Technology Enabled Strategy Chapter 2

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Questions and Answers

What is the primary focus of this chapter?

The role of managers in a rapidly shifting environment

The importance of the five forces model

The process of digital signal processing

The impact of digital technology on the business landscape (correct)

What is the significance of digital technologies in the business landscape?

They are only used in the technology industry

They are primarily used for signal processing

They are changing the industry's competitive dynamics (correct)

They are advancing at a slower rate than other innovations

What is the role of managers in a rapidly shifting environment?

To formulate non-tech-centric approaches to markets

To ignore the impact of digital technology

To focus solely on digital signal processing

To recognize opportunities and risks (correct)

What is the primary goal of leveraging technology for competitive advantage?

To weave technology into operations to create value Signup and view all the answers

What is the significance of the value chain and five forces model?

They are management frameworks used to understand competitive advantage Signup and view all the answers

What is the danger of relying solely on technology?

It is rarely the answer to achieving competitive advantage Signup and view all the answers

What is the significance of competitive advantage in the business landscape?

It is a result of a firm's ability to create value Signup and view all the answers

What is the primary goal of formulating a tech-centric approach to markets?

To leverage technology for competitive advantage Signup and view all the answers

What was the status of Apple Inc. twenty years ago?

A tech-industry 'has-been' Signup and view all the answers

What is the primary source of revenue for Google?

Digital advertising Signup and view all the answers

What is the result of companies harnessing the power of social media?

Generation of new product ideas and promotion of sales Signup and view all the answers

What is the purpose of data analytics in business?

To assist managers in decision-making Signup and view all the answers

What is the impact of the rise of open-source software on the computing industry?

Rewritten revenue models and lowered computing costs Signup and view all the answers

What is the characteristic of 'smart' devices?

They incorporate machine learning and artificial intelligence Signup and view all the answers

What is the result of the growth in data collection?

Highlighted need to consider customer privacy Signup and view all the answers

What is the impact of technological disruptions on organizations?

They will almost certainly accelerate and impact organizations Signup and view all the answers

What is the significance of the year 2020 for Apple Inc.?

It was the year Apple Inc. became the first U.S. company to have a market capitalization of $2 trillion Signup and view all the answers

What is the primary purpose of companies reviewing information shared on social media?

To mitigate potential negative impacts to their business Signup and view all the answers

What is the primary goal of companies in terms of competitive advantage?

To add value to products and services and earn more profit Signup and view all the answers

What is the role of technology in business strategy?

A key enabler to nearly every modern business strategy Signup and view all the answers

What is described as a firm's ability to attract more customers, earn more profit, or return more value to shareholders than rival firms?

Sustainable competitive advantage Signup and view all the answers

What is the main challenge in achieving sustainable competitive advantage?

New products and new competitors rising seemingly overnight Signup and view all the answers

What is the main reason technology alone cannot provide sustainable competitive advantage?

Because it can be easily imitated Signup and view all the answers

What is the fundamental strategic question in terms of technology and competition?

How can I possibly compete when everyone can copy my technology and the competition is just a click away? Signup and view all the answers

What is the purpose of the value chain?

To benchmark a firm's efficiency Signup and view all the answers

Who defined three generic business-level strategies that outline the basic methods of organizing to compete in a product market?

Michael Porter, a professor at Harvard Business School Signup and view all the answers

What is a strategic information system designed to do?

To align with and implement a competitive organizational strategy Signup and view all the answers

Why does simply purchasing the latest technology not guarantee success?

Because it is not enough to create valuable assets Signup and view all the answers

What is the role of technology in strengthening a firm's switching costs?

To increase switching costs Signup and view all the answers

What is the main challenge in developing strong strategic thinking skills?

It is a career-long pursuit Signup and view all the answers

What is the main goal of business-level strategy?

To organize to compete in a product market Signup and view all the answers

What is the result of an innovation based on technology alone?

Intense competition Signup and view all the answers

What is the advice given by Nick Carr?

Follow, Don't Lead Signup and view all the answers

What is the main difficulty in managing technology in business strategy?

