Term
Name 3 external sources of change |
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Definition
Customer demand Prices Technology |
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Term
T/F The impact of external change depends on firms' ability to respond to change. |
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Definition
| True. Any external change creates opportunity for profit. |
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Term
| What resource and capability is required to respond to opportunities provided by external change? |
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Definition
Resource - information Capability - flexibility |
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Term
| T/F Internal change is created by marketing. |
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Definition
| False. It is created by innovation. |
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Term
| What is strategic innovation? |
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Definition
| It involves creating value for customers from novel experiences, products, or product delivery and bundling. |
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Term
| What is new game strategy? |
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Definition
| It involves reconfiguring the industry value chain in order to "change the rules of the game". |
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Term
| What is a blue ocean strategy? |
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Definition
| It emphasizes the attractions of creating new markets. |
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Term
| What is an isolating mechanism? |
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Definition
A barrier that sustains competitive advantage by preventing other firms from competing through imitation. |
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Term
Name 2 types of competitive advantage. |
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Definition
Cost advantage - Similar product at lower cost Differentiation advantage - Price premium from unique product |
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Term
| What is the experience curve? |
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Definition
| The unit cost of value added to a product declines by a constant percentage (between 20-30%) each time cumulative output doubles. |
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Term
| What is an economy of scale? |
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Definition
| They exist wherever proportionate increases in the amounts of inputs employed in a production process result in lower unit costs. |
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Term
| Name the 3 principal sources of scale economies. |
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Definition
Technical input-output relationships Indivisibilities Specialization |
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Term
T/F The greatest productivity gains from process innovation result from technological innovation. |
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Definition
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Term
| Name 7 cost drivers of advantage. |
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Definition
Economies of scale Economies of learning Production techniques Product design Input costs Capacity utilization Residual efficiency |
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Term
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Definition
It provides something unique that is valuable to the buyer beyond simply offering a low price. It creates value for the customer. |
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Term
T/F Low cost offers a less secure basis for competitive advantage than does differentiation. |
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Definition
True. International competition has revealed the fragility of well-established positions in cost leadership. High profitability is associated more with differentiation that cost leadership. |
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Term
| Name 2 types of product integrity. |
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Definition
Internal - Consistency between form and function. External - Fit between product and customers' values, lifestyle, etc. |
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Term
| Which type of goods are most likely to be described through signaling? |
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Definition
| Experience goods, because they can only be recognized after consumption. |
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Term
| List the 4 steps of a value chain analysis. |
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Definition
Construct a value chain Identify drivers of uniqueness Select the most promising diff. variables - consider the firms' R&C Locate linkages between firm and buyer |
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Term
| What are the 4 stages of the industry life cycle? |
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Definition
Introduction Growth Maturity Decline |
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Term
| Who is the greatest professor in the history of professordom? |
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Definition
Roger D. Blair, PhD, MA, BA The Walter G. Matherly Professor in Economics at the Warrington College of Business |
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Term
| What growth features dominate the early and late stages of an industry? |
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Definition
In the early stages, the number of firms rapidly increase. In the mature stages, the the number of firms begins to decrease. International migration also appears. |
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Term
| What are basic strategies for each stage of the industry life cycle? |
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Definition
Introductory - product innovation Growth - increase production Maturity - cost efficiency Decline - destructive price competition |
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Term
| What are some barriers to change? |
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Definition
Organizational capabilities and routines Social and political structures Conformity Complementarities b/t strategy, structure and systems Limited search |
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Term
| T/F Evolutionary change over the typical industry life cycle is less threatening than radical technological change. |
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Definition
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Term
| What are some features of disruptive technologies? |
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Definition
They are inferior to existing technology Existing customers do not want them |
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Term
| What are some general methods to manage organizational change? |
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Definition
Dual strategies Separate organizational units Scenario analysis |
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Term
| What is the difference between invention and innovation? |
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Definition
Invention is the creation of new products and processes. Innovation is the initial commercialization of an invention through production and marketing. |
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Term
| Draw a schematic for the development of technology. |
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Definition
Basic knowledge → Invention → Innovation → Diffusion→ IMITATION (Supply side) ADOPTION (Demand side) |
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Term
| List 4 ways to protect innovation. |
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Definition
Property rights Tacitness and Complexity Lead-time Complementary resources |
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Term
| T/F Patents are most effective at protecting innovation and profitability. |
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Definition
| False. Patenting is primarily a strategic move to block innovation. |
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Term
| T/F It is best to be a leader in innovation. |
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Definition
| Neither. It depends on the resouces and capabilities of the firm. |
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Term
| What is a strategic window? |
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Definition
A period of time in which R&C are aligned with the opportunities available in the market. For smaller firms, it is smaller and earlier in the product/process life cycle. For larger firms, it is both longer and later. |
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Term
| Jim: Wow, that is really hard. You really think you can go all day long? |
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Definition
| Michael: That's what she said! |
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Term
| What are the 2 main sources of risk in an emerging industry? |
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Definition
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Term
| What are 3 ways to manage risk? |
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Definition
Cooperate with lead users (early adopters) Limit risk exposure (economize on CAPEX) Be flexible (respond quickly to market signals) |
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Term
| What are network externalities? |
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Definition
| It exists whenever the value of a product to an individual customer depends on the number of users of that product. As a result, standards emerge. |
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Term
| What are sources of network externalities? |
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Definition
User linkages Complementary products Economizing on switching costs |
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Term
| What are the steps needed to win a standards war? |
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Definition
Analyze network externalities Assemble allies (value chain) Preempt the market (move first, promote) Manage expectations (self-fulfilling prophecy) |
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Term
| Which of the previous 4 steps is most important? |
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Definition
Preempt the market - must build a user base quickly. If you fall behind, bridge the gap by allowing compatibility. |
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Term
| Draw Porter's generic strategies. |
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Definition
SOURCE OF COMP. ADVANTAGE Low Cost Differentiation Industry-Wide Cost Leadership Differentiation COMP. SCOPE Single Segment Focus |
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Term
| Describe the industry evolution for over the life cycle for competition. |
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Definition
Few companies Entry, mergers, and exits Shakeout; price competition increases Price wars; exit |
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Term
| Describe the industry evolution for over the life cycle for key success factors. |
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Definition
Product innovation; establishing credible image Manufacture, distribution, brand building, process innovation Cost efficiency; scale efficiency; low input costs Low overhead; buyer selection; signaling commitment |
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