WPC 480 EXAM 1 WITH 100% CORRECT ANSWERS ALREADY GRADED A+.

Strategy integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage. - set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors Vision A picture of what the firm wants to be and, in broad terms, what it wants to achieve - What do we want to accomplish? Mission Specifies the businesses in which the firm intends to compete and the customers it intends to serve. - What do we actually do (in order to accomplish our vision)? 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? Industrial Organization (I/O) Model explains the external environment's dominant influence on the choice of strategy and the actions associated with it Resource-Based (RBV) Model The uniqueness of resources and capabilities is the basis of a firm's strategy and its ability to earn above-average returns Resources inputs into a firm's production process 3 Categories of Resources - Physical - human - organizational capital Capability the capacity for a set of resources to perform a task or an activity in an integrative manner Core Competencies Capabilities that serve as a source of competitive advantage for a firm over its rivals Stakeholders Individuals, groups, and organizations that can affect the firm's vision and mission, are affected by the strategic outcomes achieved, and have enforceable claims on the firm's performance Capital Market Stakeholders - Shareholders - Major suppliers of capital -- Ex. Banks Product Market Stakeholders - Primary customers - Suppliers - Host Communities - Unions Organizational Stakeholders - Employees - Managers - Nonmanagers PESTEL Framework (General Environment) 1. Demographic 2. Economic 3. Political/Legal 4. Sociocultural 5. Technological 6. Global 7. Sustainable Physical Environment 1. Demographic Segment Concerned with a population's size, age structure, geographic distribution, ethnic mix, and income distribution 2. Economic Segment Refers to the nature and direction of the economy in which a firm competes or may compete 3. Political/Legal Segment The arena in which organizations and interest groups compete for attention, resources, and a voice in overseeing the body of laws and regulations guiding interactions among nations as well as between firms and various local governmental agencies 4. Sociocultural Segment Concerned with a society's attitudes and cultural values 5. Technological Segment The institutions and activities involved in creating new knowledge and translating that knowledge into new outputs, products, processes, and materials 6. Global Segment Relevant new global markets and their critical cultural and institutional characteristics, existing markets that are changing, and important international political events. 7. Sustainable Physical Environment Segment Refers to potential and actual changes in the physical environment and business practices that are intended to positively respond to those changes in order to create a sustainable environment 5 Forces of Competition Model 1. Threat of new entrants 2. Bargaining power of suppliers 3. Bargaining power of buyers 4. Threat of substitute products 5. Rivalry among competing firms 1. Threat of New Entrants Identifying new entrants is important because they can threaten the market share of existing competitors 2. Bargaining Power of Suppliers Increasing prices and reducing the quality of their products are potential means suppliers use to exert power over firms competing within an industry 3. Bargaining Power of Buyers To reduce their costs, buyers bargain for higher quality, greater levels of service, and lower prices 4. Threat of Substitute Products Goods or services from outside a given industry that perform similar or the same functions as a product that the industry produces. 5. Rivalry of Competitors Competitive rivalry intensifies when a firm is challenged by a competitor's actions or when a company recognizes an opportunity to improve its market position Reasons for Conducting Internal Analysis - an increasing number of firms are using their resources to form core competencies through which they successfully implement an international strategy as a means of overcoming the advantages created by more traditional resources - A global mind-set is the ability to analyze, understand, and manage an internal organization in ways that are not dependent on the assumptions of a single country, culture, or context - examine the firm's entire portfolio of resources and capabilities Tangible Resources Assets that can be observed and quantified - Production equipment - manufacturing facilities - distribution centers - formal reporting structures Intangible Resources Assets that are rooted deeply in the firm's history, accumulate over time, and are relatively difficult for competitors to analyze and imitate. - Knowledge - Trust - Routines Four Criteria for Sustainable Competitive Advantage 1. Valuable 2. Rare 3. Costly-to-Imitate 4. Nonsubstitutable 1. Valuable Allow the firm to exploit opportunities or neutralize threats in its external environment 2. Rare Capabilities that few, if any, competitors possess 3. Costly-to-Imitate Capabilities that other firms cannot easily develop. 4. Nonsubtitutable Capabilities that do not have strategic equivalents. Value Chain Activities 1. supply chain management 2. operations 3. distribution 4. marketing (including sales) 5. follow-up service Support Functions 1. Finance 2. Human Resources 3. Management Information Systems Business Line Strategies 1. Cost Leadership 2. Differentiation 3. Focused Cost Leaders