Technology is often thought of as easily 'outsourced' Signup and view all the answers

What is the purpose of Porter's Five Forces?

To identify opportunities for competitive advantage Signup and view all the answers

Why is technology adoption not a guarantee of success?

Because it can be easily imitated Signup and view all the answers

What is the result of low entry barriers?

A firm has intense competition Signup and view all the answers

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

To create sustainable competitive advantage Signup and view all the answers

What is a company said to have when it successfully attracts more customers, earns more profit, or returns more value to its shareholders than rival firms do?

Competitive Advantage Signup and view all the answers

What is the strategy where a firm offers customers its product or service at a lower price than its rivals can?

Cost Leadership Signup and view all the answers

Who wrote the book Competitive Advantage: Creating and Sustaining Superior Performance?

Michael Porter Signup and view all the answers

What is the framework developed by Michael Porter to determine the profitability and attractiveness of a market or market segment?

Porter's 5 Force Model Signup and view all the answers

What refers to performing the same operational tasks better than rivals perform them?

Operational Effectiveness Signup and view all the answers

What is a set of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market?

Value Chain Signup and view all the answers

Which of the following companies uses browsing records, purchase patterns, and product ratings to present a custom home page?

Amazon Signup and view all the answers

What is the term for obstacles that make it difficult to enter a given market?

Entry Barrier Signup and view all the answers

What is the focus strategy, according to Porter's typology?

A strategy that concentrates on a smaller market Signup and view all the answers

What is the strategy where a company tries to add value to their products and services so they can attract customers who are willing to pay a higher price?

Differentiation Signup and view all the answers

What is the main goal of an innovation strategy?

To meet previously unmet needs of buyers Signup and view all the answers

What is the value chain, according to Porter?

A series of activities undertaken to produce a product or service Signup and view all the answers

What is the main purpose of Porter's value chain?

To create value and profit Signup and view all the answers

What is the result of trying to combine cost leadership and differentiation, according to Porter?

A firm being stuck in the middle Signup and view all the answers

What is the purpose of a customer relationship management (CRM) system?

To collect data from every aspect of the customer's experience Signup and view all the answers

What is the main goal of a firm following a focus-differentiation strategy?

To add value to its product or service Signup and view all the answers

What is the role of technology and innovation management in an innovation strategy?

To balance short-term efficiency with long-term effectiveness Signup and view all the answers

What is the main goal of a firm that chooses to implement a focus strategy?

To concentrate its marketing and selling efforts on a smaller market Signup and view all the answers

What is the primary goal of a primary activity?

To add value greater than the cost of the activity Signup and view all the answers

Which of the following is NOT a primary activity?

Firm infrastructure Signup and view all the answers

What is the primary function of outbound logistics?

To get the product out to the customer Signup and view all the answers

How can information technology be used in sales and marketing?

Through online advertising, online surveys, and the company website or social media sites Signup and view all the answers

What is the primary function of service activity?

To maintain and enhance the product's value Signup and view all the answers

Which of the following is a support activity?

Firm infrastructure Signup and view all the answers

How can human resource management be improved through information technology?

Through online recruiting, online training, and flexible work environments Signup and view all the answers

What is the primary function of technology development?

To provide innovation that supports primary activities Signup and view all the answers

What is an imitation-resistant value chain?

A value chain that is tough for rivals to copy while gaining similar benefits Signup and view all the answers

What can an analysis of a firm's value chain reveal?

Operational weaknesses and the firm's differences and distinctiveness Signup and view all the answers

What can be the result of adopting software that changes a unique process into a generic one?

Co-opting a key source of competitive advantage Signup and view all the answers

Why did Dell stop deploying a packaged ERP implementation?

Because it required operational changes that would eliminate their unique supply chain advantages Signup and view all the answers

What is the primary focus of a company like Apple in terms of competitive advantage?

Product uniqueness Signup and view all the answers

What is Porter's Five Forces Model used for?

