low cost strategy

Definition
A pricing strategy in which a company offers a relatively low price to stimulate demand and gain market share. It is one of three generic marketing strategies (see differentiation strategy and focus strategy for the other two) that can be adopted by any company, and is usually employed where the product has few or no competitive advantage or where economies of scale are achievable with higher production volumes. Also called low price strategy.

What is LOW COST STRATEGY?

A company offers a relatively low price as a pricing strategy, seeking to stimulate demand and gain market share. One of three generic marketing strategies. Refer to differentiation strategy and focus strategy. These can be adopted by any company. Product with few or no competitive advantages, or product volume achieving an economies of scale is the best use of these strategies. Also known as low price strategy.

2.Distinctive competence of a firm refers to a set of activities or capabilities that a company is able to perform better than its competitors and which gives it an advantage over them. Distinctive competence can lie in different area such as technology, marketing activities, or management capability.

distinctive competency
Definition
Alternative term for core competencies.

Distinctive Competencies?
Answer
Company distinctive competencies help distinguish businesses from competitors. Products typically make a company distinctly competitive. The distinctive competency allows a company to be successful over the long run. Definition of Distinctive Competencies
Distinctive competencies are an element of Strategic Management and are also known by the term core competencies. The term core competencies was coined in 1990 with a series of articles by C. K. Prahalad and Gary Hamel, and most notably in their 1994.

SWOT analysis (alternatively SWOT Matrix) is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture

Definition of 'Value Chain'

A high-level model of how businesses receive raw materials as input, add value to the raw materials through various processes, and sell finished products to customers.

Competitive Business Strategies

A competitive advantage allows a company to produce or sell goods more effectively than another business. Business owners commonly develop business strategies in order to maintain a competitive advantage. Several types of strategies are available in the business environment. Business owners can use standard strategies or develop their own strategy. Flexibility is an important feature of competitive business strategies.

Definition of 'Core Competencies'

The main strengths or strategic advantages of a business. Core competencies are the combination of pooled knowledge and technical capacities that allow a business to be competitive in the marketplace. Theoretically, a core competency should allow a company to expand into new end markets as well as provide a significant benefit to customers. It should also be hard for competitors to replicate

differentiation strategy
Definition
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Approach under which a firm aims to develop and market unique products for different customer segments. Usually employed where a firm has clear competitive advantages, and can sustain an expensive advertising campaign. It is one of three generic marketing strategies (see focus strategy and low cost strategy for the other two) that can be adopted by any firm. See also segmentation strategies.

Read more: http://www.businessdictionary.com/definition/differentiation-strategy.html#ixzz2Vjllqj1A

Difference Between Joint Venture and Strategic Alliance

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Joint Venture vs Strategic Alliance

Joint venture and Strategic Alliance differ from each other financially and legally too. There is difference between them in their definitions too. A joint venture is indeed a contractual agreement between two or more companies that come together in business in terms of the performance of a business task. A strategic alliance on the other hand is a formal relationship between two or more companies in pursuit of common goal in their business even while remaining as independent organizations. This is the main difference between the two terms joint venture and strategic alliance. In other words it can be said the two or more companies that join together in a joint venture do not remain as independent companies in a joint venture. On the other hand the two or more companies that join together in a strategic alliance will remain as independent organizations in a strategic alliance. There has been a lot of debate on the issue whether joint venture is better than strategic alliance. It is generally felt that joint venture is better than strategic alliance for some interesting reasons. A joint venture is legally binding in a better way than a strategic alliance. When it comes to tax purposes strategic alliance is a bit disadvantageous when compared to joint venture. On the other hand you will find strategic alliance more flexible when compared to joint venture. Alliance can also be broken by the help of less number of lawyers. A joint venture on the other hand is not easily broken for that matter. This is because of the fact that it is more legally binding in nature. Things would work better in strategic alliance due to the fact that it is characterized by a wonderful combination of resources or information. On the other hand lot of hard work has to be put into joint venture in order to taste success.

