Podcast
Questions and Answers
How does the VRIO framework help firms identify their competitive advantages?
How does the VRIO framework help firms identify their competitive advantages?
The VRIO framework helps firms identify competitive advantages by assessing if resources are Valuable, Rare, Inimitable, and Organized, ensuring the firm can effectively exploit them.
What role does value chain analysis play in improving a firm's competitive position?
What role does value chain analysis play in improving a firm's competitive position?
Value chain analysis identifies which activities contribute to customer value, allowing firms to enhance efficiency and differentiation in their competitive strategy.
What is the significance of the 'Rarity' aspect in the VRIO framework?
What is the significance of the 'Rarity' aspect in the VRIO framework?
'Rarity' indicates whether a resource is unique among competitors, as rare resources can provide a firm an edge in the market.
Define dynamic capabilities and explain how they differ from static capabilities.
Define dynamic capabilities and explain how they differ from static capabilities.
In what way do support activities in the value chain contribute to a firm's success?
In what way do support activities in the value chain contribute to a firm's success?
How can cultural dimensions impact a firm's global resource management strategy?
How can cultural dimensions impact a firm's global resource management strategy?
Describe the importance of technology development in the value chain.
Describe the importance of technology development in the value chain.
What does the 'Organization' component of the VRIO framework entail?
What does the 'Organization' component of the VRIO framework entail?
How does VRIO extend the analysis provided by SWOT in strategic management?
How does VRIO extend the analysis provided by SWOT in strategic management?
What is the difference between static and dynamic capabilities in a firm?
What is the difference between static and dynamic capabilities in a firm?
In the context of an institutional framework, what is the main function of formal institutions?
In the context of an institutional framework, what is the main function of formal institutions?
What role do firm-specific advantages (FSAs) play in a firm's strategy compared to industry-specific factors?
What role do firm-specific advantages (FSAs) play in a firm's strategy compared to industry-specific factors?
Why is it important for firms to balance domestic and international resources?
Why is it important for firms to balance domestic and international resources?
What are the implications of being 'stuck in the middle' for a firm's competitive positioning?
What are the implications of being 'stuck in the middle' for a firm's competitive positioning?
How does differentiation in strategy justify premium pricing for a product?
How does differentiation in strategy justify premium pricing for a product?
In the context of competitive advantage, what role does strategic positioning play?
In the context of competitive advantage, what role does strategic positioning play?
What is the primary difference between integration and outsourcing in a firm's strategic decision-making?
What is the primary difference between integration and outsourcing in a firm's strategic decision-making?
Describe how a hybrid strategy can benefit a firm in today's competitive landscape.
Describe how a hybrid strategy can benefit a firm in today's competitive landscape.
What challenges might a firm face when operating within blurred industry boundaries?
What challenges might a firm face when operating within blurred industry boundaries?
How can Porter’s Five Forces framework help a firm analyze competitive dynamics?
How can Porter’s Five Forces framework help a firm analyze competitive dynamics?
What is meant by the term 'focus strategy' in competitive advantage?
What is meant by the term 'focus strategy' in competitive advantage?
Flashcards
VRIO Framework
VRIO Framework
A framework that builds on SWOT analysis to analyze internal resources for sustainable competitive advantage.
Static Resources
Static Resources
Fixed assets or capabilities that provide a foundation for a firm's competitive position.
Dynamic Capabilities
Dynamic Capabilities
The ability of a firm to adapt and renew its resources in response to changing environments.
Formal Institutions
Formal Institutions
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Informal Institutions
Informal Institutions
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Resource-Based View (RBV)
Resource-Based View (RBV)
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Capabilities
Capabilities
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Value Chain Analysis
Value Chain Analysis
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Primary Activities
Primary Activities
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Inbound Logistics
Inbound Logistics
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Operations
Operations
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Outsourcing
Outsourcing
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Cost Leadership
Cost Leadership
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Differentiation
Differentiation
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Focus Strategy
Focus Strategy
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Industry Boundaries
Industry Boundaries
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Strategic Groups
Strategic Groups
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Backward Integration
Backward Integration
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Stuck in the Middle
Stuck in the Middle
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Study Notes
Global Strategy
- Global strategy is a firm's theory for successful competition.
