WPC 480 MIDTERM EXAM QUESTIONS WITH CORRECT ANSWERS
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Course
WPC 480
Institution
WPC 480
Strategic Competitiveness - Answer-achieved when a firm successfully formulates and implements a value-creating strategy
Strategy - Answer-integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage
Competitive Advantage - A...
WPC 480 MIDTERM EXAM QUESTIONS
WITH CORRECT ANSWERS
Strategic Competitiveness - Answer-achieved when a firm successfully formulates and
implements a value-creating strategy
Strategy - Answer-integrated and coordinated set of commitments and actions designed
to exploit core competencies and gain a competitive advantage
Competitive Advantage - Answer-when it implements a strategy that creates superior
value for customers and competitors are unable to duplicate or find too costly to try to
imitate.
Above average returns - Answer-returns in excess of what an investor expects to earn
from other investments with a similar amount of risk
Risk - Answer-investors uncertainty about the economic gains or losses that will result
from a particular investment
Average returns - Answer-returns equal to those an investor expects to earn from other
investments with a similar amount of risk
Strategic Management Process - Answer-full set of commitment, decisions, and actions
required for a firm to achieve strategic competitiveness and earn above-average returns
first step is to ANALYZE (external and internal resources, capabilities, core
competencies), next STRATEGIZE (formulation and implementation), then take action
to enact strategy to have good PERFORMANCE
Todays competitive markets: - Answer-1. The global economy
2. Globalization
3. Rapid technological change
4. Increasing importance of knowledge and people
Hypercompetition - Answer--A term often used to capture the realities of the competitive
landscape.
-Emergence of GLOBAL ECONOMY and TECHNOLOGY (rapid change) are two
primary drivers of hyper-competitive environments and nature of todays competitive
landscape
Other strategic options:
-Use of
price-quality positioning to build market presence
,-Creation of new know-how and
use of first-mover advantage
-Protection or invasion of established geographic or product markets
The Global competitive landscape - Answer-Increasing:
-Market volatility and instability due to
the rapid pace of change in markets
-Globalized flow of financial capital
-Strategic and operational complexity
of global-scale competition
-Need for flexibility, speed, innovation,
and integration in the use of technology
-Rising product quality standards
Decreasing:
-Time for adapting to change
-Traditional sources of competitive advantage
-Traditional managerial mindset
Technology and Technological Changes - Answer-Technology trends impacting the
global competitive environment
-Increasing rate of technology diffusion and the emergence
of disruptive technologies
-The information age: Internet and the global proliferation of low-cost computing power
-Increasing knowledge intensity
as an intangible source of competitive advantage
In order to cope with new marketplace... - Answer-Strategic Flexibility
-coping with the uncertainty and risks of hypercompetitive environments.
-requires continuous learning and applying the new and updated skills sets and
competencies to the firm's competitive advantage.
--must overcome built-up organizational inertia.
What is the marketplace like for today's firms? - Answer-•A piece of it has moved online
•Globalization, firms were competing with local firms, now you're competing with
national firms
•Omni-channel
•More regulations trying to hold CEO's more accountable
•Consumers are more demanding because there are so many other options so they
want better quality for cheaper price
•Pressure to innovate
-Hypercompetition
Where do firm profits come from? - Answer-o Sales revenue, brand recognition
o Firms that have something valuable internally make a lot of money (resources,
capabilities)
, o The nature of the industry (some just picked an industry that just isn't very profitable)
o Firm performance comes from
♣ 1. Industry (I/O, Porters 5 Forces)
♣ 2. Firm (e.g., Resource-Based Model)
Can we model this? - Answer-o Yes, the I/O Model = industry becomes homogeneous
The I/O Model of Above Average Returns - Answer-Model on pg. 15
The External Environment --> An Attractive Industry --> Strategy Formulation --> Assets
and Skills --> Strategy Implementation --> Superior Returns
The external environment - Answer--The external environment imposes pressures and
constraints that determine strategic choices
--Similarity in resources causes competitors to pursue similar strategies
--Resource differences among competitors are short-lived due to resource mobility
across firms
-Above average performance will be competed away quickly
--Industry attractiveness (average industry returns) is what matters
Resources - Answer-inputs into a firm's production process, such as capital equipment,
the skills of individual employees, patents, finances, and talented managers.
Capability - Answer-capacity for a set of resources to perform a task or an activity in an
integrative manner
Core competencies - Answer-capabilities that serve as a source of competitive
advantage for a firm over its rivals
Porters five forces model - Answer-Industry Rivalry is in the middle surrounded by:
buyers, suppliers, substitutes, potential entrants
-Industry profitability is a function of interactions among the five forces.
-Industry attractiveness is potential for earning above-average returns by
--Producing standardized goods or services at costs below competitor costs (cost
leadership).
--Producing differentiated goods or services for which customers are willing to pay a
price premium (differentiation).
• You can fight the forces but only with cost leadership and differentiation
• Industry Rivalry through substitutes (few), suppliers (many), potential entrants (few),
and buyers (many)
Resource-Based Model - Answer-Model on pg. 18
1. Firms acquire different resources.
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