Differences Between a Joint Venture and a Strategic Alliance

Written by Linda Hurley

There are three types of strategic alliance; direct cooperation, joint ventures and minority investments. Every joint venture is always a strategic alliance but not all strategic alliances are joint ventures. What is a strategic alliance? Strategic alliances are agreements to operate collaboratively between otherwise arms length organizations to accomplish a strategic purpose. Alliances can be either equity or non-equity alliances but all are formed to achieve benefits for the organizations that would not be achieved by operating individually.

Strategic alliances usually have a unique value proposition that uses the specific competencies of each of the organizations to achieve competitive advantage. By sharing complementary resources and capabilities alliance partners achieve quicker and more efficient growth than they would if they

developed the resources or capabilities within their own organization. Joint ventures Joint ventures are the most complex of strategic alliances as they involve the creation of a separate legal entity from those of the alliance partners. The alliance partners own and control the new entity together. They can be distinguished from other forms of equity alliance by the fact that they are created to achieve a specific, defined purpose. As an example, joint venture companies are commonly seen in the manufacturing industry where economies of scale require a single manufacturing plant to be cost effective but the market can sustain a number of distributors of the product. In such cases competitors may form an alliance to create a separate company jointly owned and controlled to manufacture goods. The goods are supplied to the alliance partners who then compete in the same market to distribute the goods through either wholesale or retail channels. Direct cooperation Direct cooperation alliances are usually entered into for the purpose of operational efficiency or geographic expansion. They are non-equity alliances and are managed less formally than joint ventures. Rather than creating a separate entity or alliance partners obtaining a shareholding, direct cooperation usually involves a contractual arrangement. Although they may appear similar to transactional dealings direct cooperation alliances involve a greater commitment by the strategic partners and performance objectives are defined and measured by the partners in cooperation. Minority investment This type of strategic alliance is an equity alliance and is used most frequently by young rapidly growing organizations. The young firm obtains capital from corporate investors by providing the corporate investor with a minority shareholding in their company. The purpose of minority investment is less specific than in a joint venture and unlike a joint venture one partner retains control through their majority shareholding. Investors usually have a strategic interest in the growth and success of the company that extends beyond a simple return on investment. Before seeking a strategic alliance organizations need to identify the type of alliance that will fit their needs. Whatever vehicle is used it is essential that the expected outcomes are defined, the elements to be provided by each partner are documented and the whole arrangement is conducted through an appropriate legal agreement.

What is Vertical and Horizontal integration?

Many a times, while gazing through the business daily, you come across the words Vertical integration or Horizontal integration. While some take it as a business gimmick; others do have but only a slight idea of what it is. In any case, as a regular business reader or as an entrepreneur, one needs to be aware about all the aspects of vertical and horizontal integration. Both of these relate to strategies that are made to grow your business but they differ in approach. And most of the times which one to choose is not a very straight forward decision. In this post we will try to completely understand Vertical and Horizontal integration and list certain key things that a business should take care of while looking forward to any of these options

What is Vertical Integration? Out of all the definitions I read online the best one is from Investorwords which says. Vertical integration is the process in which several steps in the production and/or distribution of a product or service are controlled by a single company or entity, in order to increase that companys or entitys power in the marketplace. Simply said, every single product that you can think of has a big life cycle. While you might recognize the product with the Brand name printed on it, many companies are involved in developing that product. These companies are necessarily not part of the brand you see. Example of vertical integration: while you are relaxing on the beach sipping chilled cold drink, the brand that you see on the bottle is the producer of the drink but not necessarily the maker of the bottles that carry these drinks. This task of creating bottles is outsourced to someone who can do it better and at a cheaper cost. But once the company achieves significant scale it might plan to produce the bottles itself as it might have its own advantages (discussed below). This is what we call vertical integration. The company tries to get more things under their reign to gain more control over the profits the product / service delivers. Types of Vertical Integrations: There are basically 3 classifications of Vertical Integration namely: 1. Backward integration The example discussed above where in the company tries to own an input product company. Like a car company owning a company which makes tires.