- Three perspectives: rooted in military strategy, blending planning and execution, and tested hypothesis.
- Global strategy encompasses multinational enterprises and local competitors
- Four fundamental questions:
- Why firms differ: exploring organizational, resource, and institutional differences.
- How firms behave: examining competitive and cooperative strategies.
- What determines the scope of the firm: deciding operational boundaries.
- What determines success and failure: balancing internal (resource-based) and external (institutional) factors.
- Globalization: increasing interconnectedness of economies, reducing costs, and barriers.
- Semi-Globalization: acknowledgment of persistent national divides, creating uneven integration.
- Black Swan events: rare, unpredictable events with significant consequences, requiring resilience and adaptation (e.g., COVID-19).
Managing Industry Competition
- Industry competition: ongoing rivalry among firms for market share, profitability, or dominance.
- Shaped by various strategic choices.
- Tactics include price wars, marketing campaigns, and product launches.
- Intensity of competition is influenced by the number of competitors and industry growth rates, product differentiation, and exit barriers.
- Strategic groups: subsets of firms within an industry that compete directly.
- Differentiated by pricing strategies (e.g., premium vs. low-cost), product differentiation (e.g. luxury vs. mass market), and distribution channels (e.g. ecommerce vs physical retail).
Leveraging Resources and Capabilities
- Resources: tangible and intangible assets (financial, physical, technological, and organizational).
- Capabilities: the ability to deploy resources effectively to enhance value.
- Resource-based view (RBV): competitive advantage stems from valuable, rare, inimitable, and organized (VRIO) resources.
- Value chain analysis: dissecting a firm's activities to identify areas adding value for customers.
Emphasizing Institutions, Cultures, and Ethics
- Institutions: human-created constraints structuring human interaction (formal and informal).
- Culture dimensions: power distance, individualism-collectivism, masculinity-femininity, uncertainty avoidance, and long-term orientation.
- Ethics in strategy: firms are influenced by norms, laws, and standards regarding conduct.
- Strategic responses: reactive, defensive, accommodative, and proactive.
- Ethical decision making is important for long term success
Entering Foreign Markets
- Liability of foreignness: disadvantages faced by foreign firms due to being outsiders.
- Liability of outsidership: lacking network ties in a foreign market.
- Strategic considerations for entry choices include:
- Entry timing
- Market selection
- Market entry modes
- Degree of adaptation/standardization
- Frameworks used for analysis: industry-based, resource-based, and institutional views.
Making Strategic Alliances and Networks
- Strategic alliances: voluntary cooperation agreements between firms, including contractual and equity-based arrangements.
- Strategic networks: alliances among multiple firms, competing together.
- Factors to consider include costs, control, and required commitment, aligning strategic goals, and establishing trust.
- Evaluation of alliance performance: alignment of goals, learning opportunities, and partner compatibility.
- Comparing acquisition vs alliance: both have advantages depending on the conditions.
Diversifying and Managing Acquisitions
- Corporate-level strategy: how firms create value across multiple businesses.
- Diversification: expanding into new products, services, or geographic markets.
- Types of diversification: product-related and product-unrelated.
- Considerations: industry attractiveness, resource capabilities, institutional environments, and potential synergies.
- Evaluating acquisition performance: synergies, cultural fit, and management capabilities.
Making Global Strategic Alliances and Networks Work
- Critical steps include evaluating potential synergies and risks.
- Choosing the best contractual or equity model.
- Position the relationship to align strategic goals and build trust.
- Developing ways to combat opportunism during the alliance lifetime.
- Shifting from strong to weak ties to enhance operational flexibility.
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