Business Strategy and Its Importance

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Questions and Answers

What is the primary difference between strategy and business model?

Business model is more flexible than strategy.

Strategy is hard to replicate, but business models are easy to copy.

Strategy focuses on creating value, while business model focuses on competition.

Strategy determines long-term goals and resources, while business model explains value creation. (correct)

Which component is NOT part of a good strategy statement?

Advantage

Target audience (correct)

Objective

Scope

Which of the following best describes the Strategic Sweet Spot?

The balance between internal operations and external market conditions.

The intersection of customer needs, company capabilities, and competitor weaknesses. (correct)

The link between a company's financial health and its market presence.

The synergy achieved through mergers and acquisitions.

What was a key insight from the Second Industrial Revolution regarding strategy?

Controlled strategic management began to dominate enterprise operations. (C) Signup and view all the answers

Which of the following is NOT a characteristic of a good business model?

Ability to generate internal conflicts. (C) Signup and view all the answers

What does SWOT analysis help with?

Determining competitive advantages and weaknesses. (C) Signup and view all the answers

According to Chandler's concept of strategic management, what is essential to achieving competitive advantage?

Achieving economies of scale. (A) Signup and view all the answers

In the context of strategic explanation, what does the term 'friction' refer to?

The difference between the planned strategy and the actual competitive landscape. (D) Signup and view all the answers

What major risk does outsourcing present to companies according to Becker and Zirpoli?

Loss of learning capacity (B) Signup and view all the answers

According to Porter's Diamond model, which factor is seen as more critical for a country's competitiveness?

Advanced factors like technology (A) Signup and view all the answers

How do demand conditions affect innovation according to the Diamond model?

They stimulate innovation through sophisticated local demands. (D) Signup and view all the answers

Which of the following statements about related and supporting industries is correct?

They can create synergies and stimulate innovation. (C) Signup and view all the answers

What critical advantage can be lost when critical processes are outsourced?

Strategic competencies (B) Signup and view all the answers

In the context of competitive strategy, what does firm rivalry promote?

Innovation and continuous improvement (D) Signup and view all the answers

Which example illustrates a consequence of outsourcing in product development?

Transfer of key technological knowledge to competitors (A) Signup and view all the answers

What role do factor conditions play in Porter's Diamond model?

They include the availability of advanced resources crucial for competitiveness. (D) Signup and view all the answers

What role can the government play in fostering innovation within a competitive context?

By incentivizing innovation through economic policies and investments in R&D (D) Signup and view all the answers

What are chance events and how do they affect competitive dynamics?

Unforeseen technological advancements or economic crises that can disrupt competition (A) Signup and view all the answers

How can a domestic competitive context influence a firm's international strategy?

By creating firm-specific advantages (FSAs) that can be leveraged internationally (C) Signup and view all the answers

What is a criticism of the model described regarding its focus?

It is too focused on the domestic context without considering global interdependencies (B) Signup and view all the answers

What is a potential risk associated with businesses operating multiple business models?

Poorly integrated business models can destroy value rather than create it (C) Signup and view all the answers

In the context of administrative heritage, what characterizes a centralized exporter?

They transfer FSAs as standardized products or services controlled by the parent company (A) Signup and view all the answers

What is an example of how the domestic environment can support innovation?

Through the presence of elite universities and a skilled workforce, as seen in Silicon Valley (A) Signup and view all the answers

What is a primary challenge faced by emerging market enterprises (EMNEs)?

Managing dispersed international networks (C) Signup and view all the answers

Which strategy is NOT typically utilized by EMNEs to overcome institutional voids?

Focusing solely on proprietary technologies (B) Signup and view all the answers

What classification does a company like LG fall under among EMNEs?

Technology leader (B) Signup and view all the answers

What differentiates the OLI framework from the LLL framework in terms of focus?

Ownership and integration vs external connections and learning (D) Signup and view all the answers

Which of the following is a success factor for EMNEs?

Strong stakeholder networks (D) Signup and view all the answers

Which characteristic is associated with the International Projector model?

Replicating domestic FSAs through 'clone' subsidiaries. (B) Signup and view all the answers

What is a primary feature of the Multi-Centered MNE model?

Independent development of location-bound FSAs. (B) Signup and view all the answers

Which company exemplifies the International Coordinator model?

Logitech. (D) Signup and view all the answers

Which of the following describes a characteristic of the NEC model?

Centralized R&D and production in the home country. (D) Signup and view all the answers

What is a common feature shared by the International Coordinator and Multi-Centered MNE models?

Dependence on local market specific advantages. (D) Signup and view all the answers

Which of these companies utilized the International Projector model?

Disney. (C) Signup and view all the answers

Which of the following is NOT a characteristic of the Multi-Centered MNE model?

Extensive adaptation to local markets. (D) Signup and view all the answers

Which aspect does the International Coordinator model prioritize?

Global supply chain integration. (A) Signup and view all the answers

What does sustaining value primarily focus on?

Maintaining the advantage over time. (C) Signup and view all the answers

Which of the following is a type of competitive advantage focused on reducing costs?

Cost Leadership (C) Signup and view all the answers

What is one common mistake in cost analysis?

Confusing recurring costs with one-time investments. (C) Signup and view all the answers

Which factor increases a customer's willingness to pay (WTP)?

Understanding customer preferences. (A) Signup and view all the answers

What type of differentiation involves customers agreeing on product superiority?

Vertical Differentiation (B) Signup and view all the answers

Which of the following is identified as a threat to sustaining competitive performance?

Imitation (D) Signup and view all the answers

What is a primary activity in Porter's Value Chain framework?

Logistics (A) Signup and view all the answers

Which of these contributes to differentiation through marketing strategies?

Signaling (B) Signup and view all the answers

Study Notes

Strategy and its Importance

Strategy is a long-term plan defining objectives and resources for achieving them.
Strategy is about competing successfully and ensuring long-term sustainability.
Business model focuses on creating value, while strategy focuses on how to compete and win.

Good Business Model Characteristics

Aligns with company goals.
Self-reinforcing with internal consistency.
Robust and durable, not easily duplicated.

Strategy Statement Components

Objective: company's goals and targets.
Scope: target market, geographic reach, and vertical integration.
Advantage: how the company will surpass competitors.

Strategic Sweet Spot

Intersection of customers' needs, company capabilities, and competitors' weaknesses.

Evolution of Strategic Thought

Military origins: Carl von Clausewitz introduced "friction" (difference between plan and reality).
Industrial revolutions: Adam Smith's "invisible hand," Alfred Chandler's "visible hand," and economies of scale.

SWOT Analysis

Strengths: Internal competitive advantages.
Weaknesses: Internal areas needing improvement.
Opportunities: External growth possibilities.
Threats: External dangers.

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Description

This quiz explores the significance of strategy in business, focusing on long-term planning, competition, and sustainability. It covers essential characteristics of effective business models, key components of strategy statements, and the evolution of strategic thought. Test your understanding of these concepts and their application in the business world.