low cost strategy

A pricing strategy in which a company offers a relatively low price to stimulate demand and gain market share. It is one of three generic marketing strategies (see differentiation strategy and focus strategy for the other two) that can be adopted by any company, and is usually employed where the product has few or no competitive advantage or where economies of scale are achievable with higher production volumes. Also called low price strategy.

A company offers a relatively low price as a pricing strategy, seeking to stimulate demand and gain market share. One of three generic marketing strategies. Refer to differentiation strategy and focus strategy. These can be adopted by any company. Product with few or no competitive advantages, or product volume achieving an economies of scale is the best use of these strategies. Also known as low price strategy.

2.Distinctive competence of a firm refers to a set of activities or capabilities that a company is able to perform better than its competitors and which gives it an advantage over them. Distinctive competence can lie in different area such as technology, marketing activities, or management capability.

distinctive competency
Alternative term for core competencies.

Distinctive Competencies?
Company distinctive competencies help distinguish businesses from competitors. Products typically make a company distinctly competitive. The distinctive competency allows a company to be successful over the long run. Definition of Distinctive Competencies
Distinctive competencies are an element of Strategic Management and are also known by the term core competencies. The term core competencies was coined in 1990 with a series of articles by C. K. Prahalad and Gary Hamel, and most notably in their 1994.

SWOT analysis (alternatively SWOT Matrix) is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture

Definition of 'Value Chain'
A high-level model of how businesses receive raw materials as input, add value to the raw materials through various processes, and sell finished products to customers.

Competitive Business Strategies
A competitive advantage allows a company to produce or sell goods more effectively than another business. Business owners commonly develop business strategies in order to maintain a competitive advantage. Several types of strategies are available in the business environment. Business owners can use standard strategies or develop their own strategy. Flexibility is an important feature of competitive business strategies.

Definition of 'Core Competencies'
The main strengths or strategic advantages of a business. Core competencies are the combination of pooled knowledge and technical capacities that allow a business to be competitive in the marketplace. Theoretically, a core competency should allow a company to expand into new end markets as well as provide a significant benefit to customers. It should also be hard for competitors to replicate

differentiation strategy
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Approach under which a firm aims to develop and market unique products for different customer segments. Usually employed where a firm has clear competitive advantages, and can sustain an expensive advertising campaign. It is one of three generic marketing strategies (see focus strategy and low cost strategy for the other two) that can be adopted by any firm. See also segmentation strategies.

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Difference Between Joint Venture and Strategic Alliance
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Joint Venture vs Strategic Alliance

Joint venture and Strategic Alliance differ from each other financially and legally too. There is difference between them in their definitions too. A joint venture is indeed a contractual agreement between two or more companies that come together in business in terms of the performance of a business task. A strategic alliance on the other hand is a formal relationship between two or more companies in pursuit of common goal in their business even while remaining as independent organizations. This is the main difference between the two terms joint venture and strategic alliance. In other words it can be said the two or more companies that join together in a joint venture do not remain as independent companies in a joint venture. On the other hand the two or more companies that join together in a strategic alliance will remain as independent organizations in a strategic alliance. There has been a lot of debate on the issue whether joint venture is better than strategic alliance. It is generally felt that joint venture is better than strategic alliance for some interesting reasons. A joint venture is legally binding in a better way than a strategic alliance. When it comes to tax purposes strategic alliance is a bit disadvantageous when compared to joint venture. On the other hand you will find strategic alliance more flexible when compared to joint venture. Alliance can also be broken by the help of less number of lawyers. A joint venture on the other hand is not easily broken for that matter. This is because of the fact that it is more legally binding in nature. Things would work better in strategic alliance due to the fact that it is characterized by a wonderful combination of resources or information. On the other hand lot of hard work has to be put into joint venture in order to taste success.

Differences Between a Joint Venture and a Strategic Alliance
Written by Linda Hurley

There are three types of strategic alliance; direct cooperation, joint ventures and minority investments. Every joint venture is always a strategic alliance but not all strategic alliances are joint ventures. What is a strategic alliance? Strategic alliances are agreements to operate collaboratively between otherwise arm’s length organizations to accomplish a strategic purpose. Alliances can be either equity or non-equity alliances but all are formed to achieve benefits for the organizations that would not be achieved by operating individually.

Strategic alliances usually have a unique value proposition that uses the specific competencies of each of the organizations to achieve competitive advantage. By sharing complementary resources and capabilities alliance partners achieve quicker and more efficient growth than they would if they

developed the resources or capabilities within their own organization. Joint ventures Joint ventures are the most complex of strategic alliances as they involve the creation of a separate legal entity from those of the alliance partners. The alliance partners own and control the new entity together. They can be distinguished from other forms of equity alliance by the fact that they are created to achieve a specific, defined purpose. As an example, joint venture companies are commonly seen in the manufacturing industry where economies of scale require a single manufacturing plant to be cost effective but the market can sustain a number of distributors of the product. In such cases competitors may form an alliance to create a separate company jointly owned and controlled to manufacture goods. The goods are supplied to the alliance partners who then compete in the same market to distribute the goods through either wholesale or retail channels. Direct cooperation Direct cooperation alliances are usually entered into for the purpose of operational efficiency or geographic expansion. They are non-equity alliances and are managed less formally than joint ventures. Rather than creating a separate entity or alliance partners obtaining a shareholding, direct cooperation usually involves a contractual arrangement. Although they may appear similar to transactional dealings direct cooperation alliances involve a greater commitment by the strategic partners and performance objectives are defined and measured by the partners in cooperation. Minority investment This type of strategic alliance is an equity alliance and is used most frequently by young rapidly growing organizations. The young firm obtains capital from corporate investors by providing the corporate investor with a minority shareholding in their company. The purpose of minority investment is less specific than in a joint venture and unlike a joint venture one partner retains control through their majority shareholding. Investors usually have a strategic interest in the growth and success of the company that extends beyond a simple return on investment. Before seeking a strategic alliance organizations need to identify the type of alliance that will fit their needs. Whatever vehicle is used it is essential that the expected outcomes are defined, the elements to be provided by each partner are documented and the whole arrangement is conducted through an appropriate legal agreement.

What is Vertical and Horizontal integration?

Many a times, while gazing through the business daily, you come across the words “Vertical integration” or “Horizontal integration”. While some take it as a business gimmick; others do have but only a slight idea of what it is. In any case, as a regular business reader or as an entrepreneur, one needs to be aware about all the aspects of vertical and horizontal integration. Both of these relate to strategies that are made to grow your business but they differ in approach. And most of the times which one to choose is not a very straight forward decision. In this post we will try to completely understand Vertical and Horizontal integration and list certain key things that a business should take care of while looking forward to any of these options

What is Vertical Integration? Out of all the definitions I read online the best one is from Investorwords which says. Vertical integration is the process in which several steps in the production and/or distribution of a product or service are controlled by a single company or entity, in order to increase that company’s or entity’s power in the marketplace. Simply said, every single product that you can think of has a big life cycle. While you might recognize the product with the Brand name printed on it, many companies are involved in developing that product. These companies are necessarily not part of the brand you see. Example of vertical integration: while you are relaxing on the beach sipping chilled cold drink, the brand that you see on the bottle is the producer of the drink but not necessarily the maker of the bottles that carry these drinks. This task of creating bottles is outsourced to someone who can do it better and at a cheaper cost. But once the company achieves significant scale it might plan to produce the bottles itself as it might have its own advantages (discussed below). This is what we call vertical integration. The company tries to get more things under their reign to gain more control over the profits the product / service delivers. Types of Vertical Integrations: There are basically 3 classifications of Vertical Integration namely: 1. Backward integration – The example discussed above where in the company tries to own an input product company. Like a car company owning a company which makes tires.

a mix of the above two.2. namely the distribution network. Balanced integration – You guessed it right. Own the whole life cycle so that you can change it the way required 5. Expand your knowledge and capabilities 3. Increase market (and profits) 4. Have economies of scale 2. This take over / merger / buyout can be done in the same geography or probably in other countries to increase your reach. . (There was no rocket science in technology used at Youtube which Google couldn‟t have done without taking over. A balanced strategy to take advantages of both the worlds. Reduce competition (by merging with them rather than competing) 6. where mergers and acquisitions happen in order to increase the reach of an entity. Especially in case of the technology industry.) Executing these strategies and key points to remembers Vertical and Horizontal integration strategy generally can be done by businesses which have established themselves and probably have a stable life as compared to ones which have to address risks on a regular basis. Forward integration – Where the business tries to control the post production areas. Horizontal integration (also known as lateral integration) simply means a strategy to increase your market share by taking over a similar company. Many more (refer links below) I believe this much will suffice for you to understand what is vertical integration and horizontal integration? Attached are a few more links that will help you understand the concepts further Before signing off would recommend reading vertical integration case study from wikipedia which highlights how Reliance Industries worked on backward integration and from textiles they got into polyster and later into petrochemicals. This was a brilliant strategy executed by the them owner Dhirubhai. Like a mobile company opening its own Mobile retail chain. which was taken over my Google primarily because it had a strong and loyal user base. What is Horizontal Integration? Much more common and simpler than vertical integration. but yes to increase the viewers was definitely as complex without the takeover. Provide better services 7. Must read. 3. Examples of Horizontal Integration are many and available in plenty. The immediate advantage of implementing them is to 1. As per me an apt example of Horizontal Integration will be You Tube.

Growth-share matrix From Wikipedia. BCG-matrix. Henderson for the Boston Consulting Group in 1970 to help corporations with analyzing their business units or product lines.1 Relative market share 2.[3] Contents [hide]   1 Overview 2 Practical use of the growth-share matrix o o o o o   2.2 Market growth rate 2. Boston matrix. and portfolio analysis.4 Misuse of the growth-share matrix 2.3 Critical evaluation 2. strategic management.5 Alternatives 3 Other uses 4 References Overview [edit] . the free encyclopedia Early depiction of the growth-share matrix The growth-share matrix (aka the product portfolio[1]. Boston Consulting Group analysis.[2] Analysis of market performance by firms using its principles has called its usefulness into question. This helps the company allocate resources and is used as an analytical tool in brand marketing. portfolio diagram) is a chart that had been created by Bruce D. product management. and it has been removed from some major marketing textbooks.

