Business Strategy Quiz

Superior performance relative to competitors.

Identifying a firm's position vs. competitors.

Diagnosis (analysis), guiding policies (formulation), and coherent actions (implementation).

Build sports car, affordable car, even more affordable car, zero emission power, don't tell anyone.

Choosing to be the best (running the same race) or be unique (running a different race).

Goal-directed actions to gain/sustain superior performance (competitive advantage) compared to competitors.

Different types of plans to manage competing in various parts of the business.

Accelerate world transition to sustainable energy.

Choosing one option means sacrificing another. Focusing on a specific customer segment means losing potential customers outside that segment.

Offering different values at different prices in order to attract different target customer groups. This reduces customer overlap.

Walmart's focused strategy involves operating large stores in rural areas to reach specific customers, leveraging size for bargaining power, and using IT for efficiency, all while creating a low cost structure.

Companies with effective strategies provide products/services at affordable prices, maintaining profitability and benefiting consumers and shareholders.

Dividing a broad customer base into smaller, more homogeneous groups based on shared characteristics

An example of a successful strategy that has generated consistent profit for over 40 years

A business that prioritizes offering products at the lowest possible price, sometimes sacrificing features or in-store service to achieve this goal.

A business that prioritizes offering high-quality products and services, often with exceptional customer service and a distinct brand image and customer experience. This normally results in higher prices.

Personal perceptions, beliefs, and overconfidence in past experiences can influence decision-making, leading to biased choices.

A method of making decisions based on probability and facts to minimize bias and increase the likelihood of successful outcomes.

Recognizing that decisions involve uncertainty and using probabilities to assess potential outcomes.

An exaggerated belief in one's abilities or sources of information, which can lead to poor decision-making.

Questioning how often a specific outcome happens, using historical data or research.

Developing a theory or model to explain the likelihood of events.

A variable that can take on different values, each with a specific probability.

A way of showing all the possible values of a random variable and their corresponding probabilities.

Southwest Airlines uses a point-to-point model, avoids hubs, prioritizes employees and customers, and uses a single aircraft type to reduce costs.

A model used by Southwest Airlines where flights directly connect cities without using a central hub.

A model used by many airlines where flights connect through a central hub.

Southwest Airlines avoids charging fees for additional services, such as checked baggage.

Testing potential changes on a small scale (e.g., a limited amount of flights) to see customer reactions before implementing widely.

Gathering information and conducting analysis about a problem before making decisions.

Using data, analysis, and experimentation to make informed decisions, rather than making impulsive decisions.

Southwest Airlines' consistent profitability for over four decades, despite a unique approach.

The initial assessment of an event's likelihood before any data is collected.

The revised probability of an event after considering new information or data.

Information used to adjust the initial probability estimate, like expert opinions or collected data sets.

Examining collected data about the event to refine the probability estimate.

Using probability estimates to choose between actions based on potential outcomes.

Actions are the choices we can make, while scenarios are the uncontrollable situations we predict.

A decision's outcome depends on whether the chosen action leads to a net positive gain or loss.

Choosing the best course of action based on the likelihood of different scenarios and their potential outcomes.

A strategy where a company expands its operations to control different stages of the value chain, like production, distribution, or retail. This is often done to reduce dependence on external suppliers or retailers.

A situation where finding suitable suppliers or retailers within a specific industry is difficult or too risky, leading companies to consider vertical integration.

A strategy where a company expands its operations into new product markets, geographic regions, or both.

A type of diversification where a company offers a wider variety of products or services, but remains focused on the same geographic area.

A type of diversification where a company expands into new geographic markets, offering the same or similar products/services in different countries.

Southwest Airlines stands out by rejecting traditional airline practices like hub-and-spoke models and baggage fees. Instead, they focus on point-to-point routes, low fees, employee and customer prioritization, and a single aircraft model for efficiency.

Point-to-point routes connect cities directly without using a central hub airport, while hub-and-spoke models route passengers through a central hub for connections.

Southwest's commitment to employee satisfaction and customer happiness extends beyond just words. They prioritize these groups in their decision-making process.

By operating only one type of aircraft, Southwest reduces training and maintenance costs, streamlining their operations and keeping costs low.

Before making any decision, it's essential to gather relevant data about the situation you're facing and analyze that data to gain meaningful insights.

Despite a unique approach, Southwest Airlines has achieved consistent profitability over 43 years, proving that their strategy works.

Overestimating your abilities or knowledge, leading to poor decisions.

The formula to calculate variance is σ = ∑ 𝑝𝑖(𝑥𝑖 − µ) , where x represents every possible value, p is the probability of that value, and µ is the mean. The difference between x and the mean is squared to avoid negative or positive issues.

The formula for standard deviation is σ = 𝑣𝑎𝑟𝑖𝑎𝑛𝑐𝑒 = σ . It reflects the variance by removing the square, resulting in a value more closely aligned with the actual values of the variables.

Conditional probability is the probability of an event happening given that another event has already occurred. It helps predict how an event will turn out based on prior events that may influence it.

A table that shows the frequency of values of one variable (X) contingent on the values of another variable.

The totals of rows and columns in a contingency table.

The probability of two or more events occurring simultaneously.

P(X|Y) represents the conditional probability of event X happening given that event Y has already happened. It reads as 'the probability of X given Y'.

The possible outcomes are all the possible combinations of actions taken and scenarios that might occur. This means understanding what could happen based on your choices and the situations beyond your control. For example, if you're considering buying a business, possible outcomes include making a profit, breaking even, or losing money. This depends on your decision to buy and factors like market conditions and competition.

A minimum probability level you set for deciding whether to proceed with an action. If your calculated probability of a successful outcome meets or exceeds the threshold, you go ahead. If it's below, you might choose a different course of action.

Contracts with a short duration, usually less than a year, that involve competitive bidding. Short-term contracts are often used for smaller projects or tasks where the buyer doesn't need a long-term relationship with the supplier.

Voluntary arrangements between companies to share knowledge, resources, and abilities to create new products, processes, or services. They work together to achieve a common goal.

The expected value of a random variable when another event has already occurred. It's like the average but adjusted based on the conditioning event.

Two events where one doesn't influence the outcome of the other. The occurrence of one event doesn't change the probability of the other.

An event that provides valuable information about the likelihood of another event happening. It helps predict the outcome.

It allows us to update our understanding of the likelihood of an event based on new information. This helps make more informed decisions.

Multiply each possible value of the variable by its conditional probability and sum them up. This gives you the expected value given the condition.

Multiply the probability of the conditioning event by the conditional probability of the other event given the conditioning event.