Technology Enabled Strategy Chapter 2
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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?

    <p>To weave technology into operations to create value</p> Signup and view all the answers

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

    <p>They are management frameworks used to understand competitive advantage</p> Signup and view all the answers

    What is the danger of relying solely on technology?

    <p>It is rarely the answer to achieving competitive advantage</p> Signup and view all the answers

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

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

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

    <p>To leverage technology for competitive advantage</p> Signup and view all the answers

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

    <p>A tech-industry 'has-been'</p> Signup and view all the answers

    What is the primary source of revenue for Google?

    <p>Digital advertising</p> Signup and view all the answers

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

    <p>Generation of new product ideas and promotion of sales</p> Signup and view all the answers

    What is the purpose of data analytics in business?

    <p>To assist managers in decision-making</p> Signup and view all the answers

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

    <p>Rewritten revenue models and lowered computing costs</p> Signup and view all the answers

    What is the characteristic of 'smart' devices?

    <p>They incorporate machine learning and artificial intelligence</p> Signup and view all the answers

    What is the result of the growth in data collection?

    <p>Highlighted need to consider customer privacy</p> Signup and view all the answers

    What is the impact of technological disruptions on organizations?

    <p>They will almost certainly accelerate and impact organizations</p> Signup and view all the answers

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

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

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

    <p>To mitigate potential negative impacts to their business</p> Signup and view all the answers

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

    <p>To add value to products and services and earn more profit</p> Signup and view all the answers

    What is the role of technology in business strategy?

    <p>A key enabler to nearly every modern business strategy</p> 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?

    <p>Sustainable competitive advantage</p> Signup and view all the answers

    What is the main challenge in achieving sustainable competitive advantage?

    <p>New products and new competitors rising seemingly overnight</p> Signup and view all the answers

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

    <p>Because it can be easily imitated</p> Signup and view all the answers

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

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

    What is the purpose of the value chain?

    <p>To benchmark a firm's efficiency</p> 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?

    <p>Michael Porter, a professor at Harvard Business School</p> Signup and view all the answers

    What is a strategic information system designed to do?

    <p>To align with and implement a competitive organizational strategy</p> Signup and view all the answers

    Why does simply purchasing the latest technology not guarantee success?

    <p>Because it is not enough to create valuable assets</p> Signup and view all the answers

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

    <p>To increase switching costs</p> Signup and view all the answers

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

    <p>It is a career-long pursuit</p> Signup and view all the answers

    What is the main goal of business-level strategy?

    <p>To organize to compete in a product market</p> Signup and view all the answers

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

    <p>Intense competition</p> Signup and view all the answers

    What is the advice given by Nick Carr?

    <p>Follow, Don't Lead</p> Signup and view all the answers

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

    <p>Technology is often thought of as easily 'outsourced'</p> Signup and view all the answers

    What is the purpose of Porter's Five Forces?

    <p>To identify opportunities for competitive advantage</p> Signup and view all the answers

    Why is technology adoption not a guarantee of success?

    <p>Because it can be easily imitated</p> Signup and view all the answers

    What is the result of low entry barriers?

    <p>A firm has intense competition</p> Signup and view all the answers

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

    <p>To create sustainable competitive advantage</p> 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?

    <p>Competitive Advantage</p> 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?

    <p>Cost Leadership</p> Signup and view all the answers

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

    <p>Michael Porter</p> 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?

    <p>Porter's 5 Force Model</p> Signup and view all the answers

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

    <p>Operational Effectiveness</p> 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?

    <p>Value Chain</p> 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?

    <p>Amazon</p> Signup and view all the answers

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

    <p>Entry Barrier</p> Signup and view all the answers

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

    <p>A strategy that concentrates on a smaller market</p> 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?

    <p>Differentiation</p> Signup and view all the answers

    What is the main goal of an innovation strategy?

    <p>To meet previously unmet needs of buyers</p> Signup and view all the answers

    What is the value chain, according to Porter?

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

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

    <p>To create value and profit</p> Signup and view all the answers

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

    <p>A firm being stuck in the middle</p> Signup and view all the answers

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

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

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

    <p>To add value to its product or service</p> Signup and view all the answers

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

    <p>To balance short-term efficiency with long-term effectiveness</p> Signup and view all the answers

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

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

    What is the primary goal of a primary activity?