A question mark has the potential to gain market share and become a star. Dogs. 2008 Ads by Google Building Wealth In 2013 . These units typically generate cash in excess of the amount of cash needed to maintain the business. They are to be "milked" continuously with as little investment as possible.To use the chart. analysts plot a scatter graph to rank the business units (or products) on the basis of their relative market shares and growth rates. but because they have low market shares they do not generate much cash. should be sold off.  Stars are units with a high market share in a fast-growing industry. if they have been able to maintain their category leadership stars become cash cows. These units typically "break even". then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines.  Question marks (also known as problem children) are growing rapidly and thus consume large amounts of cash. in a "mature" market. from an accounting point of view such a unit is worthless. They depress a profitable company's return on assets ratio. Sustaining the business unit's market leadership may require extra cash. If the question mark does not succeed in becoming the market leader. used by many investors to judge how well a company is being managed.  Dogs. not generating cash for the company. They are regarded as staid and boring. The 3 Strategies of a Corporation Here are the three strategies of an organisation that represent the master plan in achieving goals and the maximisation of their profits. it is thought. else they become dogs due to low relative market share. and every corporation would be thrilled to own as many as possible. but this is worthwhile if that's what it takes for the unit to remain a leader. and eventually a cash cow when the market growth slows. The result is a large net cash consumption. are units with low market share in a mature. generating barely enough cash to maintain the business's market share.  Cash cows are units with high market share in a slow-growing industry. more charitably called pets. Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units. since such investment would be wasted in an industry with low growth. Posted by Maria Zain on Mar 10. The hope is that stars become the next cash cows. slow-growing industry. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share. When growth slows.

These strategies are developed based on the micro interests of the company. organisations need a framework to work by and to move forward in achieving goals that will lead to the maximum profit margin. If the corporation wants to be perceived as a leading clothes manufacturer. strategies will differ from indust ry to industry and from firm to fim.It Can Be A Very Profitable Year. There are three main strategies that businesses have to adopt to achieve this goal. its corporate strategies have to incorporate growth in the retail line that will allow them to keep up with the latest trends in fashion and clothes. Corporate Strategy A corporate strategy depicts the corporate culture's perception of progress and growth. the concepts remain the same and companies customise their strategies to fit their corporate culture.com/Building_Wealth Start Earning Today Zero brokerage. The business strategy concentrates on improving a firm's competitive position by developing their products and services and by continunously exceeding clientele expectations.rksv. Learn The Moves You Must Make Now WealthDaily. business products as well as functions in the market. Of course. The corporate strategy comprises a directional strategy through a corporate vision and a mission statement. . Business Strategy A business strategy accentuates the lines of the different business units. No Hidden Costs! Do Unlimited Trading on Cash and FO www. The corporate strategy takes an overview picture of a parenting strategy to ensure that a corporation is on the right track. However. Collectively.in In order to work toward maximising profits. the business strategies ensure that individual business units are able to increase their effectiveness while remaining jived with the corporate strategy. The corporate strategy is an important strategy to observe to depict the best image of the comp any toward its clientele.

Their functional strategies have to be customised to ensure that the business strategy adopted by the business team will be able to succeed. the Growth-Share Matrix and Portfolio Analysis Milk your "cash cows. the corporate strategy is the one that remains the most stable while the functional strategies are those that change to keep in pace with customer needs and aggressive competition in the market.These business strategies will be based on a SWOT analysis and will recommend strategies to top management. Lastly. to look into growth opportu nities." © iStockphoto/beckariuz Imagine that you're reviewing your organization's products. You need to decide which ones you should focus investment on. marketing and/or research and development. . Effective functional strategies will help the corporation develop competitive advantages for the company. The functional strategy therefore supports the business strategy. From a hierarchial point of view. it is important to know that strategies have to be outlined in a flexible manner in order to keep in pace with the different changes that take place in the external environment. These could be human resources. The Boston Matrix Focusing Effort to Give the Greatest Returns Related variants: The BCG Matrix. Functional Strategy A functional strategy is one that is implemented and activated by functional areas that support product and service development.

In this article. They designed it to help managers at large corporations decide which business units they should invest in. They're likely to be popular with customers. is a simple. and needs a lot of cash to support it.  Question Marks (Problem Children): Low Market Share and High Market Growth These are the opportunities that no one knows how to handle. However. which makes it easier for you to exploit new opportunities. Another product is also doing well. There should be some good opportunities here. You need to assess how they're likely to perform in future. if you cannot increase market share. but they don't need much investment either. and this trend looks set to continue. but it's in a new market. But they're in high-growth markets. so they could become Stars or even Cash Cows if you can build market share. because the market is only growing slowly. However. Understanding the Boston Matrix Management consultants at the Boston Consulting Group developed their matrix in the early 1970s.  Cash Cows: High Market Share and Low Market Growth These businesses or products are well established. also called the Boston Consulting Group (BCG) Matrix.One of the products is doing well financially.  Stars: High Market Share and High Market Growth Businesses and products in this quadrant are seeing rapid growth. Should you continue investing in it? And another product is barely profitable. visual way to examine the likely financial performance of your product or business portfolio. demand has fallen. we'll look at the Boston Matrix and how to use it. and opportunities are likely to be limited. Figure 1 – The Boston Matrix The categories are:  Dogs: Low Market Share and Low Market Growth Dogs are business units or products that have low market share in a low-growth market. managers in all kinds of organizations now also use it to decide which of their product lines or products to invest in. Question Marks could absorb a lot of effort with little . because you don't have a large market share. The matrix. They aren't generating much revenue right now. However. and which to dispose of or to shut down. you'll need to offer a price discount to sell Dog products. We'll also outline some of its limitations. Much of the time. shown in figure 1. They often don't make much profit. and you should work hard to realize them. Should you kill it or keep it? To make these decisions. although its market is growing. The Boston Matrix. However. you should avoid spending too much effort on these. places products into four categories based on their market share and market growth. you need to look beyond the income that the products are currently bringing in.


capabilities. and competitiveness 2012年12月19日 .What is strategy and why is it important? the five generic competitive strategies: which one to employ? » Evaluating a company’s resources.

what are the company’s resource strengths and weaknesses and its external oppo rtunities and threats. The spotlight in analyzing a company’s resources. Which of the following is not a component of evaluating a company’s resources an d A. whether the company’s key success factors are more dominant than the key succ C. and average factors annual increase of in the common close stock price. and co mpetitiveness includes such questions/concerns as A. Pinpointing what strategic issues and problems merit front-burner managerial atte ntion 3.大 中 小 1. Management’s planned. internal circumstances. D. rivals. 4. Evaluating whether the company is competitively stronger or weaker than key riv . proactive moves to outcompete rivals (via better product Assessing whether the company’s costs and prices are competitive D. als E. The key functional strategies (R&D. What are the company’s most profitable geographic market segments? E. ROE. Is How Are the a well the company company’s is the company’s competitively resources company’s prices stronger and present and or competitive strategy costs weaker than position? working? competitive? key rivals? A. What strategic issues and problems merit front-burner managerial attention? 2. supply chain management. Which of the following is not pertinent in identifying a company’s present strategy ? A. and finance) a company is employing B. D.139 浏览 字体 . Evaluating how competitive well the present strategy is position? working B. E. whether the company’s present strategy is better than the strategies of its closest rivals based on such performance measures as earnings per share. C. B. Scanning the environment to determine a company’s best and most profitable cus tomers C. production. sales and marketing. what new acquisitions the company would be well advised to make in order to str engthen its financial performance and overall balance sheet position. Which of the following is not one of the six questions that comprise the task of ev aluating B. HR. dividend pa yout ess ratio. whether the company has the industry’s most efficient and effective value chain.

ve whether The firm’s to it image has and a superior reputation of with its quality its product customers rivals performer. the company is achieving its financial and strategic objectives and whether it is an above-average gn) or a industry late-mover (a bad performer. 6. Which one of the following is not a reliable measure of how well a company’s curr ent strategy is working? A. Moves to respond and react to changing conditions in the macro-environment and industry competitive E. close rivals. and so on) mission. slower. its strategy is built around at least two of the industry’s key success factors. B. strategic and wider product and lines. sign). product quality. the caliber of results the strategy is producing. falling. price. The best quantitative evidence of whether a company’s present strategy is workin g ties. specifically whether the company i s achieving its financial and strategic objectives and whether it is an above-average i ndustry D. speed in getting newly developed products to m . in rs The improved company’s quality or service. C. or about the same pace as the industry as a whole. B. whether the company is in the industry’s best strategic group. C. One important indicator of how well a company’s present strategy is working is w hether A. whether the company has more competitive assets than it does competitive liabili D. thus resulting in a rising. Whether it has a larger number of competitive assets than competitive liabilities a nd C. How well the firm stacks up against rivals on technology. well is A. it is customarily a first-mover in introducing new or improved products (a good si E. Whether the company’s sales are growing faster. it is subject to weaker competitive forces and pressures than close rivals (a good sign) or stronger competitive forces and pressures (a bad sign). financial objectives conditions D. C. or stable market share B. D. 7. objectives. cust omer service. product innovation. Whether its profit margins are rising or falling and how large its margins are relati those E. whether the company is in the Fortune 500. whether the company has a shorter value chain than E.design. it has more core competencies than close rivals. The strategic role of its collaborative partnerships and strategic alliances with othe 5.

