AEM 1200

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100 Terms

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4Ps of Marketing
• Product: Basic design of the product/service • Price: How much the purchaser pays
• Placement (or distribution): Where and how the productis available or sold
• Promotion (or communications): Influencing consumerpurchase decisions through information, persuasion, and branding
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10-K report
Required annual report filed with the SEC by publicly held firms
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ALDI's Strategy
Limited selection (1400 vs 40,000 items) Private label (few name brands) Quarter-deposit carts No shelf-stocking Super-sized or multiple barcodes No bagging, no bags Small footprint (12,000 vs 145,000ft2) Cross-trained employees (3-5 at time, 15-20 overall)
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Asset
A useful or valuable thing, person, or quality
Both Tangible and Intangible Assets
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BHAG
Big Hairy Audacious Goal
"clear and compelling and serves as a unifying focalpoint of effort, often creating immense team spirit. It has a clear finish line, so the organization can know when it has achieved the goal .... A BHAG should not be a sure bet ... but the organization must believe 'we can do it anyway
Example:
Microsoft - A computer on every desk and in every home, all running our software
Facebook - Connect the world
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BHAG Siblings
• Strategic intent • Stretch goal • 10X goal • Moonshot • Aspirational goal • Aspirational OKR
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Brand Definitions
The image your customers have of your business or product
Your product 's identity/personality that sets it apart from the competition
An intangible business/marketing concept that helps people identify a company or product
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Brand Equity
A brand's value
The power of a brand to make you choose that product or service
A value premium a company generates from a product with a recognizable name when compared to a generic equivalent
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Business Model Basics
Value Proposition - Why customers will buy from you
Cost Structure - How you will make money
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Business Products
Purchased to use either directly or indirectly in the production of other products• Installations and accessory equipment• Maintenance, repair, and operating products• Raw materials, processed materials, and businessservices
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Capability
Ability to perform actions
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Coca Cola's Globalization
•WWII and the Army's support was crucial•In Mexico: Deep distribution and millions of sales points was key.
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Competitive Rivalry
Switching CostsIndustry Growth Rate
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Convenience vs Shopping Goods
Convenience: Staple goods, impulse goods, or emergency goods
Shopping: Goods purchased after comparing price, quality, and style
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Core Competence
An activity that a company performs quite well & is central to its strategy & competitiveness
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Corporate Governance
System of rules, practices, and processes by which a firm is directed and controlled.
•Balance the interests of the company's stakeholders(Stakeholders, senior management, suppliers, customers, financiers, the government, community)
•A company's board of directors is the primary force influencing corporate governance
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Corporation
Definition: Legal entity separate from its owners
Pros•Limited Liability•Permanence•Ease of transfer of ownership•Ability to raise capital•Can Use Specialized management
Cons•Complexity of formation and operation•Double Taxation•Paperwork and Regulation•Conflicts of Interest (Mgmt & Stockholders)
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CSR
Corporate Social Responsibility
Managing Stakeholder's expectations
EX:
Shareholders (Owners) •Maximize Profits
Employees •Maximize compensation, safety, tenure, stability
Customers •Great Value, convenience, transparency, and value-alignment
Public/Government •Be a "good citizen", pursue the "greater good"
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Customer Relationship Management (CRM)
Ongoing process of acquiring, maintaining, and growing profitable customer relationships function and set of processes for: • Customer satisfaction: When customers perceivethat a good or service delivers value above andbeyond their expectations • Customer loyalty: When customers buy a productfrom the same supplier again and again
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Customers Bargaining Power
Buyer ConcentrationUndifferentiated ProductsPrice Sensitivity
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Defining your industry
Craft beer vs beer or alcoholic beverages