2. Forward integration Where the business tries to control the post production areas, namely the distribution network. Like a mobile company opening its own Mobile retail chain. 3. Balanced integration You guessed it right, a mix of the above two. A balanced strategy to take advantages of both the worlds. What is Horizontal Integration? Much more common and simpler than vertical integration, Horizontal integration (also known as lateral integration) simply means a strategy to increase your market share by taking over a similar company. This take over / merger / buyout can be done in the same geography or probably in other countries to increase your reach. Examples of Horizontal Integration are many and available in plenty. Especially in case of the technology industry, where mergers and acquisitions happen in order to increase the reach of an entity. As per me an apt example of Horizontal Integration will be You Tube, which was taken over my Google primarily because it had a strong and loyal user base. (There was no rocket science in technology used at Youtube which Google couldnt have done without taking over, but yes to increase the viewers was definitely as complex without the takeover.) Executing these strategies and key points to remembers Vertical and Horizontal integration strategy generally can be done by businesses which have established themselves and probably have a stable life as compared to ones which have to address risks on a regular basis. The immediate advantage of implementing them is to 1. Have economies of scale 2. Expand your knowledge and capabilities 3. Increase market (and profits) 4. Own the whole life cycle so that you can change it the way required 5. Reduce competition (by merging with them rather than competing) 6. Provide better services 7. Many more (refer links below) I believe this much will suffice for you to understand what is vertical integration and horizontal integration? Attached are a few more links that will help you understand the concepts further Before signing off would recommend reading vertical integration case study from wikipedia which highlights how Reliance Industries worked on backward integration and from textiles they got into polyster and later into petrochemicals. This was a brilliant strategy executed by the them owner Dhirubhai. Must read.

Growth-share matrix
From Wikipedia, the free encyclopedia

Early depiction of the growth-share matrix

The growth-share matrix (aka the product portfolio[1], BCG-matrix, Boston matrix, Boston Consulting Group analysis, portfolio diagram) is a chart that had been created by Bruce D. Henderson for the Boston Consulting Group in 1970 to help corporations with analyzing their business units or product lines. This helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis.[2] Analysis of market performance by firms using its principles has called its usefulness into question, and it has been removed from some major marketing textbooks.[3]
Contents
[hide]

1 Overview 2 Practical use of the growth-share matrix

o o o o o

2.1 Relative market share 2.2 Market growth rate 2.3 Critical evaluation 2.4 Misuse of the growth-share matrix 2.5 Alternatives

3 Other uses 4 References

Overview [edit]

To use the chart, analysts plot a scatter graph to rank the business units (or products) on the basis of their relative market shares and growth rates.

Cash cows are units with high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a "mature" market, and every corporation would be thrilled to own as many as possible. They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth.

Dogs, more charitably called pets, are units with low market share in a mature, slow-growing industry. These units typically "break even", generating barely enough cash to maintain the business's market share. Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company. They depress a profitable company's return on assets ratio, used by many investors to judge how well a company is being managed. Dogs, it is thought, should be sold off.

Question marks (also known as problem children) are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.

Stars are units with a high market share in a fast-growing industry. The hope is that stars become the next cash cows. Sustaining the business unit's market leadership may require extra cash, but this is worthwhile if that's what it takes for the unit to remain a leader. When growth slows, if they have been able to maintain their category leadership stars become cash cows, else they become dogs due to low relative market share.

The 3 Strategies of a Corporation

Here are the three strategies of an organisation that represent the master plan in achieving goals and the maximisation of their profits.
Posted by Maria Zain on Mar 10, 2008
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In order to work toward maximising profits, organisations need a framework to work by and to move forward in achieving goals that will lead to the maximum profit margin. There are three main strategies that businesses have to adopt to achieve this goal. Of course, strategies will differ from indust ry to industry and from firm to fim. However, the concepts remain the same and companies customise their strategies to fit their corporate culture, business products as well as functions in the market. Corporate Strategy A corporate strategy depicts the corporate culture's perception of progress and growth. The corporate strategy comprises a directional strategy through a corporate vision and a mission statement. The corporate strategy is an important strategy to observe to depict the best image of the comp any toward its clientele. If the corporation wants to be perceived as a leading clothes manufacturer, its corporate strategies have to incorporate growth in the retail line that will allow them to keep up with the latest trends in fashion and clothes. Business Strategy A business strategy accentuates the lines of the different business units. These strategies are developed based on the micro interests of the company. The corporate strategy takes an overview picture of a parenting strategy to ensure that a corporation is on the right track. Collectively, the business strategies ensure that individual business units are able to increase their effectiveness while remaining jived with the corporate strategy. The business strategy concentrates on improving a firm's competitive position by developing their products and services and by continunously exceeding clientele expectations.