D.arket. 10. Whether it has more primary activities in its value chain than close rivals and a b etter overall value chain than these rivals E. All of these. D. physical and/or organization assets. a skill. e. signal whether it has the wherewithal to be a strong competitor in the marketplac E. or human assets strength competitively and can important intellectual concern capability. firm. 9. firm. 11. B. a productive marketing Which of the following a input that and R&D does not represents company’s is owned brand by the a company resource? brand. and other relevant factors on which buyers base their choice of which brand t o purchase 8. and market share vis-à-vis those of key rival s C. D. Its human. B. firm. The sizes of its profit margins and return on investment vis-à-vis those of key riva ls D. Whether it has more core competencies than close rivals 12. capital. management. A. A. Which of the following most accurately reflect a company’s resource strengths? A. collaboration E. give it excellent ability to insulate itself against the impact of the industry’s drivin g E. chain. C. Which of the following is a clear representation of a company’s capability? A. B. combine to give it a distinctive competence. and achievements or attributes that enhance the company’s ability to compete e ffectively B. its skills and competitive capabilit ies. C. C. activity. A. A valuable company’s specialized expertise. . a productive input that is controlled by the firm. B. The sizes of its unit sales. are the A company’s represent most important resource its parts of and core the company’s capability value analysis competencies. forces. revenues. a productive capacity an of alliance a input a or that is firm company’s owned to or controlled with by some another the perform brand. teams.

A well-known quality brand name and and enjoying the confidence than rivals performance of customers B. basis. B. it is unlikely to survive in the marketplace and should exit the industry. ascertain the internal market place of non-distinct divisions of the company. alliances. E. is lost. 16. stment y on key suppliers. D. or strategic resource is rivals. D. all to potential for competitive competitive advantage advantage. Resource and capability analysis is designed to A. on The best example than partnerships with a of a company key outsiders. competitively valuable alliances or cooperative ventures. 14. More intellectual capital and better e-commerce capabilities product D. having a larger number of competitive assets than competitive liabilities. ascertain which of a company’s resources and capabilities are competitively valua ble. A. stimulate demand for a product. D. Having higher earnings per share and a higher stock price than key rivals E. stimulate economic growth for companies within the industry. B. All of these. having proven technological expertise and ability to churn out new and improved products regular D. having higher earnings per share and a higher return on shareholders’ equity inve B. A lower-cost value chain than rivals 15. having more built-in key success factors than rivals. it may have a bundle of resources that can be leveraged to develop a distinctive c ompetence. E. Fruitful partnerships or alliances with suppliers that reduce costs and/or enhance C. If a company doesn’t possess stand alone resource strengths capable of contribu ting A. its best strategic option is to revamp its value chain in hopes of creating stronger competitive capabilities. E. an achievement or attribute that puts the company in a position of market advant age. 13. C. Which of the following is not a good example of a company’s strength? A. being totally self-sufficient such that the company does not have to rely in any wa C. E. it is virtually blocked from using offensive strategies and must rely on defensive s trategies. . C.C. ascertain to what extent a competitor can sustain a competitive advantage.

D. Whether the resource or capability is competitively valuable and/or are there goo substitutes available E. C. . A. 18. Whether a resource or capability can support a competitive advantage is determi ned hat B. probing the caliber of a firm’s competitive assets relative to those of rival firms. resource. C. copy. E. D. Whether the resource or capability is hard to copy and/or can be trumped by diffe rent types of resources and capabilities. E. C. analyzing only internal strengths and weaknesses through a matrix comparison m cost-benefit analysis of the company’s core product sales. B. Performing resource specific activities within the organization to allocate available capital. D. long-term cash competitive resource flow advantage deployment over derivative feasibility other strategic superior to rival firms a strategy. odel. copy. A company that has competitive assets which are central to company strategy a nd creates A. Whether the resource or capability can be trumped and/or is hard to copy. copy. companies. B. 19. D. analysis. Whether the resource or capability is competitively valuable and/or is something t C. Whether the resource or capability is competitively valuable and/or are there goo d substitutes available for the resource. Resource and achieving capability analysis price is achieved by A. Whether the resource or capability is hard to copy and/or can be trumped by diffe rent types of resources and capabilities. stability. d Whether Whether the resource the or resource rivals capability or is rare and/or is is hard to to capability for easy the lack. 20. Whether the resource or by which rivals capability is rare and/or is hard to two tests? lack. cost underestimation and benefit overestimation. Which two tests of a resource’s competitive power determine whether a compan y’s competitive advantage can be sustained in the face of active competition? A. E. plan. Whether the resource or capability is competitively valuable and/or is something t hat B.17.

they mus t A. 25. sustain benefits of high market share as an interest in growth strategies. A company requires a dynamically evolving portfolio of resources and capabilitie s A. sustain its competitiveness and help drive improvements in its performance. E. assist sustain the strategic planning team systems in as a overall strategic complex manufacturing to direction. 22. E. D. A. C. 23. Which of the following is not an example of a company’s dynamic capability? A. All of these. replace degraded resources E. combat competitors’ newly launched offensives to win bigger sales and market sh C. A competitively strategic of superior asset the worker resource providing availability productivity or a of and capability a is a company’s advantage. complexity. innovation. capacity upgrades ability to to to improve R&D existing to resources drive with and product acquired capabilities. B. B. Social Social Collective Social ambiguity simplicity complexity complexity and and and and and causal causal causal causal capabilities? uncertainty. ambiguity. resources be in sync with changes company in the company’s to own strategy. customers.21. True competitive superior product B. B. E. C. What two factors inhibit the ability of rivals to imitate a firm’s most valuable reso urces A. E. ares. Equally valuable substitute resource providing Assessment Unsurpassed competitive advantage. fully support efforts attract D. substitutes. For a company to have competitively potent resources and capabilities. Unique piecework incentive system providing a competitive advantage. . recoil. C. C. D. D. quality. Social simplicity and causal uncertainty. All of these. 24. capabilities. B. D. be in sync with its efforts to achieve a resource-based competitive advantage. capacity to add new resources and capabilities to the competitive asset portfolio. transform knowledge into a management style supporting competition in a globall y diverse world. ambiguity.

D. Is the resource strength hard to copy? E. company resource mapping. B. 27. have the potential for lowering the firm’s unit costs. chain. C. whether it is really competitively valuable and having the potential to contribute t competitive advantage. alue E. be something that a company does internally rather than in collaborative arrange how whether hard it a it is is rare for and competitors something to rivals on copy. arrangements outsiders? C. Identifying and assessing a company’s resource strengths and weaknesses and it s A. how easily it can be trumped by the substitute resources/capabilities of rivals. lack. patentable. 28. Is the resource strength something that a company does internally rather than in collaborative rivals? D. For a particular company resource/capability to have real competitive power and perhaps qualify as a basis for competitive advantage. be competitiv ely valuable. be an industry key success factor and occupy a prime position in the company’s v B. B. The competitive power of a company resource strength or competitive capability hinges A. Is the resource strength competitively valuable. D. The competitive power of a company resource strength is not measured by whic h A. Is one the of resource rare the and following something with rivals tests? lack? with be rivals.26. having the potential to contribute to a competitive advantage? 29. Is the resource strength easily trumped by the substitute resources/capabilities of E. be rare and something rivals lack. D. be hard for competitors to copy. . C. All of these. it should A. analysis. competitive competitive strategic external opportunities SWOT asset/liability positioning resource and threats is called analysis. o E. assessment. outsiders. B. and not be easily trumped by substitute resource strengths possessed by ments C. analysis.

a company competence is a competitively relevant activity which a firm performs . a company competence refers to a company’s strongest resource whereas a core competence refers to a company’s lowest-cost and most efficiently performed value chain activity. C.30. they pave the way for establishing a low-cost advantage over rivals. When a company has real proficiency in performing a competitively important va lue A. B. B. C. its market opportunit external company’s threats competitive well-being. competence. a company competence refers to a company’s best-executed functional strategy a nd a core competence refers to a company’s best-executed business strategy. E. E. A company’s resource strengths are important because A. 34. D. competence. a company competence. B. identifying the market segments in which a company is strongly positioned and w eakly positioned. The difference between a company competence and a core competence is that A. 32. they provide extra organizational muscle in turning a core competence into a key success factor. C. B. capability. C. D. it is distinctive core chain over said to have competence. 31. E. they give it competitive protection against the industry’s driving forces. they provide extra muscle in helping lengthen the company’s value chain. competence. C. SWOT gauging and determining whether the a analysis a company is has a a cost to powerful competitive its future vis-à-vis tool value for chain. A. D. B. a a a competitive a advantage competitive distinctive core over rivals. When a company is good at performing a particular internal activity. rivals. evaluating whether a company is in the most appropriate strategic group. they represent its competitive assets and are big determinants of its competitiven ess and ability to succeed in the marketplace. close rivals. ies. a a chain a a key competitive value advantage activity. 33. D. it is said to have A. sizing up a company’s resource capabilities and deficiencies. strength E. proficiency. a company competence.

the amount of which is reflected in the physical a nd tangible assets on a company’s balance sheet. source. a company competence represents real proficiency in performing an internal activ ity whereas a core competence is a competitively relevant activity which a firm perfo rms better than other internal activities. C. E. D. whereas a distinctive co mpetence is a competitively relevant activity which a firm performs especially well in comparison to other firms with which it competes. gives a company competitive capability and is a genuine company strength and re . a distinctive competence refers to a company’s strongest resource or competitive capability and a core competence refers to a company’s lowest-cost and most efficie ntly executed value-chain activity.especially well relative to other internal activities. The difference between a core competence and a distinctive competence is that A. a core competence usually resides in a company’s base of intellectual capital wher eas a distinctive competence stems from the superiority of a company’s physical and tangible assets. a core competence usually resides in a company’s technology and physical assets whereas a company competence usually resides in a company’s human assets and in tellectual capital. residing in a company’s tangible physical assets on the C. All of these. A core competence A. E. whereas a core competence is an activity that a company has learned to perform proficiently. is often grounded in a single departments set of knowledge and expertise. D. A. a core competence is a competitively relevant activity which a firm performs espe cially well in comparison to the other activities it performs. a core competence represents a resource strength whereas a distinctive compete nce is achieved by having more resource strengths than rival companies. expertis e. is a competitively relevant activity which a firm performs especially well in compa rison to the other activities it performs. B. 37. B. ets balance and is A not a core genuine resource competence strength. a core competence usually resides in a company’s technology and physical assets whereas a distinctive competence usually resides in a company’s know-how. 35. E. is typically results-based. sheet. D. 36. retracts from a company’s arsenal of competitive capabilities and competitive ass B. and intellectual capital. typically has competitive value.