Your definition will determine who you consider competitors
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Effectuation model
Process for the creation of artifacts (markets, firms, economies)
Driven by an entrepreneur who does not commit his/her resources, but instead focuses primarily on what resources he/she can extract from others or the environment
The entrepreneur is very flexible in terms of goals
opportunity creation vs opportunity discovery
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Fiduciary Responsibility
Acting on the behalf of a beneficiary
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Hawthorne Studies Perspective on Business
The 1920s-30s
Human relations •Organization as a system of interdependent humans
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Important Ethical Frameworks
•Utilitarianism•Kant (Categorical Imperative)
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Innovation vs. Reproduction
\- Most entrepreneurs organize their activities in thesame way as their predecessors
\- Most entrepreneurs bring little or no new knowledgeto their industry
\- Innovators are likely to fail because new combinationsof resources are fatal or perceived as illegitimate
\- Continuum from reproducer to innovator is defined byoutcomes, not intentions
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Intended VS Realized Strategies
because business environment is far from predictable ...
Intended strategy -organizational decisions are determined only by analysis -rarely survives in its original form
Realized Strategy - organizational decisions are determined by both analysis (deliberate) & unforeseen environmental developments, unanticipated resource constraints, and/or changes in managerial preferences (emergent) - final realized strategy = combination of deliberate & emergent strategies
intended strategy ---deliberate strategy---> realized strategy
intended strategy -------->unrealized strategy
emergent strategy -------> realized strategy
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Intrapreneurship
manager within a company who promotes innovative product development and marketing
change initiatives taken within a going concern by the people working in that organization
act of behaving like an entrepreneur while working within a large organization
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Kant (Categorical Imperative)
One ought to act such that the principle of one's act could become a universal law of human action in a world in which one would hope to live. (do onto others as you would have them to onto you...Golden Rule)
One ought to treat others as having intrinsic values in themselves and not merely as a means to reach one's ends.
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Kim & Mauborgne meet Porter
Broad Target & Low Cost - Red Ocean Strategy - KIABroad Target & Differentiation - Blue Ocean Strategy - IPADNarrow Target & Low Cost - King of the Pond StrategyNarrow Target & Differentiation - Deep Sea Strategy - Rolls Royce
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Limited Liability Corporation (LLC)
Definition: Mix between corporation and partnership
Pros•Limited Liability•Tax pass-through•Flexible Ownership•Ease of formation
Cons•Complexity of formation•Annual franchise tax•Different State Laws (foreign status in other states)•Not all firms can be LLCs
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Main point of strategy according to Porter
Making trade-offs Choosing what NOT to do or offer Avoid straddling
Achieving fit among activities Consistency, reinforcement & optimization

Fit locks out competitors by creating a chain that is as strong as its strongest link

