Strategy and contemporary issues > Chapter 5-8 > Flashcards

Chapter 5-8 Flashcards

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1
Q
A
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2
Q

What is the resource-based view of strategy?

A

The competitive advantage and superior performance of an organization are explained by the distinctiveness of its resources and capabilities

Firms compete on factor markets rather than output-markets.

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3
Q

Define resources in the context of organizations.

A
  • Assets organizations have or can call upon
  • Physical capital resources
  • Financial capital resources
  • Human capital resources
  • Organizational capital resources

Resources contribute to long-term survival and competitive advantage.

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4
Q

What are threshold resources and capabilities?

A
  • Needed to meet necessary requirements to compete
  • Do not create competitive advantage
  • Considered ‘qualifiers’ to compete

Examples include minimum customer requirements and effective use of resources.

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5
Q

What are distinctive resources and capabilities?

A
  • Required to achieve competitive advantage
  • Difficult for competitors to imitate

Examples include long-established brands and unique capabilities like design.

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6
Q

List the four key criteria for assessing resources and capabilities.

A
  • Value
  • Rarity
  • Inimitability
  • Organizational support

These criteria help determine if resources can provide a competitive advantage.

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7
Q

What does VRIO stand for?

A
  • Value
  • Rarity
  • Inimitability
  • Organizational support

VRIO analysis evaluates resources and capabilities for competitive advantage.

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8
Q

What are the two types of activities in the value chain?

A
  • Primary activities
  • Support activities

Primary activities directly create/deliver products/services, while support activities facilitate these processes.

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9
Q

What are the three generic types of dynamic capabilities?

A
  • Sensing
  • Seizing
  • Reconfiguring

Dynamic capabilities help organizations adapt to changing environments.

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10
Q

True or false: Benchmarking guarantees a competitive advantage.

A

FALSE

Benchmarking helps match competitors but does not ensure distinct resources and capabilities.

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11
Q

What is the definition of purpose in an organization?

A

The value an organization seeks to create for its stakeholders, including financial and non-financial forms of value

Purpose defines what the organization is trying to achieve with its strategy.

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12
Q

Who are stakeholders?

A

Individuals or groups that depend on an organization to fulfill their own goals and on whom the organization depends

Stakeholders include investors, customers, and employees.

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13
Q

What are organizational values?

A

Enduring ideals, beliefs, and principles that guide an organization’s strategy and operations

Values derive from the beliefs held by various stakeholders.

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14
Q

List the five types of stakeholders.

A
  • Economic stakeholders
  • Social/political stakeholders
  • Technological stakeholders
  • Community and society stakeholders
  • Internal stakeholders

These groups may have overlapping interests and values.

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15
Q

What are the five types of stakeholders mentioned?

A
  • Social/political stakeholders
  • Technological stakeholders
  • Community and society stakeholders
  • Internal stakeholders
  • External stakeholders

Each type of stakeholder has distinct values and interests that influence organizational strategy.

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16
Q

What does stakeholder mapping identify?

A

Stakeholder power and attention

This helps understand strategic priorities and ensures alignment with the values of the most powerful stakeholders.

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17
Q

What are the two factors that determine stakeholder attention?

A
  • Criticality
  • Channels
  • Cognitive capacity

These factors influence how closely stakeholders monitor organizational activities.

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18
Q

What are the four main ownership models?

A
  • Publicly quoted companies
  • State-owned enterprises
  • Entrepreneurial businesses
  • Family businesses

Each model has different focuses and management structures.

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19
Q

Define Corporate Social Responsibility (CSR).

A

Commitment to behave ethically and contribute to economic development

CSR aims to improve the quality of life for the workforce, their families, and the local community.

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20
Q

What are the four types of approaches to CSR?

A
  • Laissez-faire view
  • Enlightened self-interest
  • Forum for stakeholder
  • Shaper of society

Each approach reflects different attitudes towards balancing profit and social responsibility.

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21
Q

What is a hybrid organization?