These business strategies will be based on a SWOT analysis and will recommend strategies to top management, to look into growth opportu nities. Functional Strategy A functional strategy is one that is implemented and activated by functional areas that support product and service development. These could be human resources, marketing and/or research and development. Their functional strategies have to be customised to ensure that the business strategy adopted by the business team will be able to succeed. The functional strategy therefore supports the business strategy. Effective functional strategies will help the corporation develop competitive advantages for the company. Lastly, it is important to know that strategies have to be outlined in a flexible manner in order to keep in pace with the different changes that take place in the external environment. From a hierarchial point of view, the corporate strategy is the one that remains the most stable while the functional strategies are those that change to keep in pace with customer needs and aggressive competition in the market.

The Boston Matrix

Focusing Effort to Give the Greatest Returns Related variants: The BCG Matrix, the Growth-Share Matrix and Portfolio Analysis

Milk your "cash cows." iStockphoto/beckariuz

Imagine that you're reviewing your organization's products. You need to decide which ones you should focus investment on.

One of the products is doing well financially. However, demand has fallen, and this trend looks set to continue. Another product is also doing well, but it's in a new market, and needs a lot of cash to support it. Should you continue investing in it? And another product is barely profitable, although its market is growing. Should you kill it or keep it? To make these decisions, you need to look beyond the income that the products are currently bringing in. You need to assess how they're likely to perform in future. The Boston Matrix, also called the Boston Consulting Group (BCG) Matrix, is a simple, visual way to examine the likely financial performance of your product or business portfolio. In this article, we'll look at the Boston Matrix and how to use it. We'll also outline some of its limitations.

Understanding the Boston Matrix

Management consultants at the Boston Consulting Group developed their matrix in the early 1970s. They designed it to help managers at large corporations decide which business units they should invest in. However, managers in all kinds of organizations now also use it to decide which of their product lines or products to invest in, and which to dispose of or to shut down. The matrix, shown in figure 1, places products into four categories based on their market share and market growth. Figure 1 The Boston Matrix

The categories are: Dogs: Low Market Share and Low Market Growth Dogs are business units or products that have low market share in a low-growth market. They often don't make much profit, but they don't need much investment either. Much of the time, you'll need to offer a price discount to sell Dog products. Cash Cows: High Market Share and Low Market Growth These businesses or products are well established. They're likely to be popular with customers, which makes it easier for you to exploit new opportunities. However, you should avoid spending too much effort on these, because the market is only growing slowly, and opportunities are likely to be limited. Stars: High Market Share and High Market Growth Businesses and products in this quadrant are seeing rapid growth. There should be some good opportunities here, and you should work hard to realize them. Question Marks (Problem Children): Low Market Share and High Market Growth These are the opportunities that no one knows how to handle. They aren't generating much revenue right now, because you don't have a large market share. But they're in high-growth markets, so they could become Stars or even Cash Cows if you can build market share. However, if you cannot increase market share, Question Marks could absorb a lot of effort with little

What is strategy and why is it important? the five generic competitive strategies: which one to employ?

Evaluating a companys resources, capabilities, and competitiveness

20121219

139

- 1. Which of the following is not one of the six questions that comprise the task of ev aluating B. C. D. Is How Are the a well the company companys is the companys competitively resources companys prices stronger and present and or competitive strategy costs weaker than position? working? competitive? key rivals? A. What are the companys most profitable geographic market segments?