competence. A distinctive competence gives a company competitively valuable capability that is unmatched by rivals. competence. competence. E. A distinctive competence A. D. refers to a company’s lowest-cost and most efficiently executed value-chain activi E. B. All of these. C. petitors. D. is more difficult for rivals to copy than a distinctive group. Which of the following does not represent a potential core competence? A. Know-how in creating and operating systems for cost-efficient supply chain mana gement C. C. When a company performs a particular competitively important activity truly well in A. A distinctive competence is typically less difficult for rivals to copy than a core co . Skills in manufacturing a high-quality product at a low cost B. A distinctive competence can be a basis for sustainable competitive advantage. The capability Having a to fill customer orders accurately line and swiftly rivals wider product than a a comparison to a a its competitors. E. C. B. The capability to speed new or next-generation products to the marketplace 40. 38. strategy. Which one of the following is inaccurate as concerns a distinctive competence? A. ty. better than its competitors. D. gives a company competitively valuable capability that is unmatched by rivals. is can a underpin basis and for add sustainable real punch to competitive a company’s advantage. 41.C. is a competitively important activity that a company performs better than its com E. E. competence. D. a key success factor. company strategic distinctive core it is said to have resource. A distinctive competence can underpin and add real punch to a company’s strateg y. A distinctive competence is a competitively important activity that a company perf orms mpetence. B. usually is grounded in the technological expertise of a particular department or w ork D. 39.

is focused squarely on ascertaining whether the company has more/less resource E. represents a problem that needs to be turned into a strength because weaknesse B. prevents D. benchmarking. s A prevent company a firm resource from weakness being a or winner competitive in the deficiency marketplace. how hard it is to copy and how easily it can be trumped by substitute resource str C. a company from having a distinctive competence. All of these. 45. expertise. D. whether customers are aware of the competence and view the competence positiv D. causes the company to fall into a lower strategic group than it otherwise could co mpete C. essentially involves constructing a ―strategic balance sheet‖ where the company’s resource strengths represent competitive assets and its resource weaknesses repres ent B. C. strengths is is called competitive called competitive than strength liabilities. E. organizational. is called company resource mapping. whether the competence is technology-based or based on superior marketing kno w-how. E. assessment. rivals). in. 44. reputation. weaknesses. usually stems from having a missing link or links in the industry value chain. whether it helps differentiate a company’s product offering from the product offeri B. rivals. Sizing up a company’s overall resource strengths and weaknesses something A company’s parts that it lacks or resource of does poorly weaknesses the (in comparison to can relate to A. or intellectual capital in competitively import business.42. is something a company lacks or does poorly (in comparison to rivals) or a conditi on that puts it at a disadvantage in the marketplace. 43. C. missing or competitively inferior capabilities in key areas. A. deficiencies in competitively important physical. whether the competence is one of the industry’s key success factors. s. . D. ant B. or intangible asset A. A. inferior or unproven skills. The competitive power of a company’s core competence or distinctive competenc e ngs engths ely enough and to of competitive boost the depends rival capabilities company’s brand of name on firms. E.

Those market opportunities that match up well with the firm’s financial resources and competitive capabilities. help defend against the external threats to its well-being. D. C. strategy. business The lack Slowdowns More intense of in a distinctive market competitive profitability? competence growth pressures product quality. E. B. The market opportunities most relevant to a particular company are those that A. D. Which of the following is not an example of an external threat to a company’s fut ure A. C. New legislation that entails burdensome and costly government regulations E. C. E. C. The introduction of restrictive trade policies in countries where the company does . The external market opportunities which are most relevant to a company are the ones A. 47. B. provide a strong defense against threats to the company’s profitability. Those market opportunities that help correct a company’s biggest weaknesses an d competitive deficiencies. Those market opportunities that provide avenues for taking market share away fr om close rivals and enhance a company’s image as a leader in product innovation an d s. 48. reinforce increase its overall market business that share. close rivals. Which of the following best describes the market opportunities that tend to be m ost relevant to a particular company? A. Those market opportunities that offer the company a chance to raise entry barrier B. D. and present the most potential for competitive ad vantage. offer the best growth and profitability. 49. correct its internal weaknesses and resource deficiencies. and present the most potential for competitive advantage. Those market opportunities that help promote greater diversification of revenues and profits. B.46. E. offer hold provide the avenues the most for taking best potential market growth for share and product away from profitability. match up well with the firm’s financial resources and competitive capabilities. offe r the best growth and profitability. D. innovation. hold the most potential to reduce costs.

provides a good overview of whether a company’s situation is fundamentally healt hy or unhealthy. or suppliers 51. E. e y chains key SWOT of success key analysis rivals. rategies C. Higher overall unit costs relative to rivals E. Lack of a strong brand image and reputation (as compared to rivals) D. is a tool for benchmarking whether a firm’s strategy is closely matched to industr C. unified functional strategy instead of several distinct functional st key The payoff of doing a of success thorough SWOT analysis is A. In doing SWOT analysis. 52. The lack of a well-known brand name with which to attract new customers and he E. revealing whether a company’s market share. identifying whether the company’s value chain is cost effective vis-à-vis the value rivals. Too narrow a product line relative to rivals Less productive R & D efforts than rivals B.50. is a way to measure whether a company’s value chain is longer or shorter than th B. helping strategy-makers benchmark the company’s resource strengths against in C. its market opportunities. assisting strategy-makers in crafting a strategy that is well-matched to the compa ny’s resources and capabilities. factors. measures of profitability. factors. which one of the following is not an example of a poten tial resource weakness or competitive deficiency that a company may have? A. Which of the following is not an example of a threat to a company’s future profit ability? A. E. Shifts in Costly Likely entry retain buyer needs and new tastes of potent existing away from the regulatory new competitors customers industry’s product requirements B. Having a single. D. and sales compare favorably or unfavorably vis-à-vis key competitors. enabling a company to assess its overall competitive position relative to its key ri . chains dustry vals. D. and the external threats to its future well-being. D. reveals whether a company is competitively stronger than its closest rivals. lp C. 53. B. Growing bargaining power on the part of the company’s major customers and maj A. identifies the reasons why a company’s strategy is or is not working very well.

Openings to win market share away from rivals 55. Serving Growing additional buyer preferences for may customer groups or for the market industry’s substitutes have? segments product C. E. or E. and to defend against external threats. be aimed at those market opportunities that offer the best potential for both profi D. Benchmarking the company’s resource strengths and competitive capabilities agai industry Identifying and what success market company’s seek to be grounded growth defend against in its and threats to the resource strengths competitive company’s future and capabilities. table C. advantage. 56. Drawing conclusions about the company’s overall business situation—what is attr unattractive E. making accurate lists of the company’s strengths. Acquiring rival firms or companies with attractive technological expertise or capab ilities D. Translating the results of the analysis into actions for improving the company’s str ategy and market position 57. All of these. Expanding into new geographic markets E. to correct the important weaknes ses. has. ities. identifying the company’s resource strengths and identifying the company’s best market how many market opportunities it opportunities. generally not place heavy demands on areas where company resources are weak D. In doing SWOT analysis and trying to identify a company’s market opportunities. B. pinpointing the company’s competitive assets and pinpointing its competitive liabil . active Identifying a company’s resource key a is company’s about the strengths and competitive capabilities factors opportunities circumstances? B. B.54. C. and The two most important parts of SWOT analysis are A. nst C. drawing conclusions from the SWOT listings about the company’s overall situation and translating these into strategic actions to better match the company’s stra tegy t o its resource strengths and market opportunities. weaknesses. unproven. B. Which one of the following is not part of conducting a SWOT analysis? A. which of the following is not an example of a potential market opportunity that a co mpany A. profitability. One of the lessons of SWOT analysis is that a company’s strategy should A. identifying the external threats to a company’s future profitability and pinpointing D. opportunities.

B. pinpointing the company’s competitive assets. C. B. D. matching the company’s strategy to its resource strengths. identifying its market opportunities and the external threats it faces. C. whether its prices and costs are competitive with those of key rivals. One of the most telling signs of whether a company’s market position is strong o r A. and ex ternal s ties C. E. Which market opportunities are best suited to a company’s strengths and capabili E. and eva luating the seriousness of the threats to the company’s future profitability. 59. the opinions of buyers regarding which seller has the best product quality and cus . How to improve a company’s strategy by using company strengths and capabilitie B. whether whether its product it has is a precarious strongly lower or weakly differentiated price than from key is rivals. 58. determining whether the company has more competitive assets than competitive l iabilities. identifying the company’s resource strengths and weaknesses and its opportunitie s and threats. service. drawing conclusions about the company’s overall situation. market opportunities. Which one of the following is not something that can be gleaned from identifying a company’s resource strengths. correcting the compa ny’s important resource weaknesses. How to turn a core external competence into a distinctive threats competence as cornerstones for its threats? strategy A. and transl ating the conclusions into strategic actions to improve the company’s strategy. stock D.threats and then using these lists as a basis for ascertaining how well the company’s strategy is working. and determining whether it enjoys a competitive advantage. and identifying the company’s best market opp ortunities. pinpointing its competitive deficien cies. resource weaknesses. determining whether the company has good market opportunities. benchmarking the company’s strengths and weaknesses against those of key rival s. The three steps of SWOT analysis are A. tomer E. whether it is in a bigger or smaller strategic group than its closest rivals. and determin ing the company’s potential for establishing a competitive advantage over rivals. rivals. Which resource weaknesses and deficiencies need to be corrected so as to better enable the pursuit of important market opportunities and to better defend against ce rtain D. Whether any of the company’s resource strengths can be used to help lessen the i mpact of external threats 60.

