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Flashcards

Strategy Midterm Part 4 - Sustaining Competitive Advantage

Corey Beach English 60 cards

Cards in this deck (60)

  1. 1What are the four threats to sustainability?1. Imitation
    2. Substitution
    3. Hold up
    4. Slack
  2. 2What two threats to sustainability threaten the scarcity of your firm's value?1. Imitation
    2. Substitution
  3. 3What two threats to sustainability threaten the ability of firm to capture value?1. Hold up
    2. Slack
  4. 4What is the most direct and obvious threat to sustainability?Imitation
  5. 5Imitation increases _____ of what a firm uniquely provides.Supply
  6. 6What are some ways imitation can be deterred by first mover advantage?Private information
    Size economies
    Enforceable contracts
    Threat of retaliation
  7. 7True or False. Imitation drives competitive convergence.True.
  8. 8True or false: The threat of substitution provides higher WTP and/or lower costs to a substantial segment of the customer base.True
  9. 9What are three changes that increase the threat of substitution?1. Technology
    2. Demand
    3. Available inputs
  10. 10How can you fight the threat of substitution?Incorporate their WTP benefits
    Incorporate their cost reductions
    Reduce price (this can be risky!)
  11. 11What is hold up?Hold up diverts value to customers, suppliers, or complementors who have bargaining leverage.
  12. 12Explain the concept of decision irreversibility and its relation to hold up.Once you are committed you may be vulnerable to opportunistic behavior by partners.
  13. 13True or False: Sustained competitive advantage depends on specialized investment without complete vulnerability in bargaining.True
  14. 14What can you do to deal with hold up?Balance distribution of value across contributors
    Make sure you have multiple sourcing
    Shift timing of negotiation
    Eliminate bargaining
  15. 15What is slack?Waste within the firm; not living up to its full potential
  16. 16Explain why Google's offices with pool tables, air hockey, etc. may NOT be slack.Relaxing environment produces creativity among employees.
  17. 17Explain why the large number of corporate jets leaving the Super Bowl could be considered slack.Could be viewed as a waste of investor money - the corporate jet taking people to the Super Bowl is not helping the company make money.
  18. 18True or False: Achieving short-term competitive advantage is harder than achieving long-term competitive advantage.False
  19. 19What year does the Gucci case take place?y2k
    !!
    2000, ok
  20. 20What was Gucci producing in the 1980s-1990?Everything - they had over 22,000 products, many licensed out.
  21. 21True or False. Pre-90's, Gucci was on the productivity frontier in the luxury retail industry.False
  22. 22What type of firm does this "equation of effectiveness" measure? drop in cost / drop in WTPLow cost
  23. 23What type of firm does this "equation of effectiveness" measure? rise in WTP / rise in costDifferentiated
  24. 24True or False: If Effectiveness > 1 then firms are achieving CA over the average rival in their industry.True
  25. 25What are the two main things Gucci changed during 1990-1994?Went for the "classic" look
    Got rid of a lot of products
  26. 26What are the three tests of a good strategy?1. External consistency
    2. Internal consistency
    3. Dynamic consistency
  27. 27Why did the 1990-1994 plan fail at Gucci?Movement upscale despite customer perception
    No cost controls
    Cut product lines without a plan
    Bad luck: industry downturn
  28. 28What are the two major things De Sole did to turnaround Gucci (1994-2000)?Ready to wear, trendy fashion
    Acquired YSL, Sergio Rossi, others
  29. 29Why did the 1994-2000 strategy work for Gucci?Price points matched customer perception
    Renovated stores to match new image
    Invested in faster fashion manufacturing
    Sequenced ads
    Professional Management/cost control
    Luck: Tom Ford is HOTT
  30. 30True or False: The luxury retail industry is consolidating.True
  31. 31True or false: There is a positive network effect in the luxury goods industry.False.
    Negative network effect - the more available your brand is, the LESS popular it will become.
  32. 32True or False: Consolidation usually lowers profits for incumbents.False, consolidation usually raises profits for incumbents.
  33. 33What year did the Netflix case take place?2007