E. What strategic issues and problems merit front-burner managerial attention? 2. Which of the following is not a component of evaluating a companys resources an d A. Evaluating how competitive well the present strategy is position? working

B. Scanning the environment to determine a companys best and most profitable cus tomers C. als E. Pinpointing what strategic issues and problems merit front-burner managerial atte ntion 3. The spotlight in analyzing a companys resources, internal circumstances, and co mpetitiveness includes such questions/concerns as A. whether the companys present strategy is better than the strategies of its closest rivals based on such performance measures as earnings per share, ROE, dividend pa yout ess ratio, and average factors annual increase of in the common close stock price. rivals. B. whether the companys key success factors are more dominant than the key succ C. whether the company has the industrys most efficient and effective value chain. D. what are the companys resource strengths and weaknesses and its external oppo rtunities and threats. E. what new acquisitions the company would be well advised to make in order to str engthen its financial performance and overall balance sheet position. 4. Which of the following is not pertinent in identifying a companys present strategy ? A. The key functional strategies (R&D, supply chain management, production, sales and marketing, HR, and finance) a company is employing B. Managements planned, proactive moves to outcompete rivals (via better product Assessing whether the companys costs and prices are competitive D. Evaluating whether the company is competitively stronger or weaker than key riv

design, C. in rs The

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or

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wider

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D. Moves to respond and react to changing conditions in the macro-environment and industry competitive E. The strategic role of its collaborative partnerships and strategic alliances with othe

5. One important indicator of how well a companys present strategy is working is w hether A. it has more core competencies than close rivals. B. its strategy is built around at least two of the industrys key success factors. C. the company is achieving its financial and strategic objectives and whether it is an above-average gn) or a industry late-mover (a bad performer. sign). D. it is customarily a first-mover in introducing new or improved products (a good si E. it is subject to weaker competitive forces and pressures than close rivals (a good sign) or stronger competitive forces and pressures (a bad sign). 6. The best quantitative evidence of whether a companys present strategy is workin g ties. B. whether the company is in the industrys best strategic group. C. the caliber of results the strategy is producing, specifically whether the company i s achieving its financial and strategic objectives and whether it is an above-average i ndustry D. whether the company has a shorter value chain than E. whether the company is in the Fortune 500. 7. Which one of the following is not a reliable measure of how well a companys curr ent strategy is working? A. Whether the companys sales are growing faster, slower, or about the same pace as the industry as a whole, thus resulting in a rising, falling, or stable market share B. Whether it has a larger number of competitive assets than competitive liabilities a nd C. ve whether The firms to it image has and a superior reputation of with its quality its product customers rivals performer. close rivals. well is A. whether the company has more competitive assets than it does competitive liabili

D. Whether its profit margins are rising or falling and how large its margins are relati those E. How well the firm stacks up against rivals on technology, product innovation, cust omer service, product quality, price, speed in getting newly developed products to m

arket, and other relevant factors on which buyers base their choice of which brand t o purchase 8. A. B. e. D. give it excellent ability to insulate itself against the impact of the industrys drivin g E. combine to give it a distinctive competence. 9. A. B. C. D. a productive marketing Which of the following a input that and R&D does not represents companys is owned brand by the a company resource? brand. firm. teams. management. forces. are the A companys represent most important resource its parts of and core the companys capability value analysis competencies. chain.

C. signal whether it has the wherewithal to be a strong competitor in the marketplac

E. a productive input that is controlled by the firm. 10. Which of the following is a clear representation of a companys capability? A. B. C. D. a productive capacity an of alliance a input a or that is firm companys owned to or controlled with by some another the perform brand. firm. firm. activity.

collaboration

E. All of these. 11. Which of the following most accurately reflect a companys resource strengths? A. Its human, physical and/or organization assets; its skills and competitive capabilit ies; and achievements or attributes that enhance the companys ability to compete e ffectively B. The sizes of its unit sales, revenues, and market share vis--vis those of key rival s C. The sizes of its profit margins and return on investment vis--vis those of key riva ls D. Whether it has more primary activities in its value chain than close rivals and a b etter overall value chain than these rivals E. Whether it has more core competencies than close rivals 12. A. B. a skill, A valuable companys specialized expertise, or human assets strength competitively and can important intellectual concern capability. capital.

C. an achievement or attribute that puts the company in a position of market advant age. D. competitively valuable alliances or cooperative ventures. E. All of these. 13. stment y on key suppliers, on The best example than partnerships with a of a company key outsiders, or strategic resource is rivals. alliances. basis.