the activities it performs in transforming its competencies into distinctive compet A. the series of steps it takes to get a product from the raw materials stage into the D. Identifying the primary and secondary activities that comprise a company’s valu e eater ’s n the value key value chain for success gives rise to chain shareholders. and then start collecting reven ues and earning a profit. products.61. end-users. assets. consists of two broad categories of activities: the primary activities that create cu stomer value and the requisite support activities that facilitate and enhance the perf ormance eloping of the new primary activities. depicts the internally performed activities associated with creating and enhancing company’s competitive C. Two analytical tools useful in determining whether a company’s prices and costs are A. the competencies and competitive capabilities that underpin its efforts to create v alue for customers and shareholders. indicates whether a company’s resource strengths will ultimately translate into gr B. A. consists of the primary activities that it performs in seeking to deliver value to sh B. concerns the basic process the company goes through in performing R&D and dev E. 63. SWOT value competitive analysis SWOT chain position assessment competitive and analysis analysis and key success and and competitive factor are analysis. get it produced and distributed into the marketplace. strength assessment. consists of the series of steps a company goes through to develop a new product. factors. D. C. benchmarking. E. is the first step in understanding a company’s cost structure (since each activity i . the steps it goes through to convert its net income into value for shareholders. B. C. 64. support of activities. 62. costs). reveals whether a company’s resource strengths are well-matched to the industry C. A company’s value chain identifies A. the primary activities it performs in creating value for its customers and the relate d hands encies. driving forces analysis and SWOT analysis. B. areholders the in A the form of company’s higher dividends and value a higher stock chain price. benchmarking. E. D.

reflecting differences in the evolution of each company’s o wn particular business. age of plants and equipment. and administrative activities. B. number of employees. B. . D.D. and advertising costs. can differ substantially. differences in strategy. human resource activities (particularly labor costs). 66. fixed cost activities. Activity-based cost accounting aims at A. 67. benchmark the costs of primary value chain activities against the costs of the sup port value chain activities. determine whether the value chains of rival companies are similar or different. E. is called resource value analysis. depending on how many activities are perform D. B. tend The to be value essentially the chains same—any of differences rival are companies typically minor. vertical integration activities. E. and differences in the approaches bei ng ed used internally and to how execute many are strategy. B. can be either fairly similar or fairly different. dividing all company expenses into two categories: activities whose costs are vari able and activities whose costs are fixed. D. A. C. 65. Activity-based costing is used to variable cost activities. C. is called benchmarking. E. operating-level activities. E. determine the costs of each primary and support activity comprising a company’s value chain and thereby reveal the nature and make-up of a company’s internal cost structure. C. the activities performed by suppliers. and strategic partnership activities. The three main areas in the value chain where significant differences in the costs of competing firms can occur include A. and line of business activities. outsourced. and the activities performed by wholesale distribution and retailing allie s. making cross-company comparisons of the costs of each value chain activity. are fairly similar or fairly different. depending on the extent to which ea ch company’s primary and support activities are comprised of fixed cost activities an d s. the nature and make-up of their own internal operations. are fairly similar except when rival companies have quite different product design A. determine the costs of each strategic action a company initiates. 68. variable cost activities. None of these accurately describes what activity-based costing is about. functional area activities.

Whether the company has a longer or shorter value chain than its close rivals 71. and how all these costs compare against the costs that make up the value chain systems employed by rival f irms E. is an accounting system that assigns a company’s expenses to whichever activity B. A. rival. How the costs of the company’s internally performed activities (its own value chai n) compare against the costs of the internally-performed activities of rival companie s B. The costs of a company’s internally performed activities. E. requires looking at the costs of a company’s competitively relevant suppliers and f orward allies (distributors/dealers). involves using benchmarking techniques to develop cost estimates for the value c activities classifying them C. typically involves the use of activity-based cost accounting. costs in the value chains of both the company’s suppliers and forward channel allies. is a powerful tool for identifying the different pieces of a company’s value chain a D. requires considering the costs of a company’s internally performed activities.C. B. the costs of its distributor s/dealers) against the costs of the value chain systems employed by rival firms. determining the costs of each activity comprising a company’s value chain by esta blishing expense categories for specific value chain activities and assigning costs to t he D. d Costs in the value chains channel of the company’s suppliers allies C. Which one of the following provides the most accurate picture of whether a com pany is cost competitive with its rivals? A. E. in hain nd ch a company’s value Activity-based chain of as primary is responsible each activities and for creating major support the costing cost. is a tool for identifying the activities that cause a company’s product to be strongl y differentiated from the products of rivals. None of these accurately describes what activity-based costing is about. Costs in the value chains of a company’s distributors and retail dealers and forwar D. initiates. All of these. its internally performed activities. involves determining which value chain activities represent variable costs and whi represent fixed E. 70. Determining whether channel a company’s prices and costs are competitive A. C. D. activity determining the responsible costs of each for strategic creating action a the company cost. involves the use of benchmarking the costs in a company’s value chain system (t he costs of its suppliers. activities. costs. . 69.

ownership. Benchmarking Hard Proof A Verification of provides a of total company of with which cost resource company cost of the following? availability. comparing how different companies perform various value chain activities and the B. E. analysis. To learn how best practice companies achieve lower costs or better results in perf orming and hain which benchmarked are support activities activities activities C. A. benchmarking. 74. strategy. E. D.72. B. n making crosscompany Benchmarking comparisons of the costs of these involves activities. D. A much-used and potent managerial tool for determining whether a company pe rforms particular functions or activities in a manner that represents ―the best practic e‖ A. To develop cross-company comparisons of the costs of performing specific value c E. C. resource SWOT when both cost and effectiveness activity-based cost are taken into account is competitive strength analysis. C. checking whether a company has achieved more of its financial and strategic obje ctives over the past five years relative to the other firms it is in direct competition wi th. studying whether a company’s resource strengths are m ore/less powerful than th e resource strengths of rival companies. 73. . costing. To help construct a company value chain and identify which activities are primary D. comparing the best practices in one industry against the best practices in another industry. Improvements to internal processes. A. E. mapping. C. D. studying how a company’s competitive capabilities stack up against the competiti ve capabilities of selected companies known to have world class competitive capabilit ies. To identify the best practices in performing various value chain activities B. Which of the following is not one of the objectives of benchmarking? A. B. evidence competitiveness. To take actions to improve a company’s cost competitiveness when benchmarking reveals that its costs and results of performing an activity are not as good as what o ther companies have achieved 75.

Outsourcing high-cost activities to vendors or contractors who can perform them E. cost-saving technological improvements B. 78. whether initiate utilize in B. B. C. Relocating high-cost activities (like manufacturing) to geographic areas (like Chin a or Latin America or Eastern Europe) where they can be performed more cheaply 80. Which of the following is not a good option for trying to remedy high internal cos ts vis-à-vis rivals firms? A. revamping its value chain to eliminate or bypass some cost-producing activities (p value-added B. C.76. C. 77. Redesigning the product or some of its components to permit more economical m anufacture cost more or assembly reduction economically C. All of these. chain. Which of the following areas within a company’s total value chain system. E. The the most decision when difficult of to to part to of do benchmarking it the at is all. The options for remedying an internal cost disadvantage include The A Suppliers’ improve company’s part None of channel distribution efficiency own the portion of of and activity overall the value value effectiveness? segments. investing in productivity-enhancing. Implementing aggressive strategic resource mapping to permit across-the-board D. when to stop the process and move forward with strategy. particularly for high-cost activities. implementing the use of best practices. what information the analysis E. especially low val ue-added E. D. process. implementing the use of best practices. A. redesigning the product or some of its components to facilitate speedier and more economical manufacture or assembly. A. B. . can m anagers A. Investing in productivity-enhancing. process. particularly for high-cost activities. activities. All of these. cost-saving technological improvements. how to gain access to information regarding rivals practices and costs. A. eliminating some cost-producing activities from the value chain. 79. these. D. chain. D. A company’s strategic options for remedying cost disadvantages in internally per formed articularly value chain low activities do not include activities).

Which of the following is not an option for remedying a cost disadvantage associ ated with activities performed by forward channel allies (wholesale distributors and r etail dealers)? A. integration. The options for remedying a supplier-related cost disadvantage include A. cutting selling prices and trying to win a bigger market share. Working closely with forward channel allies to identify win-win opportunities to re duce costs 84. A company that does a first-rate job of managing its value chain activities relativ e A. trying to negotiate more favorable prices with suppliers and switching to lower pri ced B. cost-saving technological improvements. Persuade forward channel allies to implement best practices. products. E. 81. 82. Collaborate closely with suppliers to identify mutual cost-saving opportunities. is likely to have to more distinctive competencies competitors than rivals. E. Insisting on across-the-board cost cuts in all value chain activities—those perform ed by suppliers. E. switching to activity-based costing. . outsourcing the performance of high-cost activities to vendors that can perform th em more cheaply.C. inputs. Shifting to a more economical distribution strategy such as putting more emphasi s on cheaper distribution channels (perhaps direct sales via the Internet) or perhaps integrating forward into company-owned retail outlets B. Integrate backward into the business of high-cost suppliers in an effort to reduce the B. and those performed by distributors-deal ers E. D. Pressuring distributors-dealers and other forward channel allies to reduce their co sts and markups so as to make the final price to buyers more competitive with the p rices of rivals D. D. C. investing in productivity-enhancing. costs Negotiate Switch of more to the favorable lower items prices priced being with substitute purchased. shifting forward into the substitute vertical production of substitute inputs. D. Which of the following is not an option for remedying a supplier-related cost disa dvantage? A. 83. suppliers. Trying to make up the difference by cutting costs earlier in the value chain C. those performed in-house. shifting from a low-cost leadership strategy to a differentiation or focus strategy. C.

