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?

<p>To weave technology into operations to create value (A)</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 (B)</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 (C)</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 (B)</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 (C)</p> Signup and view all the answers

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

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

What is the primary source of revenue for Google?

<p>Digital advertising (A)</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 (B)</p> Signup and view all the answers

What is the purpose of data analytics in business?

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

What is the characteristic of 'smart' devices?

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

What is the result of the growth in data collection?

<p>Highlighted need to consider customer privacy (A)</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 (C)</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 (A)</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 (B)</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 (C)</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 (A)</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 (D)</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 (C)</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 (D)</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? (A)</p> Signup and view all the answers

What is the purpose of the value chain?

<p>To benchmark a firm's efficiency (A)</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 (B)</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 (D)</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 (B)</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 (B)</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 (A)</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 (C)</p> Signup and view all the answers

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

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

What is the advice given by Nick Carr?

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

What is the purpose of Porter's Five Forces?

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

Why is technology adoption not a guarantee of success?

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

What is the result of low entry barriers?

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

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

<p>To create sustainable competitive advantage (D)</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 (A)</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 (A)</p> Signup and view all the answers

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

<p>Michael Porter (B)</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 (B)</p> Signup and view all the answers

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

<p>Operational Effectiveness (A)</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 (A)</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 (B)</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 (B)</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 (D)</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 (D)</p> Signup and view all the answers

What is the main goal of an innovation strategy?

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

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

<p>To create value and profit (C)</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 (B)</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 (B)</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 (B)</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 (A)</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 (A)</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 (B)</p> Signup and view all the answers

Which of the following is NOT a primary activity?

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

What is the primary function of outbound logistics?

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

What is the primary function of service activity?

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

Which of the following is a support activity?

<p>Firm infrastructure (A)</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 (D)</p> Signup and view all the answers

What is the primary function of technology development?

<p>To provide innovation that supports primary activities (B)</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 (C)</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 (D)</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 (C)</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 (B)</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 (B)</p> Signup and view all the answers

What is Porter's Five Forces Model used for?

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

What is an example of a digital hybrid substitute?

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

What happens when there are few suppliers in an industry?

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

What is the primary reason many firms experience aggressive competition?

<p>Because they focus on operational effectiveness (C)</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 (A)</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 (C)</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 (D)</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 (C)</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 (B)</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 (A)</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 (B)</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 (D)</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 (A)</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. (C)</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. (D)</p> Signup and view all the answers

What is the impact of social media on buyer power?

<p>It increases buyer power. (B)</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. (A)</p> Signup and view all the answers

What is the characteristic of a highly technical industry?

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

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

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

What is the purpose of continually visiting strategic frameworks?

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

What is the characteristic of platform business models?

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

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

<p>Walmart (D)</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 (D)</p> Signup and view all the answers

What is a characteristic of a commodity?

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

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

<p>Starbucks (B)</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 (B)</p> Signup and view all the answers

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

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

What is an example of a switching cost?

<p>Having to go through a process again (D)</p> Signup and view all the answers

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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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