Strategic Management Chapter 2

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Questions and Answers

What is the main source of information to identify a competitor's financial strength and weakness?

Consumer reports and reviews

Competitor's website

Annual reports (correct)

Industry surveys

What is the primary goal of analyzing competitors' strengths?

To determine the competitor's financial position

To improve the firm's own product offerings

To identify areas where the competitor is lacking (correct)

To learn from their marketing strategies

What is the term used to describe the factors that most affect an industry's ability to prosper in the marketplace?

Industry Performance Indicators

Market Share Drivers

Competitive Advantage Factors

Key Success Factors (KSFs) (correct)

Why do companies analyze their competitors' weaknesses?

To develop a strategy to exploit the competitor's weaknesses Signup and view all the answers

What is the purpose of conducting market research on competitors?

To identify areas where the competitor is lacking Signup and view all the answers

What is the result of analyzing competitors' strengths and weaknesses?

A list of areas for improvement Signup and view all the answers

What is the primary purpose of a competitor analysis?

To identify opportunities to gain a competitive advantage Signup and view all the answers

What is a likely consequence of a customer experiencing dissonance?

They will neither purchase the product again nor recommend it to others. Signup and view all the answers

What do companies use to identify areas where they can improve and gain a competitive advantage?

Competitor analysis Signup and view all the answers

What is the primary goal of encouraging competition within an industry?

To attain and achieve higher quality services or superior goods. Signup and view all the answers

What is a factor that can affect the competitive forces in an industry?

Geographic boundaries of the market Signup and view all the answers

What does a competitive strategy define?

How to create and sustain a competitive advantage over competitors. Signup and view all the answers

In which industry is competition centered on quality and reliability?

Monitors for PCs and laptops Signup and view all the answers

What is the ultimate outcome of having a competitive advantage over competitors?

Being more profitable in the long run. Signup and view all the answers

What is a key factor that determines the profit prospects of an industry?

Industry's economic traits and competitive conditions Signup and view all the answers

What is a critical component of industry and competitive analysis?

Delving into the industry's competitive process to discover what the main sources of competitive pressure are. Signup and view all the answers

What do companies in attractive industries need to do to achieve good performance?

Nothing, they can achieve good performance easily Signup and view all the answers

What is the purpose of Porter's five forces model?

To understand the competitive process in an industry. Signup and view all the answers

What is the primary objective of a business's competitive strategy?

To create and sustain a competitive advantage over competitors. Signup and view all the answers

What is a key factor that business strategists consider when formulating policies?

Both internal and external factors Signup and view all the answers

What is a key factor in devising a successful strategy?

Having a deep understanding of the industry's competitive character. Signup and view all the answers

What is a competitive strategy used by companies in some industries?

Working cooperatively with suppliers, customers, and competitors Signup and view all the answers

What is a characteristic of industries with fierce competition?

Companies focus on price Signup and view all the answers

What is a factor that can affect the market opportunities in an industry?

Disposable income of prospective buyers Signup and view all the answers

Study Notes

Competitive Strategy

A competitive strategy defines how a firm expects to create and sustain a competitive advantage over competitors to be more profitable in the long run.
It involves analyzing the industry's competitive process to discover the main sources of competitive pressure and how strong each competitive force is.

Analyzing Competitors

Identify the strengths of competitors: what they do well, their great products, effective marketing, and reasons why customers prefer them.
Determine the weaknesses of competitors: areas where they lack or are weak, identified through consumer reports, reviews, and annual financial reports.

Putting it all Together

Strategists should put together all information about competitors and draw inferences about what they are not offering and what the firm can do to fill in the gaps.
This stage helps identify areas that need strengthening by the firm and how to exploit competitors' weaknesses.

Key Factors for Competitive Success

Key Success Factors (KSFs) are strategy elements, product attributes, resources, competencies, competitive capabilities, and business outcomes that determine industry members' ability to prosper in the marketplace.
Economic character of industries varies according to factors like overall size, market growth rate, pace of technological change, geographic boundaries, number and size of buyers and sellers, and distribution channels.

Industry and Competitive Analysis

Industry and competitive conditions differ, affecting profit prospects and requiring companies to work cooperatively with suppliers, customers, and competitors to create product innovations and open up market opportunities.
Leading companies in unattractive industries may struggle to earn profits, while weak companies in attractive industries can achieve good performance.

Strategy and Business Environment

Business strategists create strategies and formulate policies considering both internal and external factors to accomplish business goals and objectives.

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Description

This quiz covers concepts of strategic management, including customer purchase behavior and competitive strategy in business.