SM Session 01-04 Worksheet

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Questions and Answers

What type of relationships are managed in the context of suppliers and buyers?

Horizontal relationships

Vertical relationships (correct)

Institutional relationships

Governmental relationships

What is the focus of corporate-level strategy?

Differentiating the company's product or service

Following the CEO's direction

Competing in a particular industry

Determining what industries to operate in (correct)

What characterizes a Blue Ocean strategy?

Intense competition

Innovative space for new ventures (correct)

Calm seas and open horizons

A political party's strategy

What perspective focuses on the industry in which firms operate?

Industrial organization Signup and view all the answers

What is part of a firm's business environment?

External factors Signup and view all the answers

What is the primary concern of vertical relationships?

Managing suppliers Signup and view all the answers

What is the focus of governmental relationships in a business context?

Complying with regulations Signup and view all the answers

What is the goal of a resource-based view?

To identify a firm's internal strengths Signup and view all the answers

What type of strategy is characterized by intense competition?

RED Ocean strategy Signup and view all the answers

What is the term for firms that invest in a variety of different product markets to reduce exposure to risk in single product markets?

Diversified firms Signup and view all the answers

What is the term for the characteristics of the product and how firms improve the quality of their offerings over time?

Product Development Signup and view all the answers

What is the term for the factors shaping demand for the organization's goods and services in the environments in which the organization operates?

Demand Drivers Signup and view all the answers

Which of the following is NOT one of the forces in Porter's Five Forces model?

Threat of Government Regulation Signup and view all the answers

What type of strategy involves creating a new market space, making competition irrelevant?

Blue Ocean strategy Signup and view all the answers

What is the term for the term used to describe the market environment in which firms operate?

Market Environment Signup and view all the answers

What is the term for the process of improving the quality of a product over time?

Product Development Signup and view all the answers

What do resources and capabilities provide for a firm's strategy?

The building blocks for constructing a firm's strategy Signup and view all the answers

What is the value chain?

A set of activities carried out to create value for customers Signup and view all the answers

What is the point of exchange at which perceived producer value equals consumer value?

A price agreed upon by the seller and buyer Signup and view all the answers

What is value?

The perceived worthiness of a product or service Signup and view all the answers

What is an example of a capability?

A good track record in research and development Signup and view all the answers

What is the primary focus of a business unit strategy?

Competing in a specific industry Signup and view all the answers

Which statement is correct about assessing resources?

It is more difficult to assess intangible resources than tangible ones Signup and view all the answers

What do a firm's resources and capabilities enable it to do?

Create a competitive advantage Signup and view all the answers

What does Michael Porter suggest that new-firm entrants face in markets?

Barriers to entry Signup and view all the answers

What is the relationship between resources and capabilities?

Resources are used to develop capabilities Signup and view all the answers

What is the primary focus of advocates of the Resource-Based View (RBV)?

Internal organizational capabilities Signup and view all the answers

What are the isolating mechanisms identified by Penrose?

All of these Signup and view all the answers

What is the primary building block for constructing a firm's strategy according to the RBV?

Capabilities Signup and view all the answers

What is the focus of business unit strategy in terms of products?

Deciding what products to produce Signup and view all the answers

What is the primary focus of the RBV in terms of organizational analysis?

Internal analysis of organizational capabilities Signup and view all the answers

What is the primary difference between Porter's approach and the RBV?

Porter focuses on external forces, while the RBV focuses on internal capabilities Signup and view all the answers

What do the VRIN characteristics in a firm's resources stand for?

Valuable, Rare, Imperfectly Imitable, Non-substitutable Signup and view all the answers

What is dynamic capability in a firm?

The ability to integrate, build and reconfigure internal and external resources Signup and view all the answers

Why does a firm oriented to a product market strategy unlikely to generate economic rent?

Because there are clear substitutes, and buyers may choose one of them Signup and view all the answers

What is the goal of a firm with a product market strategy?

To create a sustainable competitive advantage Signup and view all the answers

What is essential for a firm to address and shape rapidly changing business environments?

Dynamic capabilities Signup and view all the answers

What is the focus of a firm with a resource-based view?

The firm's internal resources and capabilities Signup and view all the answers

What is the outcome when other firms in the market can buy the same resources and eliminate any rent-making possibilities?

The firm is unable to earn economic rent Signup and view all the answers

What is the primary concern of a firm with a product market strategy?

To create a sustainable competitive advantage Signup and view all the answers

Study Notes

Types of Relationships

Vertical relationships: about the management of suppliers and buyers
Horizontal relationships: not related to the management of suppliers and buyers

Corporate-Level Strategy

Considers what industries and activities the firm should be engaged in
Not about differentiating a company's product or service against competitors

Blue Ocean Strategy

Characterized by being an innovative space in which new ventures can flourish
Not about intense competition or calm seas and open horizons

External Perspective

Industrial organization: takes an external perspective and is concerned with the industry within which firms operate
Not related to value chain or macro economics

Business Environment

Market environment: part of a firm's business environment
Legal frameworks and institutional structures are also part of a firm's business environment

Product Development

Product differentiation: refers to the characteristics of the product and is the way through which firms improve the quality of their offerings over time
Not related to core product, augmented product, or product development

Red Ocean Strategy

Characterized by intense competition
Not related to the US Republican party strategy or competitive opportunities

Strategists

Refer to demand drivers as factors shaping the goals of the organization's goods and services in the environments in which the organization operates
Not related to technology drivers, properties, or objectives

Diversified Firms

Firms that invest in a variety of different product markets to reduce exposure to risk in single product markets
Not investment firms, monopolies, or oligopolies

Porter's Five Forces

Does not include threat of government regulation
Includes threat of substitutes, threat of new entrants, and bargaining power of suppliers

Business Unit Strategy

Considers how to compete in a particular industry
Not about what products to produce or what industries and activities the firm should be engaged in

Barriers to Entry

Initial capital requirements, the threat of price-cutting by established firms, and the level of product differentiation represent barriers to entry for new-firm entrants into markets

Resource-Based View (RBV)

Focuses internally on organizational capabilities
Not about external factors such as strategic groups, macro-external forces, or organizational structure

Isolating Mechanisms

Identified by Penrose as entrepreneurial vision of managers, firm-specific knowledge possessed by managers, and path dependencies in resource development

Value Chain

The set of activities carried out to create value for customers that affords the organization a profit margin
Not about contractually tight agreements, coordinating activities of different units, or producing a superior customer experience

Value

Is the perceived worthiness of something
Resides in a particular product or service
Is not the amount of profit made on a transaction

Capabilities

Examples include a reputation for using only high-quality inputs, a good track record in research and development, and a reputation for good customer service

VRIN Characteristics

Valuable, rare, imperfectly imitable, and non-substitutable

Dynamic Capabilities

A firm's capacity to integrate, build, and reconfigure internal and external resources/competencies to address and shape rapidly changing business environments

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Description

Assessment worksheet covering sessions 01-04, consisting of 23 questions to be completed within 13 minutes.