GBA 490 Exam 1

strategy

the set of coordinated actions that its managers take in order to outperform its competitors and achieve superior profitability

the success of a company’s strategy depends upon the competing differently from rivals and gaining a _________ __________ over them

competitive advantage

competitive advantage

achieved when companies provide buyers with superior value compared to rival sellers or produces its products or services more efficiently

a company’s strategy is a blend of 2 things

1. proactive deliberate actions to improve strategy

2. reactive emergent responses to unanticipated events or market conditions

a company’s business is made up of 2 elements

1. customer value proposition

2. profit formula

customer value proposition

satisfying customer wants and needs at a price customers will consider good value

a winning strategy has to pass 3 tests

1. fit test

2. competitive advantage test

3. performance test

low-cost provider

producing a cost-based advantage in which rivals find it hard to match the low-cost approach

broad differentiation

differentiate a company’s products from that os rivals in ways that appeal to a broad spectrum of buyers

focused low-cost

concentrating on narrow buyer segments or market niches and out competing rivals by having lower costs, thereby serving consumers at a lower price

focused differentiation

concentrating on narrow buyer segments or market niches and outcompeting rivals by offering buyers customized attributes that meet specialized needs

best-cost provider

giving customers more value for their money by satisfying their expectations on key quality features, performance, and/or services attributes while beating their price expectations

strategic vision

describes management’s aspirations for the company’s future, includes “where we are going” and why they are a good business

mission statement

who we are, what we are doing, and why we are doing it

stakeholder

anyone who has an interest in the company (owner, shareholder, customer, employee, supplier)

objectives

specific results management wants to achieve

balance scorecard

how well an organization is performing based on financial and strategic objectives — market share vs price/cost to produce goods

stretch objectives

aiming to perform at the company’s fullest potential and offer the best results

PESTEL analysis

political, economic, sociocultural, technology, environmental, and legal

5 competitive forces

rivalry, threat of new entrants, supplier bargaining power, buyer bargaining power, threat of substitutes

key success factors

the competitive factors that most affect industry members’ ability to survive and prosper in the marketplace (strategy, product attributes, operational approaches, resources, competitive capabilties)

driving forces

major underlying causes of change in the industry and competitive conditions

example of economic factors

unemployment rate, inflation rate, exchange rate

example of political factors

taxes, tariffs, other governmental regulations

examples of sociocultural factors

cultural influences, attitudes, demographic factors

examples of technological factors

pace of advancments, assembly line, automation

example of environmental factors

weather, climate, natural disasters

examples of legal factors

consumer laws, labor laws, OSHA

core competence

something a company must know how to do

distinctive competence

something a company does better than other companies in the industry

resources

assets, things to run the business, can also be intangible

capabilities

something you can do proficiently; superior skills

inimitable

hard to copy

nonsubstitutable

no good substitutes

value chain analysis

identifies the primary activities and related support activities that create customer value and the inner working of the firm’s customer value proposition

benchmarking

improving internal activities based on learning from other companies’ best practices

example of broad low-cost

walmart, southwest airlines

example of broad differentiation

apple, starbucks

examples of focused low-cost

men’s big and tall

examples of focused differentiation

whole foods

exmaples of best-cost

toyota vs lexus or coach vs birkin

cost driver

factors that influence a firm’s costs

economies of scale

the more you do something, the more efficiently you do it

learning curve

better results over time

private label

generic brands for products, Target good and gather, Walmart equate, CVS Aspirin