B. For a company to translate its performance of value chain activities into competi tive advantage. 86. A resource analysis cost efficient have have at in more how core least it performs three value distinctive chain than activities. is often based on cross-department combinations of intellectual capital and expert . ise. it must A. D. have competencies that allow it to produce the highest quality product in the indu A. is almost certainly going to have a longer and more profitable value chain. develop resources strengths that will enable it to pursue the industry’s most attra ctive opportunities. 87. B. E. stry. stands a good chance of achieving competitive advantage by performing its value chain activities either more proficiently or at lower cost. C. allows a company to move into a higher strategic E. have more competitive assets than competitive liabilities. develop core competencies and maybe a distinctive competence that rivals don’t have or can’t quite match and that are instrumental in helping it deliver attractive va lue to customers or else be more cost efficient in how it performs value chain activiti es such that it has a low-cost advantage. develop core competencies and maybe a distinctive competence over rivals and th at are instrumental in helping it deliver attractive value to customers or else be mor e B. C. 85. D. eliminate its resource weaknesses. outsource all of its value chain activities to world-class vendors and suppliers. rivals. D. 88. allows a company to avoid the impact of the five competitive forces. is one of the most dependable ways a company can build a competitive advantag e over rivals. usually has the fewest primary activities and the lowest costs in the industry.B. To build a competitive advantage by out-managing rivals in performing value ch ain activities. a company must A. Properly managing the value chain activities in comparison to the rivals A. group. helps neutralize external threats to a company’s future business prospects. E. C. C. is one of the best ways for a company to avoid being impacted by the industry’s d riving D. E. position itself in the industry’s more favorably situated strategic group. competencies forces. competencies. usually has strong proficiencies in activity-based costing and benchmarking.

concentrates on minimizing the costs associated with the design of a product or s ervice. focuses on working with forward channel allies to develop capabilities to outmatch the capabilities of rivals. uses a company’s valuable and rare resource strengths and competitive capabiliti es ise. D. than E. determine whether a company’s resource strengths are sufficient to allow it to ear B. B. 91. E. deliberately develop valuable competencies and capabilities that add to a compan y’s competitive power in the marketplace. analyzing whether a company is well positioned to gain market share and be the i ndustry’s profit leader. identifying a company’s core competencies and distinctive competencies (if any). ranking the company against major rivals on each of the important factors that de termine market success and ascertaining whether the company has a net competitiv e advantage or disadvantage versus major rivals. D. Doing determining a whether competitive a company strength has a assessment cost-effective value entails chain. C. E. The value of doing competitive strength assessment is to focuses on exploiting a Value-creating company’s best-executed operating activities strategy. refers to a company’s most efficiently executed value-chain activity. is based upon efficient performance of the company’s primary value chain activitie A.B. to deliver value to customers that rivals have difficulty matching. C. D. . determine how competitively powerful the company’s core competencies are. E. advantage or bigger disadvantage vis-à-vis profits key rivals. C. uses industry key success factors to provide a company with a core competence t hat rivals cannot effectively imitate. s. learn whether a company has a distinctive competence. learn how the company ranks relative to rivals on each of the important factors th at determine market success and ascertain whether the company has a net competit ive n rivals. A. 89. learn if the company’s market opportunities are better than those of its rivals. is typically based on a stand-alone resource strength such as technological expert B. D. C. A. developing quantitative measures of a company’s chances for future profitability. 90.

95. B. D. it provides a more accurate assessment of the strength of competitive forces. Assigning a weight to each measure of competitive strength assessment is gener ally analytically superior because A. each strength measure is assigned a A.0. shares. the sum of the weights should a dd A. what it takes to provide better analytical balance between the companies with hig C. it singles out which competitor has the most competitively potent core competenc B. advantage. up to 100%. a weighted ranking identifies which competitive advantages are most powerful. D. D. D. E. the different measures of competitive strength are unlikely to be equally importan t. its perceived importance in determining a company’s competitive success in the . it eliminates the bias introduced for those firms having large market shares. 1. None of these. B. 100.92. the importance of each competitive strength measure in building a sustainable co mpetitive marketplace. E. weighting each company’s overall competitive strength by the size of its market s hare produces a more accurate measure of its true competitive strength. C. its weight percentage share of based total industry on revenues. C. E. 94. B. Competitive strength can be determined by assigning measures based on percei ved importance because A. E. an unweighted ranking doesn’t discriminate between companies with high and low market ies. 93. 10. all of the various measures of competitive strength are not equally important. In a weighted competitive strength analysis. its percentage share of total industry profits. C. In a weighted competitive strength assessment. weighting each company’s overall competitive strength by its percentage share of total industry profits produces a more accurate measure of its true competitive stren gth. the results provide a more reliable measure of what competitive moves rivals are likely to make next.

C. advantage. is a way of determining which competitor has the biggest overall competitive adv antage in the marketplace and which competitor is faced with the biggest overall co mpetitive oduct ic ts s. is the most reliable indicator of which industry member has the highest overall pr C. B. D. 98. 97. None of these. is a powerful way of revealing which competitors are in the best and worst strateg D. Calculating competitive strength ratings for a company and its rivals using the in dustry’s most telling measures of competitive strength or weakness A. show which industry rival has the best overall market opportunities and which co mpetitor has the poorest market opportunities. C. groups. greater stronger weaker possession competitive advantage competitiveness competitiveness competitive E. provide useful indicators of how a company compares against key rivals. signal which competitor has the most distinctive competencies and which competi B. is the most reliable indicator of which industry member has the lowest overall cos E. quality. A. 96. pinpoints which industry rivals are most insulated from the industry’s driving force A. High scores indicate that a company is a power-user of best practices while low sc . D. High scores signal a strong competitive position and possession of a competitive a B.0. 99. factor by factor and capability by capability—thus indicating whether the company has a net o verall competitive advantage or disadvantage against each rival. and is the low-cost disadvantage. B. leader. A higher company’s overall implied overall overall of weighted net strength rating does versus versus not signal rivals. tor Quantitative measures has of a company’s the competitive strength fewest. pinpoint which industry rival is subject to the least amount of competitive pressur es from the five competitive forces. rivals. E. reveal which competitors are in the best and worst strategic groups. Which one of the following is an accurate interpretation of the scores that result from dvantage doing over a competitive companies with strength lower assessment? scores. A.h ratings and the companies with low ratings and thus get the sum of the weights to add up to 1.

ores signal minimal or ineffective adoption of best practices. strategies. manager . C. Which of the rated companies is competitively strongest and what size competitiv D. which competitors are in profitable strategic groups and which competitors are in C.Calculating competitive strength ratings for a company and comparing them aga inst o unprofitable mploying the strength ratings for its key competitors helps indicate A. B. what the industry’s key success factors are. Which rival company is competitively weakest and the areas where it is most vuln erable to competitive attack 101. value chain. the ―worry list‖ sets the management agenda for taking actions to improve the co performance clear about C. outlook. which competitors are likely to make money and which are likely to lose money in E. High scores indicate which rivals are most vulnerable to competitive attack. which competitors are employing offensive strategies and which competitors are e D. managers ca nnot mpany’s s are less know what the industry’s and what value chain key success business activities to factors are. rivals. 100. without a precise fix on what problems/issues a company confronts. The company with over the lowest score has its the lowest-cost D. benchmark. Whether a company has a net competitive advantage or a net competitive disadv antage relative to key rivals (with the size of the advantage/disadvantage being indi cated by the differences among the companies’ competitive strength scores) E.Which one of the following is not something that can be learned from doing a co mpetitive key revamping e the makeup advantage of its it value strength assessment? rivals chain enjoys A. which weaknesses and vulnerabilities of competitors the company might be able t attack strategic defensive years successfully. ahead. The company with the lowest score has the strongest net competitive advantage E. B. The factors on which a company is competitively strongest and weakest vis-à-vis B.Identifying the strategic issues a company faces and compiling a ―worry list‖ of problems and roadblocks is an important component of company situation analysis b ecause A. 102. without a precise fix on what problems/roadblocks a company confronts. groups. Whether a company should correct its weaknesses by adopting best practices and C.

the ―worry list‖ helps company managers clarify their thinking about how best to modify the company’s value chain..‖ and ―what to do about…. is accomplished in part by using the results of analyzing the company’s external e nvironment to help come up with a ―worry list‖ of ―how to….‖ outlook. 103. Surveying a company’s board members.‖ ―whether to….Identifying the strategic issues and problems that merit front-burner managerial attention A. problems Analyzing Evaluating the that the company’s what merit own front-burner company’s resources they managerial external and think competitive the attention? environment position faces and present ―what strategy to or to do modify about…. is done in part by evaluating the company’s own internal situation—its resources and competitive position—to help come up with a ―worry list‖ of ―how to…. All of these.‖ ―whether to….‖ ―whether to….‖ and ―w hat ormance to and do business about….. D. internal circumstanc C. looking in on what challenges/obstacles/roadblocks the company has to overcome in order to be financially and competitively successful in the years ahead. All of these. Assessing what challenges the company has to overcome in order to be financially and competitively successful in the years ahead regarding strategic issues company D..‖ pany’s E.D.‖ ―whether to…. 104.. B. competitiveness. E. . helps set management’s agenda for taking actions to improve the company’s perf C. A.‖ and ―what to do about…. B.Which of the following is not part of the task of identifying the strategic issues a nd A. managers.. drawing on the evaluations of the company’s own resources. D.‖ it.. and to address and resolve entails environment. Developing a ―worry list‖ of ―how to…..Identifying the strategy-related issues and problems that company managers ne ed ompetitive es.‖ E. these issues and obstacles must be cleared before management can focus clearly on what is the best strategy for the company to pursue. select employees. and key in vestors ‖ E. developing a ―worry list‖ of ―how to….. is done in part as a basis for drawing conclusions about whether to stick with com C. 105. drawing on what was learned from having analyzed the company’s industry and c B.

It entails developing a ―worry list‖ of ―how to…. E.. It entails drawing on the results and conclusions from evaluating the company’s o C.. Developing a list of what issues and problems that managements need to address (and to resolve) should always precede deciding upon a strategy and what actions to take to improve the company’s position and prospects. Identifying the strategic issues and problems that the company faces is the first t hing that company managers need to do before starting to analyze the company’s in ternal and external environment. B.‖ and ―what to do .‖ D. resources and competitive environment.‖ ―whether to…. It entails drawing upon the results and conclusions from analyzing the company’s external wn about…. position.106.Which of the following is not accurate as concerns the task of identifying the str ategic issues and problems that merit front-burner managerial attention? A.

