MGMT344 EXAM QUESTIONS WITH ALL CORRECT ANSWERS
Bargaining Power of Buyers - Answer- Buyers (customers) are most powerful when:
- there are small sellers and few large buyers
- buyers purchase in large quantities
- a single buyer is a large customer to a firm
- buyers purchase from multipl...
Bargaining Power of Buyers - Answer- Buyers (customers) are most powerful when:
- there are small sellers and few large buyers
- buyers purchase in large quantities
- a single buyer is a large customer to a firm
- buyers purchase from multiple sellers at once
Bargaining Power of Suppliers - Answer- Suppliers have bargaining power when:
- their products have few substitutes and are important to buyers
- the buyers industry is not an important customer to the supplier
- differentiation makes it costly for buyers to switch suppliers.
Substitute Products - Answer- - substitute products are produced from outside the
industry as defined, but meet the same or similar needs
e.g. mobile vs fixed line vs postal letter
- in the absence of close substitutes, customers are less sensitive to price
- the competitive threat of substitute products increases as they come closer to serving
similar customer needs.
Strategic Groups - Answer- Strategic groups are organisations within an industry or
sector with similar strategic charac- teristics, following similar strategies or competing on
similar bases
For example, in the grocery retailing industry, supermarkets, convenience stores and
corner shops each form different strategic groups.
Strategic Groups Analysis - Answer- - represents the competitive structure of an
industry
- identifies which firms are strategically similar
strategic groups can be important because = the map can reveal strategic spaces with
no current competitors
Steps in Strategic Group Analysis - Answer- - select appropriate axes
○ Typically differ for each industry
• Should not be correlated
• Should distinguish between companies in the industry
• Should help represent the structure of the industry
,• Plot companies
• Interpret
• Identify groups
• Analyse relative performance, mobility barriers, and usefulness of any unoccupied
positions
• Consider alternative axes
Dimensions for Strategic Group Analysis - Answer- • Ownership and financial
• Ownership structure
• Corporate effects
• Size of organisation
• Level of gearing
Operations and scope
• Extent of vertical integration
• Geographical coverage
• Capacity utilisation
• Cost position
• R&D or innovation intensity
Market orientation
• Pricing policy
• Product or service diversity
• Product or service quality
•Distribution channels
Limitations of Industry Analysis Models - Answer- They focus on the industry not the
firm
- industry structure explains about 7-19% of the variance in firm profitability
the model provides a fairly static view
- innovation can alter the competitive environment
- A good firm can make an unattractive position attractive
Criticisms of the Environment-Led Approach - Answer- - leads to predictable strategies
-competitive environment changes rapidly
- advantages based on internal characteristics often more robust
-
VRIO analysis
V - Answer- = Value of strategic competition
, - Taking advantage of opportunities and neutralising threats: the most fundamental
issue is that to be valuable capabilities need to provide the potential to address the
opportunities and threats that arise in the organisation's environment, which points to an
important comple- mentarity with the external environment of an organisation
For example, IKEA's cost-conscious culture, size and its intricate configuration of
interlinked activities lower its costs compared to competitors and addresses
opportunities of low-priced furniture that competitors do not attend to.
- value to customer
- cost
VRIO ANALYSIS
R - Answer- RARITY
- Rare capabilitiesare those possessed uniquely by one organisation or by a few others.
Here competitive advantage is longer-lasting. For example, a company can have
patented products or services that give it advantage.
- Some libraries have unique collections of books unavailable elsewhere; a company
can have a powerful brand
- or retail stores can have prime locations
VRIO Analysis
I - Answer- = INIMITABILITY
those that competitors find difficult and costly to imitate or obtain or substitute. If an
organisation has a competitive advantage because of its particular marketing and sales
skills it can only sustain this if com- petitors cannot imitate, obtain or substitute for them
or if the costs to do so would eliminate any gains made.
VIRO ANALYSIS
O - Answer- ORGANISATIONAL SUPPORT
the organisation must also be suit- ably organised to support these capabilities including
appropriate organisational processes and systems.
Resources Satisfying RBV (resource based view of the firm) conditions - Answer- -
intangible
linked to company history
- embedded in social systems/ company culture
- causally ambiguous
Steps in VRIO Analysis - Answer- select candidate resources to test.
- may be broad firm characteristics
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