A. having higher earnings per share and a higher return on shareholders equity inve B. being totally self-sufficient such that the company does not have to rely in any wa C. having proven technological expertise and ability to churn out new and improved products regular D. having a larger number of competitive assets than competitive liabilities. E. having more built-in key success factors than rivals. 14. Which of the following is not a good example of a companys strength? A. More intellectual capital and better e-commerce capabilities product D. A well-known quality brand name and and enjoying the confidence than rivals performance of customers B. Fruitful partnerships or alliances with suppliers that reduce costs and/or enhance C. Having higher earnings per share and a higher stock price than key rivals E. A lower-cost value chain than rivals 15. If a company doesnt possess stand alone resource strengths capable of contribu ting A. all to potential for competitive competitive advantage advantage, is lost.

B. it is unlikely to survive in the marketplace and should exit the industry. C. it may have a bundle of resources that can be leveraged to develop a distinctive c ompetence. D. it is virtually blocked from using offensive strategies and must rely on defensive s trategies. E. its best strategic option is to revamp its value chain in hopes of creating stronger competitive capabilities. 16. Resource and capability analysis is designed to

A. ascertain the internal market place of non-distinct divisions of the company. B. ascertain which of a companys resources and capabilities are competitively valua ble. C. stimulate demand for a product. D. ascertain to what extent a competitor can sustain a competitive advantage. E. stimulate economic growth for companies within the industry.

17. B. odel. D.

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A. probing the caliber of a firms competitive assets relative to those of rival firms. stability. C. analyzing only internal strengths and weaknesses through a matrix comparison m cost-benefit analysis of the companys core product sales.

E. Performing resource specific activities within the organization to allocate available capital. 18. A company that has competitive assets which are central to company strategy a nd creates A. B. C. D. long-term cash competitive resource flow advantage deployment over derivative feasibility other strategic superior to rival firms a strategy. analysis. companies. plan.

E. cost underestimation and benefit overestimation. 19. Whether a resource or capability can support a competitive advantage is determi ned hat B. Whether the resource or by which rivals capability is rare and/or is hard to two tests? lack. copy. A. Whether the resource or capability is competitively valuable and/or is something t

C. Whether the resource or capability can be trumped and/or is hard to copy. D. Whether the resource or capability is competitively valuable and/or are there goo d substitutes available for the resource. E. Whether the resource or capability is hard to copy and/or can be trumped by diffe rent types of resources and capabilities. 20. Which two tests of a resources competitive power determine whether a compan ys competitive advantage can be sustained in the face of active competition? A. Whether the resource or capability is competitively valuable and/or is something t hat B. C. d Whether Whether the resource the or resource rivals capability or is rare and/or is is hard to to capability for easy the lack. copy. copy. resource.

D. Whether the resource or capability is competitively valuable and/or are there goo substitutes available E. Whether the resource or capability is hard to copy and/or can be trumped by diffe rent types of resources and capabilities.

21. What two factors inhibit the ability of rivals to imitate a firms most valuable reso urces A. B. C. D. Social Social Collective Social ambiguity simplicity complexity complexity and and and and and causal causal causal causal capabilities? uncertainty. complexity. ambiguity. ambiguity.

E. Social simplicity and causal uncertainty. 22. A. C. D. A competitively strategic of superior asset the worker resource providing availability productivity or a of and capability a is a companys advantage. substitutes. quality.

True

competitive superior product

B. Equally valuable substitute resource providing Assessment Unsurpassed

competitive advantage.

E. Unique piecework incentive system providing a competitive advantage. 23. A company requires a dynamically evolving portfolio of resources and capabilitie s A. B. assist sustain the strategic planning team systems in as a overall strategic complex manufacturing to direction. recoil.

C. sustain its competitiveness and help drive improvements in its performance. D. sustain benefits of high market share as an interest in growth strategies. E. transform knowledge into a management style supporting competition in a globall y diverse world. 24. For a company to have competitively potent resources and capabilities, they mus t A. C. ares. E. All of these. 25. Which of the following is not an example of a companys dynamic capability? A. B. D. capacity upgrades ability to to to improve R&D existing to resources drive with and product acquired capabilities. innovation. capabilities. resources be in sync with changes company in the companys to own strategy. customers. B. be in sync with its efforts to achieve a resource-based competitive advantage. fully support efforts attract D. combat competitors newly launched offensives to win bigger sales and market sh

C. capacity to add new resources and capabilities to the competitive asset portfolio. replace degraded resources E. All of these.