Summary of presentation example:
Way of gaining a competitive advantage Advantage flows from establishing a unique position
You establish a unique position by doing things differentlyand Choosing which trade-offs to make
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Market Segmentation
Dividing potential customers into groups of similar people, or segments
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Marketing
Organizational function and set of processes for:
• Creating, communicating, and delivering value tocustomers • Managing customer relationships in ways thatbenefit the organization and its stakeholders
Planning and executing the development, pricing, promotion and distribution of ideas, goods, and services
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Marketing Functions
• Sales/selling • Pricing • Customer service • Advertising • PR (public relations)• Merchandising • Distribution • Customer financing • Market research
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Marshmallow Activity Takeaways
Iteration vs planning-execution approach • Importance of frequent feedback
Managing the process • Value of an able facilitator
Teamwork is more important than "a plan" • Multiple contributions lead to unpredictable but potentially better solutions
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Merchandising
Promoting the sale of goods by their presentation in retail outlets
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Mission Statement
• Who we are, what we do, and why we are here
• Often describes current business\- Products\- Markets\- Identity
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Most Profitable Industries since 1980s
PharmaceuticalsToiletries/CosmeticsSoft Drinks
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Nascent Entrepreneur
someone who starts serious activities intended to culminate in a viable business startup
\- Does not follow a fixed sequence of activities• Does not have a plan
\- 15 months between initial "serious thought" and first real attempt• Has to gather courage
\- Some conduct activities before giving serious thought• Stumbles upon a business
\- Start with little capital, no employees• It's me, myself, and I
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Opportunities and Threats
Result from a change in the environment\- Evolving consumer tastes \- Changes in laws \- New competitors entering a market
Focus on the change\- "Intense competition" is not a threat unless it's growingmore intense
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Organizational Emergence
\- Almost half of adults are "entrepreneurs" (or self-employed) at some point in their lives \- 4-6% of adult population actively trying to start newventures \- Only half of entrepreneurs manage to launch anorganization \- Fewer than one in ten new ventures grow \- Most foundings imitate existing organizational forms
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Partnership
Definition: Agreement between co-owners of for-profit business
Pros•Can pool financial resources•Share responsibilities•Complimentary skills opportunity•Ease of formation
Cons•Unlimited liability•Potential for disagreements•Difficulty in withdrawing•Loss of Control
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Pattern
Consistency in behavior\- What is consistent about Apple's decision-making throughout its history?
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Perceptions of Business Over Time
• Managerial view (up to 1960s)Focus on production
• Shareholder view (1960-1980s)Focus on financial performance
• Stakeholder view (Since-1990s)Focus on serving multiple constituencies
Truth of this is debated
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Perspective
Ingrained way of perceiving the world\- If Google were an undergraduate student, what would its major be?
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Placement
Distribution and Product Placement
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Plan
Consciously intended course of action; guideline to deal with a situation\- Made in advance\- Developed consciously & purposefully
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Ploy
Maneuver intended to outwit a competitor\- What could Gimme Coffee have done to discourage Starbucks from entering the Ithaca market?
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Porter's Definition of Strategy
Strategy is about achieving a competitive advantage What gives a firm an advantage?
Strategy is about creating a unique position Which is the most profitable restaurant on the Commons?
Strategy is about doing things differently Why do most small restaurants fail?
Strategy is about outcompeting or having nocompetitors
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Porter's Five Forces
Threat of entryThreat of substituteSupplier powerBuyer powerCompetitive rivalry
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Position
Niche, location in the environment
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Price
Value pricing - Set prices according to what customers think our product is worth
Competitive pricing - Set prices according to what competition is charging
Cost-plus pricing - Add a certain percentage to production cost
Penetration pricing - Set prices below the competition to gain market share
Dynamic pricing - Constantly change your prices to match demand
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Product
Anything an organization offers to satisfy customers' needs and wants: • Pure goods: Products that do not include any service • Pure services: Products that do not include anygoods
• Consumer products: Purchased for personal use\- Convenience & shopping goods\- Specialty & unsought products
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Product Line
A group of related products all marketed under a single brand
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Product Mix
The total number of product lines and individual products or services offered by a company
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Promotion (communication)
Advertising - Marketing communication using an openly sponsored, non-personal message to sell a product
Personal selling - Face-to-face interactions in which a salesperson tries to convince a customer to buy a product
Public relations (PR) - Non-product communications for raising awareness and improving the reputation of an organization
Direct marketing- Marketing communication presented to target customer without using an advertising middleman
Sales promotions - Temporary efforts to drive sales (contests, coupons, prizes, free samples, rebates, influencer posts, etc.)
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Pros and Cons of Free Trade
Pros•Comparative Advantage/Ricardian Theory - Everyone benefits, we all get richer
Cons•Race to the bottom, exploitation, homgenization (loss of identity)
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Purpose of a business
To create a customer
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Quasi-Entrepreneur
Wheeler-dealer (or bricoleur)Architect of temporary arrangements
Accidental entrepreneurA deal becomes a company
Small business ownerControls/manages all aspects of firm
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Quibi Example
Short-form streaming platform for mobiles devices\- Raised $1.75b\- Launched April 2020, got about 500,00 subscribers\- Shut down on October 2020 (6 months)\- In 2021, Roku acquired Quibi for less than $100m
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Resource-based View (RBV)
RBV thinks of the firm as a "bundle of resources"
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Review Coffee Industry Stuff on Class 4 Slide 30s