Q-2 Who All Have To Pay Income-Tax ? a.1. . from unrelated persons. Hindu Undivided Families (HUF). commercial or let out.000 (Rs. Thus the tax will be computed on the basis of total income. Games. Profits & Gains of Business / Profession. c. All Partnership Firms irrespective of their Income. d. 1. e. Income from House Property whether residential. Association of Persons (AOP) & Artificial Juridical Persons ( such as Deities of Temples) having taxable income exceeding Rs.Short & Long Term.000 for Resident Senior Citizens for Asssessment Year 2011-2012) Societies & Charitable / Religious Trusts having taxable income exceeding Rs. Races.90. Gift received on or after 1-9-2004 in excess of Rs.000. Capital Gains .60. value of Perquisites.1. Individual including Non-resident. Municipal Corporation etc. b. 2. Income from other Sources including Bank Interest. 2.Q-1 What are the different Heads of Income according to Income Tax Act ? There are 5 different Income heads. 3. 4. All Companies irrespective of Income.60.000 for Resident Women assesses below 65 Years and Rs. 50. Salaries including Allowances. Bodies of Individuals (BOI). Interest on Securities. Co-Op. Societies irrespective of their Income. The Income under each head will be charged to Income Tax.000 in cash etc. Local Authorities like. 1. Lotteries. Cross word Puzzles. Profits in lieu of salary and Pensions. Panchayats.40. f.

Deduction of Expenditure : In computing income under various heads. Carry forward implies carrying forward of certain losses for set-off in subsequent years. At present the Assessment Year 2010-2011 ( 1-4-2010 to 31-3-2011) is going on. Tax is calculated and compared with the amount paid and assessment order is issued. 1st April to 31st March every year. Total / Taxable Income : Total / Taxable Income is computed after deducting permissible deductions under section 80A to 80U.e. On this Taxable Income. In India. the Govt. Set-off and Carry Forward : Set-off means adjustment of certain losses against the income under other sources / heads.Assessment year 2008-09 which will commence on April 1. As such it is known as Financial Year. Computation of Gross Total Income : It is the aggregate of incomes under various heads of income calculated after set-off of unabsorbed depreciation/loss. Previous Year : [ Sec. from the Gross Total Income. 2010. This processing is called Assessment. files Return of Income by prescribed dates. 2011. carried forward from earlier years.Q-3 How Income-Tax Will Be Charged By The Income Tax Department ? Income Tax is charged on 5 different heads. maintains its accounts for a period of 12 months i. These Returns are processed by the Income Tax Department Officials and Officers. Under this Income Returned by the assessee is checked and verified. The year in which whole of this process is under taken is called Assessment Year. Every person who is liable to pay tax under this Act. 3 ] . then no deduction shall be allowed against such Capital Gains. no deduction shall be allowed in respect of expenditure incurred in relation to incomes exempt from tax. Example. Where the Gross Total Income of the Assesses includes Short-Term Capital Gains from transfer of equity shares / units of an equity oriented mutual fund subject to Securities Transaction Tax or any Long-Term Capital Gains. However. deduction is allowed towards expenditure incurred in relation to earning the income.Allowance Deductions. Income Tax will be calculated as per the applicable rates Q-4 Meaning of Assessment Year & Previous Year : Assessment Year : [ Sec. Aggregate of taxable income under each head of income is known as Gross Total Income and so Taxable Income = Gross Total Income . will end on March 31. The Income Tax department has also selected same year for its Assessment procedure. 2 (9)] “ Assessment Year” means the period of 12 months commencing on the 1st day of April every year. The Assessment Year is the Financial Year of the Govt. of India during which income a person relating to the relevant previous year is assessed to tax.

g. Jeevan Dhara. 2. Sl. 3. 1-4-2007 to 31-32008. Financial Year preceding the Assessment Year Financial Year in which found in the possession of the assessee. Jewelley Partly explained Investment Unexplained Expenditure Payment of Hundi. Q-5. 6. No. 4. e. Interest on PPF/GPF/EPF Any amount received from Life Insurance against insurance policies (except on Jeevan Aadhar. in any year. Interest received on 6. Keyman Insurance.g. 2. 6. Money in Cash Section Previous Year [68] [69] [69A] [69B] [69C] [69D] Financial Year in which found to be entered. Cash. Income earned against the following Investments are totally Tax-FREE ! 1. hence it can be simply said that the Previous Year is the Financial Year preceding the Assessment Year e. Financial Year in which such payment was made. In ancient Rome.As the word „Previous‟ means „coming before‟ . 5. 5. will not enjoy Tax Free Return u/s 10 (10 D) (except on death). such as a human. Dividend received on Shares. Previous Year in case of a continuing Business : It is the Financial Year preceding the Assessment Year. Long Term Capital Gain earned on Sale of listed securities (Shares) A person is a being.5% & 9% RBI Tax Free Relief Bonds. for Assessment Year 2008-2009 the Previous Year should be the Financial Year ending 31st March 2008. from F/Y 2003-2004 Premiums exceeding 20% of the SA. shall be the period between Diwali 2007 to 31 March 2008. that has certain capacities or attributes constituting personhood.e. Previous Year in case of newly set up Business : The Previous Year in case of newly started business shall be the period between commencement of business and 31st March next following . However. As such for the assessment year 2008-2009.8%. the Previous Year in relation to Assessment Year 2008-2009. New Jeevan Dhara & New Jeevan Akshay & similar other policies of Private Life Insurers). 3. Income Cash Credit Unexplained Investment Unexplained Bullion.7%. which in turn is defined differently by different authors in different disciplines. Previous Year in case of newly created source of income : In such case the Previous Year shall be the period between the day on which such source comes existence and 31st March next following. The various [1] masks represented the various "personae" in the stage play. in case of a newly started business commencing its operations on Diwali 2007. Jeevan Akshay. 4. 1. and by different cultures in different times and places. Financial Year in which Investment was made. the word "persona" (Latin) or "prosopon" (πρόσωπον: Greek) originally referred to the masks worn by actors on stage.8.5%. the Previous Year for continuing business is 2007-2008 i. Financial Year in which expenditure was incurred. As`sess`ee´ . Equity Oriented Funds of UTI & other Mutual Funds.

Also called earnings or gross profit. 1. royalties. etc. For example. 3. . endowment. Law: Money or other forms of payment (received periodically or regularly) from commerce. a branch of mathematics. determinacy is the study of under what circumstances one or the other player of a game must have. Economics: Consumption that. (2) An amount by which total assets increase in an accounting period. 2.winning strategy In set theory.n. Companies will pursue backward integration when it will result in improved efficiency and cost savings. 4 key success factors Definition The combination of important facts that is required in order to accomplish one or more desirable business goals. For example. income means the maximum amount an individual can spend during a period without being any worse off. One who is assessed Is called assesse income Definitions (4) 1. Income (and not the GDP) is the engine that drives an economy because only it can create demand. 3. backward integration might cut transportation costs. capital (interest or profit). improve profit margins and make the firm more competitive. or land (rent). Accounting: (1) An excess of revenue over expenses for an accounting period. employment. 4. investment. one of the key success factors in promoting animal food products might be to advertise them in a way that appeals to those consumers who love animals 5 Definition of 'Backward Integration' A form of vertical integration that involves the purchase of suppliers. will leave an individual with the same amount of goods (and the expectations of future goods) as at the beginning of that period. The flow of cash or cash-equivalents received from work (wage or salary). at the end of a period. Therefore.

Big Business SME Sole Trader Strategic group mapping A mechanism for understanding the other players that operate in your field The big idea Strategic group mapping is a technique for looking at your position in your sector.By way of contrast. backward integration Definition Type of vertical integration in which a consumer of raw materials acquires its suppliers. strategic vision Definition Ideas for the direction and activities of business development. Generally included in a document or statement so all company managers can share the same vision for the company and make decisions according to the shared principles and company mission. There are a number of benefits to strategic group mapping:   It can help you identify who your direct and indirect competitors (or possible partners) are It can illustrate how easy it might be to move from one strategic group to another . Michael Porter then expanded the concept in the 1980s. Hunt coined the term „strategic group‟ in 1972 when he noticed sub -groups of businesses with similar characteristics in the same market. forward integration is a type of vertical integration that involves the purchase or control of distributors. field or market. or sets up its own facilities to ensure a more reliable or costeffective supply of inputs.

C. They are externally focused instead of having an internal focus. They are not motivational.  It may help identify future opportunities or strategic problems It ensures you take your customers‟ or beneficiaries‟ views into account when developing or assessing your strategy sustainable competitive advantage Competitive advantage is a position of a company in a competitive landscape that allows the company earning return on investments higher. They are too broad and do not rule out any opportunity management might wish to pursue. D. strategic intent Definition A readily grasped declaration of the course that the management of a business plans on taking the company in over some future time frame. Sustainable Competitive Advantage Competitive advantage is gained when a firm acquires attributes that allow it to perform at a higher level than others in the same industry. . Vertical integration describes a company's control over several or all of the production and/or distribution steps involved in the creation of its product or service.. B.. The strategic intent of a business needs to be easily understood by every member of the firm so that all staff can be working toward a consistent overall goal Which of the following are common shortcomings of company vision statements? Answer: They do not provide direction to decision makers when faced with product/market choices.

