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Senior Seminar Final Exam
N/A
26
Business
Undergraduate 4
05/10/2010

Additional Business Flashcards

 


 

Cards

Term
What is competitive advantage?
Definition
a firm with competitive advantage creates more economic value than its rivals.  There are two types, sustained and temporary.
Term
What is economic value?
Definition
Economic value is the difference between the perceived benefit for the consumer and the cost of producing. 
Term
Give an example of a firm with a sustained competitive advantage.
Definition
Patagonia: because they have an incredible reputation for quality and excellent product differentiation; also great relationships with suppliers and distributors.  Also, Westjet with spoke-spoke model instead of hub-spoke
Term
What is strategy?
Definition
Strategy is a theory on how a firm can gain a competitive advantage.  It's not a fixed set of rules; it's a flexible and dynamic plan!
Term
Give an example of a business-level strategy for an organization of your choosing.
Definition
Verizon communicates its quality and customer service in order to gain a competitive advantage over its competitors.  Jamie Kennedy: product differentiation.  Patagonia: product differentiation.  Sony: relationships.
Term
What are the general, task and internal environments?  Give an example of these for a random company.
Definition
general: larger environment (economy), task: the industry in which the business functions, internal: within the business itself (financial, people, culture, physical assets, etc).  EX: Sowers functions in China (general), among other non-profits (task), and internally it has a network of volunteers.
Term
Why are the general, task and internal environments important?
Definition
According to the RBV of the firm, the resouces and capabilities of a firm are important sources of competitive advantage.
Term
What is a Porter's 5 Forces Analysis?
Definition
The Porter's framework identifies the 5 most important threats faced by firms in their LOCAL COMPETITIVE environments.  These "threats" or "forces" increase the amt of competition in said environment.  The threats include: threat of entry: new firms could enter market (economies of scale play big role), threat of suppliers: can increase/decrease quantity and cost of inputs, threat of rivalry: higher when lots of firms in one industry are the same size, threat of substitutes: decreases profit margin and creates price ceiling, threat of buyers: can have power esp. if very few
Term
What are the components of a SWOT analysis?
Definition

Internal environment: strengths and weaknesses.  Components could include: financial capital, culture, structure, owners, board, employees, physical assets.

External environment: strenths and weaknesses. Components could include: competitors, economic conditions, political atmosphere, industry trends, technology being introduced, etc.

Term
What is a VRIO analysis?
Definition

A VRIO asks 4 questions about each of a firm's resources/capabilities to determine the competitive potential of each.

1)Value: Does this resource allow Company X to exploit an environmental opportunity or neutralize a threat?

2)Rarity: How many companies share this same resource?

3) Imitability: Do other organizations face a cost disadvantage to obtain this resource?

4)Organization:  Is the organization structured to support exploitation of this valuable resource?

Term
What is the resource-based view of the firm?
Definition
The RBV of the firm is a model of firm performance that focuses on the resources and capabilities controlled by the firm as sources of competitive advantage. Model functions under the assumptions of 1)resource heterogeneity (firms possess different kinds and types of the same resource even within the same industry) and 2) resource immobility (car factory difficult to move...).  These assumptions help explain competitive advantage.
Term
What is the difference between primary and secondary data?  What are the pros and cons of each?
Definition

Primary: collected by me.

PROS: tailored to individual need, contextual, in-depth on specific area of need, reliable, scope can vary, comparable to secondary data. 

CONS: time-consuming, limited ability to reach adequate sample size, money constraints

Secondary: collected by someone else.

PROS: done by an expert on the subject, quick to obtain, cheap (usually), reviewed and double-checked, large group surveyed.

CONS: may be too broad or irrelevant for specific circumstances

Term
What are the business level strategies?
Definition

Business level strategies are actions firms take to gain a competitive advantage in one market or industry.  Corporate level strategies are actions corporations take to gain a competitive advantage in multiple markets or industries.  Business-level strategies include cost-leadership, product differentiation and focus.  Walmart, Victoria’s Secret, Southwest Airlines.

Term

What steps would company take to pursue a cost leadership strategy?

Definition

A firm with a cost-leadership business strategy (ex: Wal-mart with economies of scale and excellent supply chain management) focuses on gaining advantages by reducing costs below those of all competitors.  Sources of cost-leadership include: 1) size differences and economies of scale, 2) size differences and diseconomies of scale (the point on the production curve after lowest cost per product is passed), 3) experience differences and learning curve economics, 4) differential low-cost access to productive inputs, 5) technological advantages independent of scale, and 6) policy choices.

