Global Economy and Competitive Advantage

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Questions and Answers

What is the reason why customers prefer to purchase from a global competitor rather than a domestic firm?

The global company's brand is well-known

The global company has a strong marketing strategy

The global company's product is cheaper

The global company's product is superior (correct)

What is a key source of competitive advantage in the global economy?

Financial resources

Technological infrastructure

Marketing strategies

Employees (correct)

What is required for companies to earn above-average returns in the 21st century?

Merging with other companies

Meeting local standards

Innovating new products

Meeting global standards (correct)

What is the result of the increasing rate of technology diffusion?

Increased competition Signup and view all the answers

How long did it take for the telephone to reach 25% of all homes in the United States?

35 years Signup and view all the answers

What is one way in which technological changes have impacted individual firms and industries?

Shift from physical to electronic movie rentals Signup and view all the answers

What is one category of technology-related trends and conditions?

Technology diffusion and disruptive technologies Signup and view all the answers

What is the name given to the current economic environment with many important countries having unique interests and environments?

Multi-polar world Signup and view all the answers

What drives firms to aggressively challenge their competitors in a hypercompetitive market?

The desire to improve their competitive position Signup and view all the answers

What is a global economy characterized by?

Goods and services moving freely across geographic borders Signup and view all the answers

What is globalization a product of?

A large number of firms competing against one another Signup and view all the answers

What is a result of globalization?

An increase in the range of opportunities for companies Signup and view all the answers

Why is it important for firms engaging in globalization to make culturally sensitive decisions?

To avoid cultural conflicts Signup and view all the answers

What is a challenge faced by highly globalized firms?

Ever-increasing complexity in operations Signup and view all the answers

What has been the result of globalization on performance standards?

An increase in performance standards Signup and view all the answers

What is an example of a company that has engaged in globalization?

Starbucks Signup and view all the answers

What is the primary goal of a firm's strategy implementation?

To achieve strategic competitiveness and above-average returns Signup and view all the answers

What has become increasingly challenging due to advances in technology?

Determining the boundaries of an industry Signup and view all the answers

What is a result of effective strategic actions in the context of carefully integrated strategy formulation and implementation efforts?

Positive performance Signup and view all the answers

Why is the pace of change relentless and ever-increasing in many industries?

Due to the increasing volatility of markets Signup and view all the answers

What has changed the competitive landscape of the entertainment industry?

Advances in interactive computer networks and telecommunications Signup and view all the answers

What is the primary role of the strategy portion of the model?

Strategy formulation and implementation Signup and view all the answers

What is the outcome of a dynamic strategic management process?

Strategic competitiveness and above-average returns Signup and view all the answers

What is a recent development in the entertainment industry?

Telecommunication companies are moving into the entertainment business Signup and view all the answers

What is the main assumption of the resource-based model of above-average returns?

Each organization is a collection of unique resources and capabilities. Signup and view all the answers

What are resources classified into?

Three categories: physical, human, and organizational capital Signup and view all the answers

What is a capability in the resource-based model?

The capacity for a set of resources to perform a task or an activity in an integrative manner Signup and view all the answers

What are core competencies?

Capabilities that serve as a source of competitive advantage Signup and view all the answers

What is an example of a core competency?

Apple's R&D function Signup and view all the answers

According to the resource-based model, what is the primary reason for differences in firms' performances across time?

Firms' unique resources and capabilities Signup and view all the answers

What is a resource in the resource-based model?

Inputs into a firm's production process, such as capital equipment, the skills of individual employees, patents, finances, and talented managers Signup and view all the answers

Can individual resources alone yield a competitive advantage?

No, but they can be a source of competitive advantage when formed into a capability Signup and view all the answers

What is a common feature among Netflix and other streaming content providers like Amazon?

They produce their own content Signup and view all the answers

What is the impact of social media advertising on traditional competitive advantages?

It has reduced their effectiveness Signup and view all the answers

What is required for a firm to be strategically competitive in today's business world?

A mind-set that values flexibility and innovation Signup and view all the answers

What is the consequence of failure for firms in today's competitive landscape?

Severe consequences Signup and view all the answers

What does the effective use of the strategic management process do for firms?

Reduces the likelihood of failure Signup and view all the answers

What is hypercompetition characterized by?

Excessive competition that creates inherent instability Signup and view all the answers

What drives hypercompetition according to the text?

The dynamics of strategic maneuvering among global and innovative combatants Signup and view all the answers

What is one of the forms of competition that occurs in hypercompetition?

Competition to create new know-how and establish first-mover advantage Signup and view all the answers

Study Notes

Globalization and Technological Changes

Firms competing in the global economy must meet or exceed global standards to earn above-average returns.
Workers flow freely among global economies, making employees a key source of competitive advantage.
Managers must learn to operate in a "multi-polar" world with many important countries having unique interests and environments.

Technology and Technological Changes

Technology trends and conditions can be categorized into: technology diffusion and disruptive technologies, the information age, and increasing knowledge intensity.
The rate of technology diffusion has increased significantly over the past 15-20 years.
Examples of technology diffusion rates: telephone (35 years), TV (26 years), radio (22 years), PCs (16 years), Internet (7 years).

The Competitive Landscape

The fundamental nature of competition in many industries is changing.
Markets are increasingly volatile, and the pace of change is relentless.
Advances in interactive computer networks and telecommunications have blurred the boundaries of the entertainment industry.
Cable companies, satellite networks, telecommunications companies, and internet-only streaming services are competing for entertainment revenue.

Hypercompetition

Hypercompetition describes excessive competition that creates inherent instability and necessitates constant disruptive change.
It results from the dynamics of strategic maneuvering among global and innovative combatants.
Firms aggressively challenge their competitors to improve their competitive position and ultimately their performance.

The Global Economy

A global economy is characterized by the free flow of goods, services, people, skills, and ideas across geographic borders.
Globalization increases the range of opportunities for companies competing in the current competitive landscape.
Firms engaging in globalization must make culturally sensitive decisions when using the strategic management process.

Resource-Based Model of Above-Average Returns

The resource-based model assumes that each organization is a collection of unique resources and capabilities.
A firm's resources are classified into three categories: physical, human, and organizational capital.
Resources are either tangible or intangible in nature.
Individual resources alone may not yield a competitive advantage; capabilities are formed when resources are integrated.
Core competencies are capabilities that serve as a source of competitive advantage for a firm over its rivals.

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Description

This quiz covers the impact of globalization on domestic firms, the role of global competitors, and the significance of workers in gaining a competitive edge. Learn how managers can operate effectively in a multi-polar world.