Flashcards
SBS Exam 3
Cards in this deck (75)
- 1Value ChainMaps where resources & capabilities are housed
Assess if all parts of the company are aligned to create advantage
(cost or benefit) - 2Value Chain: General RuleGreater number of linkages and interconnections between resources / capabilities within a value chain =
more likely a competitive advantage is durable - 3Value Chain: Looking for FIT
- 4Value Chain: Primary Activitiescreate value directly
Inbound Logistics
Operations
Outbound Logistics
Marketing and Sales
Service - 5Inbound logisticsUsed to receive, store, and disseminate inputs to a product
material handling
warehousing
inventory control - 6OperationsActivities to convert inputs from inbound logistics into final product form
machining
packaging
assembling
equipment maintenance - 7Outbound logisticsActivities involved with collecting, storing, & physically distributing final product to customers.
finished goods
order processing
materials handling
warehousing - 8Marketing and SalesActivities completed so that customers can purchase products and to induce them to do so
To effectively market and sell products firms develop:
1. advertising & promotional campaigns
2. appropriate distribution channels
3. select, develop, support their sales force. - 9Serviceenhance or maintain a product's value.
Firms engage in a range of service related activities
ex) installation, repair, training, adjustment - 10Value Chain: Support Activitiesaid the value creation by primary activities
procurement
technology development
human resources management
firm infrastructure - 11procurementpurchasing the inputs needed to produce products.
Purchased inputs include:
items fully consumed during the manufacture of products
(raw materials & supplies)
fixed assets
(machinery, laboratory equipment, office equipment, buildings). - 12technology developmentImproves product and the processes used to manufacture it.
basic research & product design
servicing procedures
process equipment
takes on many forms - 13human resource managementActivities involved with:
recruiting
hiring
training
developing
& compensating all personnel. - 14firm infrastructurethrough infrastructure, the firm effectively and consistently identifies:
external opportunities and threats
resources and capabilities
and supports core competencies.
ex) general management, planning, finance, accounting, legal support, and governmental relations that are required to support the work of the entire value chain. - 15Value Creating Activities Cost AdvantageSouthWest
- 16Cost Advantage: inbound logisticshighly efficient systems
link suppliers products with firms production processes - 17Cost Advantage: operationseconomies of scale
to reduce production costs
efficient scale production facilities - 18Cost Advantage: outbound logisticsdelivery schedule that reduces costs
low-cost transportation carriers - 19Cost Advantage: marketing & salessmall, highly trained sales force
products priced to generate significant sales volume - 20Cost Advantage: serviceefficient / proper product installations to reduce the frequency & severity of recalls
- 21Cost Advantage: Firm Infrastructurecost effective management information systems
few managerial layers
(reduce overhead costs)
simplified planning practices
(reduce planning costs) - 22Cost Advantage: Human Resource ManagementConsistent policies to reduce turnover costs
intense training to improve worker efficiency & effectiveness - 23Cost Advantage: Technology DevelopmentEasy-to-use manufacturing technologies
Investments in technologies to
reduce costs of manufacturing process - 24Cost Advantage: Procurementfind the lowest cost (with acceptable quality) raw materials
frequent evaluation processes to monitor suppliers performances - 25Value Creation Activities Benefit AdvantageGillette
- 26Benefit: inbound logisticssuperior handling of raw materials to minimize damage & improve final quality
- 27Benefit: operationsmanufacture attractive products
rapid responses to customers unique manufacturing specifications - 28Benefit: outbound logisticsaccurate order processing procedures
rapid product deliveries to customers - 29Benefit: marketing & salesextensive granting of credit buying arrangements for customers
extensive personal relationships with buyers & suppliers - 30Benefit: serviceextensive buyer training to assure high quality product installations
complete field stocking of replacement materials - 31Benefit: Firm Infrastructurehighly developed information systems to better understand customers' purchasing preferences
company wide emphasis on the importance of producing high-quality products - 32Benefit: Human Resource Management (BA)worker creativity & productivity
subjective rather than objective performance measures
superior personnel training - 33Benefit: Technology Developmentstrong capability in basic research
investments in technologies that will allow the firm to produce highly differentiated products - 34Benefit: Procurementfind the highest quality raw materials
highest quality replacement parts - 35Firm Success: Management vs Industry
- 36When industry growth acceleratesrivalry decreases
profitability increases - 37With more homogeneous productsrivalry increases
profitability decreases - 38When the number of competitors increasesrivalry increases
profitability decreases - 39when excess production capacity increasesrivalry increases
profitability decreases - 40monopolyfirm sets the price instead of taking it
- 41How increased competition affects transactions with customers
- 42Intermediate Rivalry OligopolyFew firms produce most market output
Products may or may not be differentiated
Effective entry barriers protect firm profitability
*Firm interdependence*
requires *strategic thinking* - 43Intermediate Rivalry Monopoly & Intensive CompetitionFirms do not consider other firms decisions
*Rival firm's decision not responsive to firm action* - 44Basic Game Theory (strategic thinking)General analysis of strategic interaction with rivals
Decision making when
1. firms are assumed to be rational
2. each firm attempts to anticipate actions of rivals
understand optimal choices
(equilibrium concept firms
max profit at price where MR=MP)
develop structure for analysis
(players, choices, payoffs, assumptions) - 45Equilibrium Concept (Nash) for simple gamesA rival firm does the best it can given expectations of rival behavior
best response is the best choice given the choice of the rival - 46*Key assumption in Nash Equilibrium Concept*Behaviors are non-cooperative
since firms are rivals we assume it is illegal to cooperate - 47Nash equilibriumrepresented by the set of choices of the firms
each firm does the best it can given rivals actions
there is no regret after the fact
each firm has made a choice that is a best response - 48GAME structurecompetition between firms
(application of classic prisoners’ dilemma) - 49Key Managerial Insights• Understand your business setting
Rivals, nature of interaction, potential choices, payoffs, etc.
