms to pursue one of the two fundamental strategies?
Because the strategies are usually contradictory and there are tradeoffs
-
how do you calculate total value created?
(WTP-OC)
how do you calculate value added of each player?
, [TV-TV(without firm)]
how do you calculate whether there is bargaining in the game?
find sum of all the different added values and if they re more than the original
TV then there is bargaining power.. there I extra value that people can fight for
if you are given a market price and cost to firms, how do you calculate the share
of value (in $) that goes to buyers, firms, and suppliers
if you are given a market price and cost to firms, how do you calculate the profit
and revenue firms generate
how do you calculate the highest price a firm can charge?
profit (same thing as added value)=price-cost
how do the two fundamental strategies relate to the value-based game?
-product leadership increases WTP of buyers
-cost leadership tries to lower the input costs of production so the firm can
appropriate more value
how can firms increase their profit?
-increasing WTP or lowering costs
-adding value which would increase WTP
what are some examples of firms following product leader strategies?
what are some examples of firms following cost leader strategies?
what are porter's five forces?
threat of new entrants, threat of substitutes, bargaining power of buyers,
bargaining power of suppliers, rivalry among existing competitors
what do we use porter's "threat of new entrants" force for?
bring new capacity and a desire to gain market share that puts pressure on
prices, costs, and rate of investment necessary to compete.
what do we use porter's "bargaining power of supplier" force for?
capture more value for themselves (higher price - think apple marketing)
increase profits even if prices can not be raised
