Management 405

what percent of businesses fail in the first how many years?

80% in the first 5 years

common business mistakes

doing the same but thinking you can do better, confusing marketing with strategy, not understanding strengths, not having a strategy, getting the definition of business wrong

what is strategy?

the coordinated set of actions that its managers take to outperform the company’s competitors and achieve superior profitability

what is a business model?

management’s blueprint for delivering to customers a valuable product or service that will yield attractive profit

what are the elements of a business model?

the customer value proposition and the profit formula

what is a customer value proposition?

defines how the firm will satisfy buyer wants and needs at a price buyers will consider a good value

what is a profit formula?

describes the approach to determining a cost structure that allows for acceptable profits given the pricing tied to its customer value proposition

what is the magic triangle?

defines to whom you provide the value of what and how you will use it to generate revenue

what does strategy coordinate?

the business model, competitive advantage, and competitive strategies

what is a value proposition?

how can we solve this problem in a way that provides value to a customer?

what elements do you need in a value proposition?

relevancy, quantified value, and differentiation

name the types of revenue models

markup, licensing, commission, rent/lease, subscription, advertising, fee for service

which type of revenue model is the oldest type of business model?

markup

how can a competitive advantage be sustainable?

when an attractively large number of buyers develop a durable preference for its products or services over others’ consistently over a long period of time

what are the elements of competitively valuable capabilities?

can’t be imitated, represent specialized skill/knowledge, result in sustainable competitive advantage

what are the strategic approaches to sustainable competitive advantage?

low-cost provider, broad differentiation, focused low-cost, focused differentiation, best-cost provider

what is the low-cost provider strategy?

to achieve a cost-based advantage over rivals

what is an example of a low-cost provider?

southwest airlines and walmart

what is the broad differentiation strategy?

to differentiate products/services from those of its rivals in ways that appeal to a broad spectrum of buyers

what is an example of a broad differentiator?

Apple and Johnson&Johnson

what is the focused low-cost strategy?

to outcompete rivals in a niche market by achieving lower costs and offering its products at lower prices

what is an example of a focused low-cost-er?

any private label manufacturer

what is the focused differentiation strategy?

to outcompete rivals in a niche market by offering buyers customized and exclusive attributes

what is an example of a focused differentiator?

Ferrari and Whole Foods

what is the best-cost provider strategy?

to give customers more value by satisfying their expectations on key attributes, while beating their price expectations

what is an example of a best-cost differentiator?

SDSU and IKEA

what are the tests of a winning strategy?

strategic fit, competitive advantage, and performance

what is the most important part of the strategy process model?

all of them, it is an ongoing cyclical activity

what influences each stage of the strategy process model?

external and internal factors that will shape strategic and operating decisions

what does a strategic plan tell you?

a company’s future direction, performance targets, and strategy

what is the first stage of the strategy process model?

developing a strategic vision, mission, and values

what is the second stage of the strategy process model?

setting objectives

what is the third stage of the strategy process model?

crafting a strategy to achieve the objectives and move the company along the intended path

what is the fourth stage of the strategy process model?

executing the strategy

what is the fifth stage of the strategy process model?

evaluating and analyzing the external environment and the company’s internal situation to identify corrective adjustments

what is the difference between competitive advantage and competitive approach?

competitive advantage is what you have and competitive approach is what you do

what is the difference between a mission statement and a vision statement?

mission statement is a company’s present business purpose and a vision statement is the future business scope

what is another word for the general environment?

macroenvironment

what does the external environment of the firm entail?

the industry conditions and the macroenvironment conditions

what does the bullseye diagram describe?

the firm in relation to the layers of its environment

what are external factors that firms face?

PESTEL

what are industry factors that firms face?

suppliers, competition, consumers, substitutes

what is the managerial purpose in setting objectives?

to convert the strategic vision into an organizational focus in order to achieve specific performance targets at manageable intervals

what are the types of objectives?

financial goals, strategic goals, and social goals

what is a balanced scorecard?

a widely used method for combining the use of both strategic and financial objectives, tracking their achievement, and giving management a more complete and balanced view of how well an organization is performing