    <p>To add value greater than the cost of the activity</p> Signup and view all the answers

    Which of the following is NOT a primary activity?

    <p>Firm infrastructure</p> Signup and view all the answers

    What is the primary function of outbound logistics?

    <p>To get the product out to the customer</p> Signup and view all the answers

    How can information technology be used in sales and marketing?

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

    What is the primary function of service activity?

    <p>To maintain and enhance the product's value</p> Signup and view all the answers

    Which of the following is a support activity?

    <p>Firm infrastructure</p> Signup and view all the answers

    How can human resource management be improved through information technology?

    <p>Through online recruiting, online training, and flexible work environments</p> Signup and view all the answers

    What is the primary function of technology development?

    <p>To provide innovation that supports primary activities</p> Signup and view all the answers

    What is an imitation-resistant value chain?

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

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

    <p>Operational weaknesses and the firm's differences and distinctiveness</p> Signup and view all the answers

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

    <p>Co-opting a key source of competitive advantage</p> Signup and view all the answers

    Why did Dell stop deploying a packaged ERP implementation?

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

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

    <p>Product uniqueness</p> Signup and view all the answers

    What is Porter's Five Forces Model used for?

    <p>To analyze the profitability of an industry</p> Signup and view all the answers

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

    <p>A decrease in profits</p> Signup and view all the answers

    What is an example of a digital hybrid substitute?

    <p>Uber and Lyft</p> Signup and view all the answers

    What happens when there are few suppliers in an industry?

    <p>The bargaining power of suppliers increases</p> Signup and view all the answers

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

    <p>The level of customization possible</p> Signup and view all the answers

    What is the purpose of the value chain analysis?

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

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

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

    What is the primary reason many firms experience aggressive competition?

    <p>Because they focus on operational effectiveness</p> Signup and view all the answers

    What is the 'fast follower' problem?

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

    What is the key to achieving sustainable competitive advantage?

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

    What is the difference between operational effectiveness and strategic positioning?

    <p>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</p> Signup and view all the answers

    Why is technology not often a source of competitive advantage?

    <p>Because it can be easily copied or replicated</p> Signup and view all the answers

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

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

    What is the resource-based view of competitive advantage?

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

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

    <p>The trap of carelessly entering markets</p> Signup and view all the answers

    What is the key to achieving true strategic positioning?

    <p>Creating differences that cannot be easily matched by rivals</p> Signup and view all the answers

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

    <p>Combining the right technologies with good management</p> Signup and view all the answers

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

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

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

    <p>The customer's bargaining power is high.</p> Signup and view all the answers

    What is the impact of social media on buyer power?

    <p>It increases buyer power.</p> Signup and view all the answers

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

    <p>It is more challenging to make a profit.</p> Signup and view all the answers

    What is the characteristic of a highly technical industry?

    <p>It has numerous barriers to entry.</p> Signup and view all the answers

    What is the result of fierce rivalry among existing competitors?

    <p>It leads to aggressive pricing and increased customer support.</p> Signup and view all the answers

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

    <p>It has lowered overall profitability.</p> Signup and view all the answers

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

    <p>It can alter the competitive landscape.</p> Signup and view all the answers

    What is the purpose of continually visiting strategic frameworks?

    <p>To consider any market-impacting shifts.</p> Signup and view all the answers

    What is the characteristic of platform business models?

    <p>They do not require physical infrastructure.</p> Signup and view all the answers

    What is a primary goal of a strategic information system?

    <p>To deliver a product or service at a lower cost</p> Signup and view all the answers

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

    <p>Tightly controlling costs throughout the value chain</p> Signup and view all the answers

    What is the primary goal of a differentiation strategy?

    <p>To add value to a product or service</p> Signup and view all the answers

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

    <p>Walmart</p> Signup and view all the answers

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

    <p>To reduce the truck uploading process</p> Signup and view all the answers

    What is a characteristic of a commodity?

    <p>Price-focused</p> Signup and view all the answers

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

    <p>Starbucks</p> Signup and view all the answers

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

    <p>To provide convenience to customers</p> Signup and view all the answers

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

    <p>Collecting valuable data on customers</p> Signup and view all the answers

    What is an example of a switching cost?

    <p>Having to go through a process again</p> 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.

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