To analyze the profitability of an industry Signup and view all the answers

What is the result of the Internet on industry profits in industries where substitution occurs?

A decrease in profits Signup and view all the answers

What is an example of a digital hybrid substitute?

Uber and Lyft Signup and view all the answers

What happens when there are few suppliers in an industry?

The bargaining power of suppliers increases Signup and view all the answers

What is the main difference between a packaged ERP implementation and a custom-built ERP system?

The level of customization possible Signup and view all the answers

What is the purpose of the value chain analysis?

To understand how information technology can lead to competitive advantage Signup and view all the answers

Why do firms typically buy accounting software rather than build their own?

Because accounting processes are standardized and not a source of competitive advantage Signup and view all the answers

What is the primary reason many firms experience aggressive competition?

Because they focus on operational effectiveness Signup and view all the answers

What is the 'fast follower' problem?

A company that quickly learns from a pioneer's successes and mistakes Signup and view all the answers

What is the key to achieving sustainable competitive advantage?

Controlling a set of exploitable resources with four critical characteristics Signup and view all the answers

What is the difference between operational effectiveness and strategic positioning?

Operational effectiveness is about performing the same activities better, while strategic positioning is about performing different activities or the same activities in a different way Signup and view all the answers

Why is technology not often a source of competitive advantage?

Because it can be easily copied or replicated Signup and view all the answers

What is required for a firm to maintain sustainable competitive advantage?

Control over a set of exploitable resources with four critical characteristics Signup and view all the answers

What is the resource-based view of competitive advantage?

An approach that determines if a firm's differences are special enough to maintain sustainable competitive advantage Signup and view all the answers

What is the result of carelessly entering markets simply because growth is spotted?

The trap of carelessly entering markets Signup and view all the answers

What is the key to achieving true strategic positioning?

Creating differences that cannot be easily matched by rivals Signup and view all the answers

What is the best way to achieve a positive result from technology?

Combining the right technologies with good management Signup and view all the answers

What happens when a single company makes the controller chip for a car engine?

The company can control the price, at least to some extent. Signup and view all the answers

What happens when many companies are providing the same product to a customer?

The customer's bargaining power is high. Signup and view all the answers

What is the impact of social media on buyer power?

It increases buyer power. Signup and view all the answers

What is the result of low barriers to entry in an industry?

It is more challenging to make a profit. Signup and view all the answers

What is the characteristic of a highly technical industry?

It has numerous barriers to entry. Signup and view all the answers

What is the result of fierce rivalry among existing competitors?

It leads to aggressive pricing and increased customer support. Signup and view all the answers

What is the impact of technology on Porter's Five Forces?

It has lowered overall profitability. Signup and view all the answers

What is the result of government deregulation or intervention in an industry?

It can alter the competitive landscape. Signup and view all the answers

What is the purpose of continually visiting strategic frameworks?

To consider any market-impacting shifts. Signup and view all the answers

What is the characteristic of platform business models?

They do not require physical infrastructure. Signup and view all the answers

What is a primary goal of a strategic information system?

To deliver a product or service at a lower cost Signup and view all the answers

Which of the following is a characteristic of a cost-leadership strategy?

Tightly controlling costs throughout the value chain Signup and view all the answers

What is the primary goal of a differentiation strategy?

To add value to a product or service Signup and view all the answers

What is an example of a company that uses a cost-leadership strategy?

Walmart Signup and view all the answers

What is the purpose of the Fast Unloader technology used by Walmart?

To reduce the truck uploading process Signup and view all the answers

What is a characteristic of a commodity?

Price-focused Signup and view all the answers

What is an example of a company that uses a differentiation strategy?

Starbucks Signup and view all the answers

What is the purpose of the My Starbucks Rewards Program and Mobile Order & Pay system?

To provide convenience to customers Signup and view all the answers

What is the benefit of providing opportunities for personalization or customization?

Collecting valuable data on customers Signup and view all the answers

What is an example of a switching cost?

Having to go through a process again Signup and view all the answers

Study Notes

Chapter 2: Technology Enabled Strategy

The chapter explores the impact of digital technology on the business landscape, strategy, and competitive advantage.