• Place yourself behind rival’s desk
What’s their best response to your choices?
• Given their best response, what is your best response
• “Nash Equilibrium” - 50Business AnalysisInvestigation into the operations of a business to expose the causes behind the results achieved, and the effects of those results on the business.
- 51Three C's of Static Business Analysis• Explains the Context: data information understanding
• Presents Comparisons: allows evaluation good or bad?
• To facilitate Causal understanding:
A happened resulting in B - 52Static AnalysisVery valuable and important:
allows you to assess if your firm is currently a cost or benefit leader
doesn’t inform what it will take to maintain a cost or benefit advantage in future years. - 53Rivals• Firms in the same industry
• Provide comparable utility
• Compete for the same customers
ex) passenger seat on commercial airline A vs commercial airline B - 54Substitutes• From different industries
• Provide comparable utility
• Considered as a choice by buyer
• Serve as a cap on WTP
ex) Taking a train, car, or bus instead of a commercial airline. - 55Factors Affecting Intensity of Rivalry/Competition
- 56Factors Affecting Defection to Substitutes
- 57Coors CaseCoors has competitive advantage in 1977 but it is unsustainable
Causes of cost advantage easily imitated by rivals
Limited capacity to respond - 58Stakeholder'sWho are stakeholders?
Differentiating stakeholders
Prioritizing stakeholders - 59Stakeholder TheoryFirms interconnected with many different parties with actual or perceived stake in the firm = stakeholder
The stakeholders in a firm are individuals & constituencies that contribute (voluntarily or involuntarily) to its wealth creating capacity and activities and are its beneficiaries or risk bearers - 60Why important?Place demands on the organization for direction, actions, expenditures, and organizational focus
may be internal or external to organization - 61Voluntary Stakeholdershave direct, formal association with the firm and seek mutual benefit
investors
employees
customers - 62Involuntary Stakeholdersaffected by externalities
seek reduction / avoidance of harm and offsetting benefits
both indirect and activists - 63Ultimatelyany party that can convincingly claim being directly or indirectly affected by the organization is a stakeholder
- 64Stakeholder Groups1. Corporation
2. Resource Base
3. Industry Structure
4. Social Political Arena - 65CorporationCorporation
- 66Resource BaseInvestors: Shareholders & Lenders
Customers & Users
Employees - 67Industry Structure1. Unions
2. Joint Venture Partners & Alliances
3. Supply Chain Associates
4. Regulatory Authorities - 68Social Political Arena1. Local Communities and Citizens
2. Governments
3. Private Organizations - 69Which stakeholders to focus on? How?Must be constantly aware that each and all can influence the firm
Change over time - 70Material vs Symbolic focusHigh profile firms often targeted by stakeholders because they are high profile
leverage issue - easy to get people attention on issue by targeting your firm - 71Stakeholders interests may be identical, similar, or opposingex) Disney's benefits for domestic partners
identical/similar:
entertainment community; liberal activists
opposing:
southern baptist church; conservative activists - 72May be able to satisfy sequentially, not simultaneouslyEx)
Better employee benefits once profitable - 73Stakeholder Priority Matrix
- 74Stakeholder group advocating against using tantalum How does it relate to business strategy?There is no awareness
Must create WTP for added benefit
(conflict free phone)
Challenge: messaging challenge
more expensive - 75Matrix Examples
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- Flashcards on SBS Exam 3, created by Hannah Livingston on 12/04/2018.
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- Hannah Livingston
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