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48 Cards in this Set
- Front
- Back
What do you need to know to develop a business level strategy?
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Who(market segment), what(goods/services), how (core competencies/capabilities).
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What are business-level strategies concerned with?
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Effectively managing relationships with customers. The reach, richness, and affiliation with customers. Who, what and how to serve the customer.
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What are activity maps used for?
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To determine how business activities are integrated.
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What is cost leadership strategy?
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Goods or services produced at the lowest cost.
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What is the differentiation strategy?
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Goods or services produced to give a perceived benefit that is higher than competing products.
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What is the integrated cost leadership/differentiation strategy? What makes this strategy so challenging?
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Low cost and differentiation; may be difficult because firms can wind up in the middle.
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What business level should i choose when my firms resources can create different products than other firms?
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Differentiation strategy
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Define corporate-level strategy.
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What firms we should put in our portfolio of businesses to maximize profit and gain a competitive advantage
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single-business strategy
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95% or more of firm revenue from core business
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dominant business diversification
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70-90% of firm revenue from a core business
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related constrained diversification
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less than 70% from a related business with operational relatedness (link between resources)
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related linked diversification
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less than 70% from a related business with corporate relatedness (knowledge and competencies shared)
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unrelated diversification
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high level of diversification; no sharing of assets between businesses
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conglomerate
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a firm with several unrelated businesses
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Name and define the three reasons to diversify
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economies of scope (transfer of related resources across businesses); Value creation(operational and corporate relatedness); Value-neutral/negative(to increase firm size)
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Name and define the types of diversification
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related diversification (synergy and economies of scope to create value), unrelated strategy (create value through better allocation of firm financial assets)
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value-creating reasons to diversify
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economies of scope, market power, financial economies
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define multi point competition
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When two or more diversified firms compete in the same product markets or geographical area
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Is market power a benefit of related linked or related constrained diversification
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both
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What happens to an acquiring firm's share price when in begins the acquisition? What happens to the stock of the firm being acquired?
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acquiring firm - stock goes down; acquired firm - stock goes up
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What are the reasons a firm should acquire another firm?
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Increased market power, overcome entry barriers in other markets, lower production costs and time to market, lower development risk, increase diversification, change the firms competitive scope to reduce competitive rivalry, learn new capabilities
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Name and define the four types of acquisitions.
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Horizontal(competitor), Vertical(supply chain), Related(related firm), Cross-border(international)
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Name and define the four types of restructuring
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Restructuring(change firms structure), Downsizing(decrease firm size), Down scoping(divest in some businesses), Leveraged buyouts(buy with private equity)
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What helps in achieving a successful acquisition?
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firms have complementary resources, friendly acquisitions, strong due-diligence before purchase, financial slack and low debt, innovation/flexibility/adaptability
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Define problems associated with acquisitions.
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integration difficulties, inability to achieve synergy, poor target evaluation, large debt used to finance acquisitions, over diversification(over focus on financial controls, over focus on acquisitions(management attention diverted), firms become large (firm less innovative, too bureaucratic)
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Define an international strategy
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When a firm sells good outside of the domestic market
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Motives for going international
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Increased market size, improve ROI for goods/services with high R&D and other fixed costs, Economies of scale and learning, Location advantages
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Local responsiveness
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How responsive a firm is to its local environment
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R&D and international strategy
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Market size increase can compensate for R&D costs, host governments and R&D reqs, gain new knowledge from around the world
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Why is a large domestic market important for international growth?
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Home country resources allow the firm to establish operations in foreign markets.
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International business level strategy
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international business level strategy is contingent on factors in the home country; factors of production, demand conditions, related and supporting industries, firm strategy, structure, rivarly
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International corporate level strategy
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multi-domestic, global, transnational
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multi-domestic international corporate level strategy
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goal is for high local responsiveness
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global international corporate level strategy
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goal is for a standardized strategy across borders
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transnational international corporate level strategy
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high local responsiveness and standardized strategy (offers conflicting goals)
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define environmental trends like liability of foreignness and regionalization
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liability of foreigness - issues with being a foreign company; regionalization - choosing specific regions instead of the entire world(may be more profitable than the former option)
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Methods of entry for International Strategy
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Exporting, Licensing, Strategic alliances, acquisitions, new Wholly owned subsidary
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What is the difference between greenfield and brownfield ventures?
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Greenfield = New Wholly owned subsidary; Brownfield = Acquisition
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Competitive rivarly affects which strategy the most: business or corporate?
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business because competitive actions or rivals are a building block of business level strategy
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Multi market competition and its effects on firm actions
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When competitors share multiple markets, this tends to reduce rivalry since firms do not want to initiate attacks due to the likelihood of a negative response
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Market commonality
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the number and importance of markets shared by two firms
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resource similarity
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how close tangible and intangible resources of competing firms are to one another
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name and describe the types of competitive actions
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awareness (knowledge of competitors presence), motivation (desire for competing firm to attack), ability (capabilities of a competing firm for attack)
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response to awareness action
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increasing awareness leads to decrease in the likelihood of attack
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response to motivation action
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if the competing firm is motivated, attacks may decrease
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response to ability action
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increasing similarity increases the likelihood of response
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Define quality
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When a firm meets or needs a customers expectations
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Define slow, standard, and fast-cycle markets
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Slow cycle markets allows competitive advantages to last a long time since imitation is costly. Fast cycle markets are the opposite of slow cycle, and standard cycle markets are in the middle of the other two
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