 

Term

What steps would company take to pursue a differentiation strategy?

Definition

A firm with a product-differentiation strategy (ex: Victoria’s Secret, Patagonia) attempts to gain a competitive advantage by increasing the perceived value of their products or services relative to the value of other firms’ products or services.  Product differentiation can be achieved by a firm focusing directing on the attributes of 1) product/service features (BMW), 2) relationship between firm and consumer (Patagonia), and 3) linkages with or between firms (Yoplait and Breast Cancer Foundation, Kraft cheese & crackers).

 

Term

 

What steps would company take to pursue a focus strategy?

Definition

A firm with a focus strategy (ex: Southwest Airlines with point-to-point flights) focuses on a narrow market or industry segment, specializing in serving this specific small group.  A firm with this strategy will probably look to gain competitive advantage through product innovation and or/brand marketing rather than efficiency. 

 

Term
What changes can a firm make to pursue a cost leadership strategy?
Definition

1) change organizational structure: decrease reporting layers, simplify reporting relationships, decrease corporate staff, focus on narrow range of corporate functions.

2) change management control systems: tighten cost control systems, cost goals, close supervision of inputs/outputs/production, cost leadership philosophy.

3) change compensation policies: rewards for cost reductions, incentives for all employees to be involved

Term
Why is strategy execution such an important topic?  (How would you execute strategy at Company X?)
Definition
Strategy is an important topic because it helps to generate competitive advantage.  It can personally affect me!  I might want to judge a company by how strategic it is when deciding on a job, I might want to know for personal success on the job, or I might have to help with it in my job (small firm).  To help execute a strategy the following things are important: avoid the engagement gap, give everyone power to make a change, and execute the strategy on a daily basis!
Term
What are two different ways a company could pursue a green business strategy?
Definition
In the simplest sense, a company can either attempt to compensate for the damage it's doing by donating to environmental causes or it can make its own business greener: the money can either be focused externally or internally.
Term
What did you most agree and disagree with in the Master Strategist? 
Definition
I like the view of the 7 phenomena: we are on the edge of ___ or ___.  The three laws of the master strategist: rise above conflicting bodies and identify common position, take the whole and minimize waste and reduction, see an event within a flow of events so as to react within the context of the flow.  The three rules for creating institutions that survive and prosper: capability to learn and adapt, capability to self-organize and the capability to survive and prosper.  Fixed agendas will not grow or adapt and thus will become irrelevant and DIE.
Term

Why does leadership matter to strategy? 

Definition

Purpose is at the heart of strategy.  Strategy never ends; it's constant change and adaption.  The CEO, who chooses a company's identity, must be a strategist and a leader; his/her vigilance must be constant.  The biggest responsibility of the CEO is to guide the never-ending process of adapting an organization to the current day and should provide perspective in the midst of action and purpose to the flow.  When in an environment of indecision and stalled action, a CEO can start the conversations and get people behind an idea.

"The executive's job is no longer to command and control but to cultivate and coordinate"

Term
How would you change corporate culture?
Definition

from the article "Beat the Odds and Succeed in Organizational Change": any change necessarily begins with a group of people who agree that change will be made and they need to work together, but as they get going there tends to be less input of ideas for fear that this will slow things down; to avoid this I would resist the temptation to make change a strict ideology, which widens the engagement gap. 


The democratic process is characterized by three core principles: voice, cohesion and action.

Term
How can team performance be improved?
Definition
  • Recognizing first of all that the four stages of teams development are: forming, storming, norming and performing.  The fifth state could be re-forming, which suggests the very short lifespan of a team; it should be formed for short projects.
  • There should be good evaluation tools for evaluation and assessment of the project completed, as well as good peer-to-peer feedback.
Term
What have you learned about communication this term?
Definition
Communication in a firm needs to be firm-wide.  Top down communication works well and bottom up should be encouraged; making organizations more effective often requires removing levels of communication.  Understanding how you communicate best is important: writing? talking? phone? group? one-on-one?
Term
What is meant by strategy as simple rules?
Definition
Simple rules govern the structure of a company to allow it to take advantage of all opportunities.  There are five categories: how-to, boundary, priority, timing, exit.  2 to 7 central rules is usually best; these rules govern the PROCESS by which a company lives out its mission.
Term
What do you think the role of the environment is in the business of the future?
Definition
Ultimately, corporations are the only orgs with resources, tech and global reach to achieve sustainability.  A company must 1) prevent pollution 2) have produc stewardship and 3) invest in clean technology.  The business of the future must become a steward of the environment to have the definitive competitive advantage.
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