A

Combines values and structures that normally do not go together

They may trade off economic growth for achieving social goals.

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22
Q

What is the virtuous circle model?

A

Strategy serves both social and financial objectives simultaneously

The model suggests that social goals can lead to economic benefits, creating a self-reinforcing cycle.

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23
Q

What are the three ways to manage conflicts in the dynamic balance model?

A
  • Establishing organizational guardrails
  • Dynamic decision-making
  • Both/and leadership

These strategies help balance social and financial objectives over time.

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24
Q

Define governance in an organizational context.

A

Structures and systems of control by which managers are held accountable

Key stakeholders in governance typically include owners and employee representatives.

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25
What is the **principal-agent model**?
Analyzes relationships where principals employ agents to act on their behalf ## Footnote Issues arise from knowledge imbalances, monitoring limits, and misaligned incentives.
26
What are the **four layers of organizational culture** according to Schein?
* Values * Beliefs * Behaviors * Taken-for-granted assumptions ## Footnote These layers help understand the underlying culture of an organization.
27
What are the **seven elements of the cultural web**?
* The paradigm * Rituals and routines * Stories * Symbols * Power * Organizational structures * Control symbols ## Footnote These elements illustrate the behavior and manifestations of an organization's culture.
28
What is **strategic drift**?
The tendency for strategies to develop incrementally based on cultural influences ## Footnote This can lead to failure in adapting to a changing environment.
29
What is **strategic drift**?
The tendency for strategies to develop incrementally based on cultural influences, failing to keep pace with a changing environment ## Footnote It can lead to either the organization's death or transformational change.
30
List the **four phases** in the process of strategic drift.
* Incremental strategic change * Strategic drift * Flux * Transformation or death ## Footnote Each phase represents a different level of response to environmental changes.
31
What is the **first phase** of strategic drift?
Incremental strategic change ## Footnote Involves small adjustments when the environment is changing slowly.
32
What triggers the **flux** phase in strategic drift?
A downturn in performance caused by the growing gap between organization and environment ## Footnote Strategies might change but in no clear direction.
33
What are the **four main reasons** why it is hard to avoid strategic drift?
* Uncertainty * Path dependency and lock-in * Cultural entrenchment * Powerful people ## Footnote These factors can prevent organizations from adapting to changes effectively.
34
Define **competitive strategy**.
Concerned with how a company, business unit, or organization achieves competitive advantage in its domain of activity ## Footnote It focuses on creating value for users greater than the costs of supplying them.
35
What is **competitive advantage**?
Exists when a company's profitability is greater than the average profitability of all companies in its industry ## Footnote It is about creating value for users that is superior to that of rivals.
36
What are the **two fundamental means** of achieving competitive advantage?
* Lower costs * Differentiated products or services ## Footnote Companies can either offer similar products at lower costs or unique products that justify higher prices.
37
What is a **cost-leadership strategy**?
Involves becoming the systematically lowest-cost organization in a domain of activity ## Footnote It relies on several key cost drivers.
38
List the **four key cost drivers** that can help achieve cost leadership.
* Input costs * Economies of scale * Experience * Product/process design ## Footnote These drivers help reduce costs and improve efficiency.
39
What is a **differentiation strategy**?
Involves uniqueness along some dimension that is sufficiently valued by customers to allow a price premium ## Footnote It often leads to higher costs due to investments in R&D, branding, or staff quality.
40
What are the **three primary differentiation drivers**?
* Product and service attributes * Customer relationships * Complements ## Footnote These factors enhance perceived value and customer loyalty.
41
What is a **focus strategy**?
Targets a narrow segment or domain of activity and tailors its products or services to the needs of that specific segment ## Footnote It seeks to exploit weaknesses of broader cost leaders and differentiators.
42
What are the **two types** of focus strategies?
* Cost focus strategy * Differentiation focus strategy ## Footnote Each type addresses specific needs that broader strategies may not serve well.
43
What is a **hybrid strategy**?