  34. 34What were the roles of Brand Scale New Releases Customer Service Late Fees in blockbuster v netflix?I'm not writing the answer here - just wanted you to think about it!
  35. 35What were Netflix's three core activities?1. Personalized entertainment
    2. Efficient inventory management
    3. Superior customer service
  36. 36What was the new technology that helped Netflix a lot?DVD player
  37. 37What is strategy be design?Planning and rational choice
    Intended strategy
  38. 38What is strategy as a process?Many decision makers responding to a multiple of external and internal forces.
    Emergent strategy.
  39. 39Intended strategy + Emergent strategy =Realized strategy - you can't just design strategy, it also emerges & changes over time!
  40. 40True or False: Netflix is an example of an emergent strategy.True.
  41. 41What year did the Kodak case take place?2003, the year of Captain Jack Sparrow
  42. 42True or False: Kodak totally missed the disruptive technology (digital).False - they recognized it but did not capitalize on it!
  43. 43Who was Kodak's main rival in the 80s, why?Fuji - the got the Olympics sponsorship, were underpricing Kodak but had high quality film.
  44. 44What three things formed the basis for Kodak's original business model?Consumables (film, not hardware like cameras)
    Advertising
    Scale-economies (mass production at low cost)
  45. 45Disruptive technologies are hard to spot because in the beginning, they are actually not that disruptive. Why?Tend to have high price, quality is not great yet, and few people need the product or service.
  46. 46Is digital imaging an imitator or substitute for film?Substitute
  47. 47True or False: Kodak was vertically integrated while digital imaging is a horizontally integrated endeavor.True.
    Digital imaging involves a lot of industries: electronics, storage, printing, etc.
  48. 48Key points about CEO Chandler (Bing) ('83-'89)Invest in R&D and digital
    Acquisitions - pharma
    Started digital division, but had to report to Rochester
  49. 49Key facts about CEO Whitmore ('89-'93)Was BFF with previous CEO Chandler (Bing)
    Long term employee
    Launched the ~photo cd~
  50. 50How did the culture at Kodak negatively impact the company during this time?Very hierarchical, no one wanted to disagree with those in charge. And those in charge were resistant to change (moving away from consumables and the concept of film)
  51. 51Key Facts of CEO Fischer ('93-'97)From Motorola, not Fischer Price
    Gets rid of dumb businesses like pharma - in return gets $$$$
    Opened market in China
    Sadly, could not get middle management on board
  52. 52Key Facts of CEO Carp (comes after Fischer, hilarious, yes?) '97-'03"Network of consumables"
    Made $ on kiosks
    But still lost money on digital cameras
    Carp...floundered
  53. 53What is cognitive inertia?Type of organizational inertia that can greatly influence the search of strategic alternatives.
    ex. Cuban Missile Crisis
  54. 54What is Action Inertia?Type of organizational inertia that is the practical difficulty to implement organizational change. Managers need to convince and move the firm in a different direction than the current one.
  55. 55What are the four steps to make sure you don't miss a disruptive change?1. Determine whether the change is disruptive or sustaining
    2. Define the strategic significance of the new technology
    3. Locate the initial market
    4. House the disruptive technology in an independent entity
  56. 56True or False: Sustaining technologies give customers something more or better in the attributes they already value.True
  57. 57How do disruptive technologies differ from sustaining ones?Disruptive technologies introduce a very different package of attributes from the one mainstream customers historically value.
  58. 58True or False: If the tech people in your company support something but everyone else is against it, it is probably a sustaining technology.False! Tech people are smarter than you - it is probably a disruptive technology and you should look at it closer.
  59. 59True or False: You should get input from current customers about a technology you identified as disruptive.False, your current customers don't want this technology (yet) so they will give you inaccurate feedback for your decision-making process.
  60. 60Are you tired of strategy yet?YUP!

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Flashcards on Strategy Midterm Part 4 - Sustaining Competitive Advantage, created by Corey Beach on 30/03/2015.
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