26. The competitive power of a company resource strength or competitive capability hinges A. B. o E. All of these. 27. For a particular company resource/capability to have real competitive power and perhaps qualify as a basis for competitive advantage, it should A. be hard for competitors to copy, be rare and something rivals lack, be competitiv ely valuable, and not be easily trumped by substitute resource strengths possessed by ments C. alue E. have the potential for lowering the firms unit costs. 28. The competitive power of a company resource strength is not measured by whic h A. Is one the of resource rare the and following something with rivals tests? lack? with be rivals. outsiders. patentable. chain. B. be something that a company does internally rather than in collaborative arrange how whether hard it a it is is rare for and competitors something to rivals on copy. lack.

C. whether it is really competitively valuable and having the potential to contribute t competitive advantage. D. how easily it can be trumped by the substitute resources/capabilities of rivals.

D. be an industry key success factor and occupy a prime position in the companys v

B. Is the resource strength something that a company does internally rather than in collaborative rivals? D. Is the resource strength hard to copy? E. Is the resource strength competitively valuable, having the potential to contribute to a competitive advantage? 29. Identifying and assessing a companys resource strengths and weaknesses and it s A. B. C. D. competitive competitive strategic external opportunities SWOT asset/liability positioning resource and threats is called analysis. analysis. analysis. assessment. arrangements outsiders? C. Is the resource strength easily trumped by the substitute resources/capabilities of

E. company resource mapping.

30. A. ies, D.

SWOT gauging and determining whether the a

analysis a company

is has

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powerful competitive its future vis--vis

tool value

for chain.

B. sizing up a companys resource capabilities and deficiencies, its market opportunit external companys threats competitive well-being. close rivals. C. evaluating whether a company is in the most appropriate strategic group. strength E. identifying the market segments in which a company is strongly positioned and w eakly positioned. 31. A companys resource strengths are important because

A. they pave the way for establishing a low-cost advantage over rivals. B. they represent its competitive assets and are big determinants of its competitiven ess and ability to succeed in the marketplace. C. they provide extra muscle in helping lengthen the companys value chain. D. they give it competitive protection against the industrys driving forces. E. they provide extra organizational muscle in turning a core competence into a key success factor. 32. When a company has real proficiency in performing a competitively important va lue A. B. C. D. a a chain a a key competitive value advantage activity, it is distinctive core chain over said to have competence. competence. proficiency. rivals.

E. a company competence. 33. When a company is good at performing a particular internal activity, it is said to have A. B. C. D. a a a competitive a advantage competitive distinctive core over rivals. capability. competence. competence.

E. a company competence. 34. The difference between a company competence and a core competence is that A. a company competence refers to a companys best-executed functional strategy a nd a core competence refers to a companys best-executed business strategy. B. a company competence refers to a companys strongest resource whereas a core competence refers to a companys lowest-cost and most efficiently performed value chain activity. C. a company competence is a competitively relevant activity which a firm performs

especially well relative to other internal activities, whereas a core competence is an activity that a company has learned to perform proficiently. D. a company competence represents real proficiency in performing an internal activ ity whereas a core competence is a competitively relevant activity which a firm perfo rms better than other internal activities. E. a core competence usually resides in a companys technology and physical assets whereas a company competence usually resides in a companys human assets and in tellectual capital. 35. The difference between a core competence and a distinctive competence is that A. a distinctive competence refers to a companys strongest resource or competitive capability and a core competence refers to a companys lowest-cost and most efficie ntly executed value-chain activity. B. a core competence usually resides in a companys base of intellectual capital wher eas a distinctive competence stems from the superiority of a companys physical and tangible assets. C. a core competence is a competitively relevant activity which a firm performs espe cially well in comparison to the other activities it performs, whereas a distinctive co mpetence is a competitively relevant activity which a firm performs especially well in comparison to other firms with which it competes. D. a core competence represents a resource strength whereas a distinctive compete nce is achieved by having more resource strengths than rival companies. E. a core competence usually resides in a companys technology and physical assets whereas a distinctive competence usually resides in a companys know-how, expertis e, and intellectual capital. 36. ets balance and is A not a core genuine resource competence strength. sheet.