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Ricardian Theory
a country exports that commodity in which it has a comparative labor productivity advantage
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Scope of Marketing
PlaceEventsIdeas
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Social-Network Context
Social network context
Our network determines our "opportunity structure" Rich network positions =more opportunities
Diversity vs tie strength Strong ties (trust, predictability, voice) Weak ties (opportunism, uncertainty, exit)
Half of startups are solo efforts, a third are of "family teams", the rest are of unrelated individuals
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Sociology & entrepreneurship
What are organizations?\- Goal-directed boundary-maintaining activity systems\- Constructed by people to accomplish things they can't do on their own
• Organizations as means to an end
Most organizations are copycats
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Sole Proprietorship
Definition: Single owner who manages the company
Pros•Ease of Formation•Retention of Control•Pride of Ownership•Retention of Profits
Cons•Limited Financial Resources•Unlimited liability•Limited ability to attract talent•Heavy Workload and Responsibility
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Southwest Trade offs and fit
Short-haulNo baggage transferNo mealsPoint-to-point serviceProprietary reservation systemNo assigned seatsStandardized fleetFast turnarounds Little customer SegmentationLow fares
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Specialty Goods
Purchased as unique products that require buyers to make a special purchasing effort
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Stakeholder Tension with CSR
Finding the proper balance between CSR and profit
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Strategic Intent
how a firm's energy and resources are channeled into a focused and unified overall goal. It is a statement of design for creating a desirable future.
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Suppliers Bargaining Power
Supplier ConcentrationSwitching CostsForward Integration Threat
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SWOT analysis
strengths, weaknesses, opportunities, threats
S&W are INTERNALO&T are EXTERNAL
Power of a SWOT analysis is in matching the internalstructure to external environment
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Target of Market
Group of people who are most likely to buy a particular product/service:• Consumer marketers (B2C): Direct their effortstoward people who buy products for personalconsumption• Business marketers (B2B): Direct their efforts towardpeople who buy products to use directly or indirectlyto produce other products
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Taylor's Perspective on Business
The 1910s
Scientific management •Organization as a machine (bricklayers)
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Textbook Definition of Strategy
A company's strategy consists of the competitive moves and business approaches that managers employ to attract and please customers, compete successfully, capitalize on opportunities, to grow the business, respond to changing market conditions, conduct operations, and achieve the targeted financial and market performance
Summarized:•How to please customers •How to compete against rivals•How to seize opportunities•How to respond to changes in the market •How to meet performance targets
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The academic entrepreneur: Osvel Hinojosa
Ph.D. in wildlife ecology
Head of Pronatura Noroeste (an NGO)
Created/managed research & conservation projects
Poached by the Cornell Lab of Ornithology to lead its
Coastal Solutions Fellows Program
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The born entreprenuer: Tono Fernandez
Never worked for anyone else
Never stopped trying different ideas/ businesses
Eventually landed on a moneymaker; cannot avoid growing/diversifying
Does not know how to delegate
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The Five Ps of Strategy
PatternPlanPerspectivePloyPosition
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The one-track entrepreneur: Hector Velasco
Great intra-preneur
Accomplished business consultant
Persisted on a single business idea for years
Ultimately failed
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The serial entrepreneur: Kevin McGovern
Co-founded over 25 companies Six have become category leadersDiverse industries Nutraceuticals, water purification, skin care productsTrained as a lawyer
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Thompson's Perspective on Business
The 1960s
Contingency theory•Organizational structure aligned to the environment
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Threat of Entry
Economies of ScaleProduct DifferentiationCapital RequirementsAccess to Distribution Channels
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Threat of Substitute
Switching CostsPrice/performance differentialsTech Trends
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Types of BHAG's
Target orientedCompetitiveRole modelInternal Transformation
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Types of Business Organization
•Sole Proprietorship•Partnership•Limited Liability Company (LLC)•Corporation
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Types of Entrepreneur
Builder of organizations\-Sociological approach (Aldrich)
Innovator\-Market disrupter (Schumpeter)
Opportunity discoverer\-Exploiter of market imperfections (Kirzner)
Agent of social change\-Social entrepreneurship, Ashoka model
Broker, network entrepreneur \-Bridger of structural holes
Champion\-Catalyzer of social movements
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Utilitarianism
Produce the greatest good for the greatest number
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Vision
• Describes an organization's particular direction • Distinctive & specific - Graphic - Directional ("where we are going") - Focused - Some flexibility - Feasible (can be "stretch") - Unique
• Short, powerful, memorable
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Vision vs. Mission
• Some distinguish them temporally - Future vs present • Many people don't make the same distinction - Visions & missions & BHAGs & strategic intents overlap
Few firms are truly mission or vision-driven
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VUCA Business Context
V•Volatility - Unpredictable ChangeU•Uncertainty - Don't know the significance of ChangeC•Complexity - Many Moving interconnected partsA•Ambiguity - Don't understand cause and effect relationship
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VUCA Covid Example
Volatility - Changes in demand (Netflix, Zoom) VUCAUncertainty - Effects of changes in demand (will gyms die?)Complexity - Chips used in electronics, household goods, and carsAmbiguity - Car manufacturers cancel chip orders, leads to high car prices
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Weber's Perspective on Business
The 1900s

Bureaucratic structure •Task/responsibility differentiation •Strict hierarchy •Standardized rules/procedures •Vertical separation of planning and execution
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What is Learning
Changing the way you think. - Learn by doing
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What isn't strategy according to Porter
Operational effectiveness Benchmarking, Lean Manufacturing, TQM,best practices, etc.
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What makes a resource valuable?
Inimitability - Can someone copy it?
Durability - How long does it last?
Appropriability - Who gets the benefits?
Substitutability - Can someone use a different resource for the same purpose?
Competitive superiority - Is our resource better than our competitors?
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When is a focused differentiation strategy attractive?
When the niche is large enough to be profitableWhen there is low competition - Industry leaders overlook it
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When is a focused low-cost strategy attractive?
When your are toad!When you are stuck in a pond!Low cost capabilities usually favor large scales and highvolumes, then why stay in the pond?
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When is a low cost strategy attractive
High price competitionLow switching costsIdentical productsCustomers don't care about differentiationHigh buyer power