Digital Business Landscape

The last 20 years have seen rapid technological growth, changing the way businesses operate and interact with customers.
Key examples of this growth include:
- Google's rise to become the most profitable media company.
- Apple's transformation from a "tech-industry 'has-been'" to a valuable company.
- The growth of social media platforms, such as Facebook, which has 2.9 billion active users.
- The rise of data analytics and business intelligence to drive innovation and decision-making.

Technology Enabled Strategy

The chapter aims to provide a primer on developing strategic thinking skills, focusing on the intersection of technology and strategy.
Managers are confused about how to craft a tech-enabled strategy, with conflicting views on its importance.

Competitive Advantage

A firm has a competitive advantage when it attracts more customers, earns more profit, or returns more value to its shareholders than rival firms.
Sustainable competitive advantage is hard to achieve due to the dynamic nature of the business environment.
A firm can achieve competitive advantage by:
- Adding value to its products or services.
- Reducing costs more effectively than its rivals.

Competitive Strategy

Michael Porter's three generic business-level strategies:
- Cost leadership (low-cost): offering products or services at a lower price than rivals.
- Differentiation: adding value to products or services to attract customers willing to pay a higher price.
- Focus: concentrating on a smaller market or niche.

The Value Chain

Michael Porter's value chain model: a series of activities undertaken by a company to produce a product or service.
The value chain consists of:
- Primary activities: inbound logistics, operations, outbound logistics, sales/marketing, and service.
- Support activities: firm infrastructure, human resource management, technology development, and procurement.

Using Technology to Achieve Competitive Advantage

Technology can play a key role in achieving and sustaining competitive advantage by:
- Enabling cost leadership through efficient processes.
- Enhancing differentiation through added value.
- Supporting innovation and focus strategies.
- Enhancing the value chain through information technology.### Technology Development and Value Chain
Technology development provides innovation that supports primary activities, adding value to various departments.
Information technology is a primary generator of value in this support activity.

Procurement and Value Chain

Procurement focuses on the acquisition of raw materials used in product creation.
Business-to-business e-commerce can be used to improve the acquisition of materials.

Imitation-Resistant Value Chain

A firm with an imitation-resistant value chain has a critical competitive asset.
Managers can use the value chain framework to analyze differences and distinctiveness compared to rivals.

Enterprise Resource Planning (ERP) Systems

ERP systems can improve processes and tools, such as supply chain management, customer relationship management, and enterprise resource planning.
These systems can have a significant impact on integrating activities within the firm and with suppliers and customers.
However, such software may not yield lasting competitive advantage if easily matched by competitors.

Porter's Five Forces

The Five Forces model is a framework for industry analysis, determining the average profitability of an industry.
The five forces are:
- Threat of substitute products or services
- Bargaining power of suppliers
- Bargaining power of customers
- Barriers to entry
- Rivalry among existing competitors

The Impact of Technology on Porter's Five Forces

Technology has lowered overall profitability in industries where substitution occurs.
The Internet has increased buyer power and made it easier to enter markets.
Technology has also increased the speed and quality of execution, making it easier to improve processes and tools.

The Danger of Relying on Technology

Relying solely on technology for competitiveness can lead to "sameness" and a lack of strategic positioning.
Operational effectiveness is critical, but it can be matched by rivals.
Strategic positioning, on the other hand, involves performing different activities or the same activities in a different way.
A firm's differences must be valuable, rare, imperfectly imitable, and non-substitutable to achieve sustainable competitive advantage.

Key Takeaways

Technology can play a key role in creating and reinforcing assets for sustainable advantage.
It's not a time or technology lead that provides sustainable competitive advantage, but what a firm does with its time and technology lead.
The value chain can be used to map a firm's efficiency and benchmark it against rivals.
Just purchasing and installing the latest technology will not by itself make a company more successful.

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Description

This quiz covers the key concepts of Technology Enabled Strategy, including digital business landscape, competitive advantage, and Porter's Five Forces.