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What is the primary purpose of value chain creation?
Core competencies are resources or capabilities that provide a firm with competitive disadvantages over rivals.
False
What does PESTLE analysis examine?
Political, economic, social, technological, legal, and environmental factors
A firm's ability to maintain unique competitive advantages over a long period is known as __________.
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Match the following concepts with their definitions:
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Which of the following factors are part of the external environment analyzed by the I/O model?
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Competitive actions and responses are only monitored on a domestic level.
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What is the purpose of conducting SWOT analysis?
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What is a primary focus of the Resource-Based Model?
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Diversification involves focusing on specific segments to enhance growth potential.
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What are the two main strategies outlined by Porter’s 5 Forces Model?
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The __________ strategy involves achieving a competitive advantage by being the lowest-cost producer.
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Match the following strategies with their definitions:
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Which of the following best describes Vertical Integration?
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The presence of substitute products increases profitability in an industry.
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What is the main goal of a corporate-level strategy?
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Study Notes
Corporate Goals
- Value Chain Creation: Adding value to a product throughout its production journey, making it stronger in the market.
- Strategic Competitiveness: Performing better than competitors through smart strategy making and action.
- Product Differentiation: Creating unique products that stand out in the market.
- Core Competency: The special abilities and resources that make a company better than its rivals.
- Profit or Above-Average Returns: Earning more than the standard profit for the type of business.
- Sustainable Competitive Advantage: Keeping a unique edge over the competition for a long time by using special resources.
- Corporate Culture: Creating a work atmosphere that encourages progress, teamwork, and strategic thinking.
External Factors on Competitiveness
- PESTLE Analysis: Analyzing external factors, such as political, economic, social, technological, legal, and environmental conditions, that influence a company's success.
- Global Competitiveness: Being able to compete in markets around the world while meeting international standards.
- Competition (Domestic & International): Keeping an eye on what other companies are doing, both locally and globally.
- Environmental Scanning: Constantly researching, evaluating, and noticing changes outside the company to adapt the strategy.
- Barriers to Market Entry: Obstacles like high costs, large production scales, and unique products that make it difficult for new companies to enter a market.
- SWOT (Opportunities and Threats): Analyzing external situations to find opportunities to take advantage of and threats to be prepared for.
Internal Analysis
- SWOT (Strengths/Weaknesses): Looking at a company's internal abilities, resources (strengths), and limitations, gaps (weaknesses).
- Core Competencies: Valuable and unique resources and abilities that are hard to copy and replace, creating a company's strong foundation.
Industrial Organization Model (I/O Model)
- Definition: A framework that believes the outside world greatly affects a company's strategic choices.
- Growth Contribution: Helps companies understand the structure of their industry and develop strategies to gain more profit by strategically positioning themselves within that structure.
Resource-Based Model (Organic Growth Model)
- Definition: A model that emphasizes that a company's growth comes from its unique internal resources and capabilities that are difficult to imitate.
- Growth Contribution: This model encourages companies to use their internal resources to create sustainable competitive advantages by focusing on special core competencies for organic growth.
Company/Firm Resources
- Capital, Human, Technological, and Management Resources: These assets are key for developing a competitive advantage, especially when combined with core competencies.
Strategy
- Diversification: Entering new product markets to reduce risk and increase growth potential.
- Focus and Economies of Scope: Concentrating on specific market segments and utilizing shared capabilities across various businesses for cost savings.
- Corporate-Level Strategy: Strategy for managing multiple business units within a larger company.
- Business-Level Strategy: Strategy for competing in specific product markets by leveraging core competencies.
- Cost Leadership: Gaining a competitive advantage by being the most cost-effective producer.
- Product Differentiation: Gaining a competitive advantage by offering unique products that customers value.
- First Mover / Second Mover Strategy: Being the first to enter a market brings initial advantages but can be risky, while following later can allow refinement and learning from mistakes.
Porter’s 5 Forces Model
- Power of the Buyer: When buyers have strong influence, they can dictate prices and quality.
- Power of the Supplier: Powerful suppliers have more control over the costs and availability of materials.
- Threat of Substitutes: The presence of alternative products limits the potential profitability of an industry.
- Threat of New Entrants: New companies entering a market increase competition, but barriers to entry can protect existing companies.
- Industry Rivalry: High competition amongst existing businesses leads to price wars and reduced profitability.
Vertical vs. Horizontal Strategy
- Vertical Integration: Controlling various steps in the production process, either by acquiring companies further back in the supply chain (backward integration) or closer to the customer (forward integration).
- Horizontal Integration: Expanding a business by merging with or acquiring companies at the same level within the industry.
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Description
Explore key concepts in corporate dynamics including value chain creation, strategic competitiveness, and product differentiation. This quiz will test your understanding of how external factors like PESTLE analysis impact company performance and sustainability. Gain insights into corporate culture and the foundations of a sustainable competitive advantage.
