INT BIZ Midterm

What does PESTEL stand for

Political

Economic

Social

Technology

Ecological

Legal

What are Growth Rates

measures changes in the value of goods and services produced by a nation over a specific period of time, often a year

What is Employment rate

unemployment tends to be low, and skilled human capital becomes scarce and more expensive

What is Interest rates

the inflation-adjusted cost of borrowing money or the return creditors receive for lending

What are sociocultural factors

capture a society’s cultures, norms, and values.

Technological Factors

the technological advances that shape new products, processes, and industries

What are ecological Factors

environmental concerns such as climate change, resource scarcity, and sustainable growth

What are Industry effects

the industry’s underlying economic structure and its impact on firm performance

What are firm effects

firm performance directly to strategic leaders’ actions

What is industry analysis

a more rigorous basis not only for identifying an industry’s profit potential

what is strategic position

creating value for customers (V) while containing the cost to produce it (C)

who developed the five forces model

Michael Porter

What is the premise to the 5 forces model

Strategic leaders understand the profit potential of different industries and position their respective firms to gain and sustain competitive advantage

What is the threat of entry

describes the risk of potential competitors entering the industry.

What are some effects of “threat of new entry”

it can reduce overall profit and increase firm spending

what are switching costs

The costs that customers incur when changing to the products and services offered by a different vendor.

What is Power of Suppliers

strong bargaining power can exert pressure on an industry’s profit potential

what is power of buyers

is a customer's ability to pressure businesses into lowering prices, improving product quality, or adding extra

What can lead to high power of buyers

each buyer purchases large quantities

buyers purchase standardized or unchanged products

face low or no switching costs

What are the threat of substitutes

alternative products or services from outside an industry that fulfill similar customer needs, posing a serious competitive threa

What is rivalry

the intensity with which companies in the same industry jockey for market share and profitability

what is competitive industry structure

elements and features common to all industries

What are the factors of competitive industry structure

number and size of firms

degree of pricing power

types of product or service

What is perfect competition

structure in which a large number of buyers and sellers trade identical products, and no single participant has the power to influence the market price

What is monopolistic competition

some obstacles to entry, and the ability to raise prices for a relatively unique product while retaining customers

what is monopoly

when one firm, often large, supplies the whole market

what are exit barriers

the obstacles that interfere with a firm’s ability to leave an industry

what is a complement

or competency that adds value to the original product offering when the two are used in tandem

what are some questions to ask when entering a market

who are the players?

When to enter?

How to enter?

what is strategic group models

clusters different firms into groups based on a few key strategic dimensions

What are mobility barriers

industry-specific factors that separate one strategic group from another.

what is an example of the ultra low pioneer cost?

Spirit Airlines model, ggressively unbundling airfares and charging separately for checked bags, seat assignments, and even onboard refreshments

What are core competencies

unique strengths embedded deep within a firm

What is a simpler term for core competencies

how a firm is able to seperate themselves from those that are in the market

What are resources

any assets, such as cash, buildings, machinery, or intellectual property, that a firm can draw on when crafting and executing a strategy

What are capabilities

organizational and managerial skills required to effectively orchestrate a diverse set of resources and deploy them strategically

What are two main points related to core competencies

Core competencies that are not continuously nourished will lose their ability to yield a competitive advantage.

When analyzing a company’s success in the market, it can be too easy to focus on the more visible manifestations of core competencies, such as superior products or services.

what is resource heterogenity

comes from the insight that bundles of resources differ across firms

what is resource immobility

the insight that resources tend to be “sticky” and don’t move easily from firm to firm

what does VRIO stand for

Value

Rare

Imitate

Organized

What is the benefit of VRIO

gives companies a competitive advantage

what is valuable resource

enables the firm to capitalize on an external opportunity or mitigate an external threat,

what does it mean for an item to be rare

only a few firms posess it

when is a resource costly to imitate

firms that do not possess it cannot develop or purchase it at a reasonable price

What is organized to capture value

fully leverage the competitive potential of its resources, capabilities, and competencies,

What is social complexity

situations in which various social and business systems intersect

what is core rigidity

firm relies too long on the competency without honing, refining, and upgrading it as the environment change

what is resource stocks

the firm’s current level of intangible resources

what is resource flows

the firm’s level of investment in maintaining or building an intangible resource.

what is value chain

encompasses all internal activities involved in transforming inputs into outputs

what are examples of primary activities

Operations, Supply Chain, Marketing and sales

what are support activities

R&D, HR, Information Systems

What is Business Level Strategy

the goal-directed actions that managers take in their quest for competitive advantage when competing in a single product market

what is differentiation strategy

To create higher value for customers than their competitors create, attempting to deliver products or services with unique features while keeping costs at the same or similar levels, allowing them to charge higher prices

what is cost-leadership strategy

create the same or similar value for customers by delivering products or services at a lower cost than competitors, enabling it to offer lower prices to its customers

what is required in differentiation and cost leadership

different strategic positioning

what are the markets for Water bottles

Mainstream, Premium, ultra premium

what are some examples of mainstream products

Aquafina and Dasani

What are premium products

Lifewter and Smartwater

What are products in ultra premium

Harrods in London

What is the equation for differentiation to customers

(V-C) Value - Cost

what are some value drivers

Customer service, product features, complements

what is customer service

the support, advice, and assistance a company gives to its customers before, during, and after they buy or use a product or service

what is product features

specific function, capability, or tangible characteristic that defines what a product is, what it does, and how it performs

what are important factors that affect cost leaders

Cost of input factors

Economics of Scale

Learning and Experience Curve

what is strategic forebearance

that effective strategy involves careful consideration not only of which opportunities to pursue but also of which ones to avoid deliberately

what is disconomies of scale

increases in cost as output increases

What is Economies of Learning

movement down a given learning curve based on current production technology

wht is the experience curve

reductions in per-unit production costs resulting from improvements in technology and processes, even when cumulative output remains unchanged

what is the Veblen Effect

Behavioral economics suggests that consumers often perceive higher-priced goods and services as inherently more valuable

what is blue ocean strategy

the combination of differentiation and cost leadership strategies

what are blue oceans

the overall untapped markets that exist

what is value innovation

aligning innovation with total perceived consumer benefits, price, and cos

what is the value curve

depicts a firm’s relative performance across different competitive factors in an industry

what is between economies and disconomies of scale

the minimum efficient scale