It is also defined as the process by which managers make a choice of a set of strategies for the organization that will enable it to achieve better performance. when creating a new strategic management plan. Strategic management is a continuous process that appraises the business and industries in which the organization is involved. Strategic management process has following four steps: 1. management should evaluate it on a continuous basis and strive to improve it. After executing the environmental analysis process. in chronological order. Components of Strategic Management Process Strategic management is an ongoing process. Steps and Components The strategic management process means defining the organization’s strategy. After conducting environment scanning. Strategy implementation includes designing the organization’s structure.Strategy formulation is the process of deciding best course of action for accomplishing organizational objectives and hence achieving organizational purpose. and managing human resources. The key strategy evaluation activit are: appraising internal and external factors that are the root of present strategies. so as to make essential changes. Strategy Formulation. and taking remedia corrective actions. it must be realized that each component interacts with the other components and that this interaction often happens in chorus.Strategic Management Process . It helps in analyzing the internal and external factors influencing an organization. 3. and fixes goals to meet all the present and future competitor’s and then reassesses each strategy. Steps and Components . Strategy Implementation. These components are steps that are carried.Strategy evaluation is the final step of strategy management process. distributing resources. measuring performance. Evaluation makes sure that the organizational strategy as well as it’s implementation meets the organization objectives. 4.Environmental scanning refers to a process of collecting. Present businesses that have already created a strategic management plan will revert to these steps as per the situation’s requirement. Strategy Evaluation. Therefore.Meaning. 2. Strategic Management Process .Strategy implementation implies making the strategy work as intended or putting the organization’s chosen strategy into action. managers formulate corporate business and functional strategies. developing decision making process. scrutinizing and providing information for strategic purposes. Environmental Scanning.Meaning. appraises it’s competitors.

but within an industry each factor becomes a challenge to all firms competing for the same market. 3. It is also defined as the process by which managers make a choice of a set of strategies for the organization that will enable it to achieve better performance. this type of assessment often becomes a simple exercise in developing lists. managers formulate corporate business and functional strategies. Present businesses that have already created a strategic management plan will revert to these steps as per the situation’s requirement. and fixes goals to meet all the present and future competitor’s and then reassesses each strategy. After conducting environment scanning. SUCCESS FACTORS     Some managers use the phrase "key success factors" to refer to those competitive factors that are most important to the industry in question. Therefore. Evaluation makes sure that the organizational strategy as well as it’s implementation meets the organization objectives. when creating a new strategic management plan. and managing human resources. developing decision making process. Key success factors will vary from industry to industry. and taking remedia corrective actions. it must be realized that each component interacts with the other components and that this interaction often happens in chorus. Strategic management is a continuous process that appraises the business and industries in which the organization is involved.The strategic management process means defining the organization’s strategy. Insightful conclusions are preferred over long lists.Strategy implementation implies making the strategy work as intended or putting the organization’s chosen strategy into action. After executing the environmental analysis process. Strategy Evaluation.Strategy evaluation is the final step of strategy management process. Strategy Implementation. so as to make essential changes.Strategy formulation is the process of deciding best course of action for accomplishing organizational objectives and hence achieving organizational purpose. in chronological order. . Strategy Formulation. These components are steps that are carried. It helps in analyzing the internal and external factors influencing an organization. measuring performance. Some managers prefer to get at the same issues by asking: What makes the difference between success and failure in this business? Unfortunately. Components of Strategic Management Process Strategic management is an ongoing process. Strategy implementation includes designing the organization’s structure. scrutinizing and providing information for strategic purposes.Environmental scanning refers to a process of collecting. management should evaluate it on a continuous basis and strive to improve it. Key success factors are those few critical or strategic factors that mean the difference between success and failure. The key strategy evaluation activit are: appraising internal and external factors that are the root of present strategies. appraises it’s competitors. distributing resources. 4. Environmental Scanning. 2. Strategic management process has following four steps: 1.

Strategy focuses on how the business will perform better than the competition (advantage). 1. Strategy selects the direction of the organization. people) are required to compete in the market (resources).By Matt Kermode « Futures Trading And The Transfer Of Risk .Key success factors generally include exceptional management of several of the following:            Product design Market segmentation Distribution ad promotion Pricing Financing Securing of key personnel Research and development Production Servicing Maintenance of quality/value Securing key suppliers Strategy. technical competence. Strategy selects the markets in which the business will compete and the activities it performs (scope).By Matt Kermode » What is strategy and why is it important? Johnson and Scholes (2006) define strategy as “the direction and scope of an organization over the longterm: which achieves advantage for the organization through its configuration of resources within a challengingenvironment. finance. assets. 3. . Strategy determines what resources (skills.By Matt Kermode Options Trading And How They Can Reduce Risk . Strategic Advantages And Competing On Business Capabilities Part 1: The External Environment and Strategy Formulation . 2. Deconstructing the sentence provides insight into the meaning of this definition. In other words. to meet the needs of markets and fulfill stakeholderexpectations”. 4. facilities. relationships. strategy plots the course for the future of the business.

What are the industry’s dominant economic features? Answering this question requires considering eleven factors: market size and growth rate. and how strong is each force? The standard analytical framework used to answer this question is the five forces model of competition. and higher costs. Strategy manages the external factors that affect the business (environment). there are grandmasters in the tournament.5. number of rivals. employees. strategy is a guide used to meet the needs of those who have a vested interest in the organization such as investors. However. is capable of building competitive advantage. shareholders. your strategy will depend on your competitors moves. and holds good prospect for boosting company performance – the three criteria of a winning strategy” (Gamble. Similar to chess. What kinds of competitive forces are industry members facing. economies of scale. supply and demand conditions. and learning curve effects. Organizations rely on the judgments of employees to perform activities that benefit the company. The lack of focus results in inefficiencies. An organization that does not singularly focus on aligning decisions with strategy will eventually be outcompeted by one that does. and the community (stakeholder). 2010). 6. In order to compete and win. lower profits. Finally. You might be able to win a few games without having a strategy. speed of product innovation. geography of competitive rivalry. . pace of technological change. number of buyers. Strategy provides a framework that guides the decision-making process. Formulating a strategy “Insightful analysis of a company‟s external environment is a prerequisite for crafting a strategy that is an excellent fit with the company‟s situation. vertical integration. Why is strategy important? The business environment can be thought of as a chess tournament. degree of product differentiation. you need a good strategy. suppliers. Analysis of a firm (or potential firm) revolves around seven questions. just as there are strong players in the marketplace.

Furthermore. (2) their purchases represent a large part of the supplier's revenue. how will partial substitutes affect revenues? If I am using my product to sell time tourism. but the iPod dominates the market share. buyers tend to have power when: (1) the buyers are concentrated or organized. There are many MP3 players on the market. will flights to the Orion Nebula affect sales? One way to protect yourself from substitutes is branding. one must consider the treat of new entrants. they have a very strong bargaining position. Suppliers in these positions can demand a premium for their products. One consideration is how easy is it to replicate the product. if Doc Brown and Marty McFly are the only people interested in my time machine. they have a strong bargaining position. (3) their purchases represent a large part of their own costs or. Upon completion of the time machine. Finally. Suppliers hold a strong position when: (1) suppliers are concentrated. The threat of substitute products is another consideration. For example. (4) suppliers are forward integrated. However. (2) too few goods are chased by too many buyers. my product must easy to replicate. The main consideration in this segment of the analysis is determining the barriers to entry. (3) a supplier's goods are unique or highly differentiated with few or no substitutes. (4) there are too many suppliers chasing too few buyers. More common barriers to entry are: (1) heavy advertising expenditures to . if I am building a time machine in my basement I will need a flux capacitor (obviously).The answers to these questions will help determine the attractiveness of new markets and what strategies to employ in existing ones. If Bill and Ted can build a time machine to go on an excellent adventure. A barrier to entry in the time travel business is a throughout understanding of string theory and quantum gravity. More specifically. if there is only one company that supplies this product. and/or (5) high costs are involved in switching from one supplier to another.

or strategic groups. (2) economies of scale.get a foothold in the market. necessitating heavy investment in large plants to achieve competitive pricing. the closer the firms are on the map. and lifestyles (Gamble. It is most useful when there are numerous firms competing in an industry and in-depth analysis is not pragmatic. and evolving societal concerns. buyer preference shifting towards product customization. competition. It is important to define the x and y-axis in terms of value-propositions. government policy change. (3) restricted access to distribution channels. Specifically. What strategic moves are rivals likely to make? Answering this question this question requires gather business intelligence. This technique compares the market positioning of different firms. technological change and manufacturing process innovation. A gap in the map may be a market to exploit. new internet capabilities and applications. (4) well established brands. entry or exit of a major firm. are these forces conjointly creating an environment that is increasing demand. reductions in industry uncertainty and business risk. it is prudent to analyze competitors‟ . and/or (5) fierce competition. It is imperative to grasp how the driving forces are interacting. As a rule of thumb. It is important to monitor competitors‟ press releases and financial statements. product innovation. The most common driving forces are: changes in an industry‟s long-term growth rate. and/or profits or are they decreasing these factors? What market positions do industry rivals occupy – who is strongly positioned and who is not? The best practice for answering this question is to use the strategic group mapping technique. 2010). marketing innovation. globalization. the more competitive the rivalry. attitudes. What forces are driving industry change and what impact will these changes have on competitive intensity and industry profitability? The most powerful change agents are driving forces. In addition.

Are they driving forces affecting a strategic grouping? Has the competition‟s strategy resulted in competitive advantages or disadvantages? Does the competition have the resources and adaptability to compete in the changing environment? Predicting the competitions‟ actions requires careful analysis. KSFs are of primary importance to all members within the industry. Which organizations have strong incentive to expand to new geographic regions. 2010). The second component is incentive. and production costs. Financially weak organizations may be prone to try something drastic. there are certain questions that are more important than others. KSFs for the Smartphone industry are design. Strategy should focus on being good at all the industry‟s KSFs and great at 1 or 2. Companies that are better at distinct KSF than their rivals almost always enjoy higher market share and a competitive advantage. There are three questions that can generally determine an industry‟s KSFs. Poor design and high production costs will inevitably lead to losses. KSFs and sound strategy are inextricably linked. However. Does the outlook for the industry offer the company a good opportunity to earn attractive profits? The final question requires integrating the information from all the preceding analyses and formulating an informed opinion. . acquire competitors.strengths and weaknesses and determine which firms are likely to increase or decrease their market share. constant re-evaluation of these questions is required to be assured your strategy has not become obsolete. Evaluation of these factors requires analyzing why the competition is poised to do better or worse than rivals. For example. how much growth are investors requiring? What are the key factors for future competitive success? “An industry‟s key success factors (KSFs) are those competitive factors that most affect industry members‟ ability to proper in the marketplace…” (Gamble. For example. Financially sound organizations have the resources to explore a greater number of options. or move to new markets? In other words. Competitive advantages and competing on business capabilities is discusses in article 2. The pinnacle of sound strategy is the development of sustainable competitive advantages. does the industry have growth potential? Are there driving forces that are increasing or decreasing industry profitability? These 7 questions are a necessary prerequisite to the formation of a sound strategy that will result in competitive advantages. The first is the rivals‟ financial position. Because the external environment is dynamic. However. What are the criterion buyers use to choose between competing sellers? What resources and competitive capabilities are essential for success in the industry? What factors will put organizations at a competitive disadvantage? It is rare that there are more than 5 or 6 KSFs for an industry. there are two principle components that increase the probability of accurate predictions.

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