Combines different generic strategies, often grounded in one basic strategy supplemented with another ## Footnote It can involve creating separate SBUs pursuing different strategies.
44
What is the **Blue Ocean Strategy**?
A strategy that aims to find uncontested market spaces by combining differentiation and cost-leadership activities ## Footnote It encourages innovation and avoids competition in saturated markets.
45
What does a **strategy canvas** do?
Compares competitors according to their performance on critical success factors (CSFs) ## Footnote It helps establish potential strategies for the future.
46
What is **value innovation**?
The creation of new market space by excelling on established CSFs or creating new CSFs representing previously unrecognized customer wants ## Footnote It is a key aspect of the Blue Ocean Strategy.
47
What are the **three key decisions** in game theory?
* Threat assessment * Differentiation response * Cost response ## Footnote These decisions help organizations navigate competitive interactions.
48
Define **business model**.
Describes a value proposition for customers, an arrangement of activities that produces this value, and associated revenue and cost structures ## Footnote It concerns how an organization creates, configures, and captures value.
49
What are the **three interrelated components** of a business model?
* Value creation * Value configuration * Value capture ## Footnote These components outline how value is generated and shared among stakeholders.
50
What is the **razor and blade** business model pattern?
A basic product is sold at a low price, while complementary products are sold at a higher price to capture revenue ## Footnote Common examples include razors and blades, mobile phones with subscription plans.
51
What is the **freemium** business model?
Offers a basic version of a product or service for free to attract a large user base, aiming to convert a small percentage into paying customers ## Footnote Examples include LinkedIn and Spotify.
52
What is the **peer-to-peer** business model?
Connects individuals or businesses directly, often without intermediaries, focusing on cooperation and sustainability ## Footnote This model emphasizes direct interactions between users.
53
What is the **razor and blades** business model?
A model that sells a primary product at a low price to capture revenue from complementary products ## Footnote Common examples include razors and blades, mobile phones with subscription plans, and ink-jet printers with expensive ink.
54
Define the **freemium** model.
Offers a basic version for free to attract users, aiming to convert some into paying customers for premium features ## Footnote Examples include LinkedIn and Spotify, which generate revenue through subscriptions and advertising.
55
What does the **peer-to-peer** model focus on?
Connecting individuals or businesses directly, often without intermediaries ## Footnote Examples include Airbnb and Uber, which utilize business intermediaries to facilitate exchanges.
56
What are **multi-sided platforms**?
Platforms that bring together two or more distinct, interdependent groups of participants to interact ## Footnote Can be two-sided, three-sided, or multi-sided.
57
What are **network effects**?
The more participants, the better for everyone on the platform ## Footnote This enhances the value of the platform for all users.
58
What is the purpose of a **platform business**?
Enables interaction between producers and consumers, facilitating matches among users ## Footnote Provides infrastructure and sets governance conditions.
59
Define a **platform ecosystem**.
A core part of a product mediates relationships between various components and end-users ## Footnote Success depends on the interdependence of all members, often involving co-specialization or exclusivity agreements.
60
What characterizes a **pipeline business**?
Linear transformation through the value chain: research, design, manufacture, sell ## Footnote This model contrasts with platform-based businesses.
61
What are the three important factors to consider in **platform strategies**?
* Platform distinctiveness and size * Choosing platform sides * Multi-homing costs ## Footnote These factors influence the platform's ability to attract and retain participants.
62
What does **platform distinctiveness and size** refer to?
Distinctive features and sufficient size to attract participants ## Footnote Quality, quantity of content, reliability, speed, ease of use, and trustworthiness are important.
63
What are the implications of **choosing platform sides**?
Adding more sides may generate growth but can harm existing participants ## Footnote Example: Amazon has other merchants selling the same goods, requiring a balance between cooperation and competition.
64
What are **multi-homing costs**?
Costs incurred from using more than one platform, such as data transfer and learning new systems ## Footnote High costs encourage loyalty to a platform, while low costs allow easy switching.
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