A. retracts from a companys arsenal of competitive capabilities and competitive ass B. is typically results-based, residing in a companys tangible physical assets on the C. is often grounded in a single departments set of knowledge and expertise. D. is a competitively relevant activity which a firm performs especially well in compa rison to the other activities it performs. E. All of these. 37. source. B. typically has competitive value, the amount of which is reflected in the physical a nd tangible assets on a companys balance sheet. A core competence

A. gives a company competitive capability and is a genuine company strength and re

C. usually is grounded in the technological expertise of a particular department or w ork D. ty. 38. When a company performs a particular competitively important activity truly well in A. B. C. D. E. a key success factor. 39. Which of the following does not represent a potential core competence? A. Skills in manufacturing a high-quality product at a low cost B. Know-how in creating and operating systems for cost-efficient supply chain mana gement C. D. The capability Having a to fill customer orders accurately line and swiftly rivals wider product than a a comparison to a a its competitors, company strategic distinctive core it is said to have resource. competence. competence. competence. is more difficult for rivals to copy than a distinctive group. competence.

E. refers to a companys lowest-cost and most efficiently executed value-chain activi

E. The capability to speed new or next-generation products to the marketplace 40. petitors. B. gives a company competitively valuable capability that is unmatched by rivals. C. D. is can a underpin basis and for add sustainable real punch to competitive a companys advantage. strategy. A distinctive competence

A. is a competitively important activity that a company performs better than its com

E. All of these. 41. Which one of the following is inaccurate as concerns a distinctive competence? A. A distinctive competence is a competitively important activity that a company perf orms mpetence. C. A distinctive competence can be a basis for sustainable competitive advantage. D. A distinctive competence can underpin and add real punch to a companys strateg y. E. A distinctive competence gives a company competitively valuable capability that is unmatched by rivals. better than its competitors. B. A distinctive competence is typically less difficult for rivals to copy than a core co

42. The competitive power of a companys core competence or distinctive competenc e ngs engths ely enough and to of competitive boost the depends rival capabilities companys brand of name on firms. rivals. reputation. A. whether it helps differentiate a companys product offering from the product offeri B. how hard it is to copy and how easily it can be trumped by substitute resource str C. whether customers are aware of the competence and view the competence positiv D. whether the competence is one of the industrys key success factors. E. whether the competence is technology-based or based on superior marketing kno w-how. 43. s A prevent company a firm resource from weakness being a or winner competitive in the deficiency marketplace. in. a company from having a distinctive competence.

A. represents a problem that needs to be turned into a strength because weaknesse B. causes the company to fall into a lower strategic group than it otherwise could co mpete C. prevents

D. usually stems from having a missing link or links in the industry value chain. E. is something a company lacks or does poorly (in comparison to rivals) or a conditi on that puts it at a disadvantage in the marketplace. 44. ant B. s. D. missing or competitively inferior capabilities in key areas. E. All of these. 45. Sizing up a companys overall resource strengths and weaknesses something A companys parts that it lacks or resource of does poorly weaknesses the (in comparison to can relate to

A. inferior or unproven skills, expertise, or intellectual capital in competitively import business. rivals).

C. deficiencies in competitively important physical, organizational, or intangible asset

A. essentially involves constructing a strategic balance sheet where the companys resource strengths represent competitive assets and its resource weaknesses repres ent B. C. strengths is is called competitive called competitive than strength liabilities. benchmarking. assessment. weaknesses.

D. is focused squarely on ascertaining whether the company has more/less resource E. is called company resource mapping.

46. The external market opportunities which are most relevant to a company are the ones A. B. reinforce increase its overall market business that share. strategy.

C. match up well with the firms financial resources and competitive capabilities, offe r the best growth and profitability, and present the most potential for competitive ad vantage. D. correct its internal weaknesses and resource deficiencies. E. help defend against the external threats to its well-being. 47. The market opportunities most relevant to a particular company are those that A. C. D. offer hold provide the avenues the most for taking best potential market growth for share and product away from profitability. innovation. close rivals. B. provide a strong defense against threats to the companys profitability.

E. hold the most potential to reduce costs. 48. Which of the following best describes the market opportunities that tend to be m ost relevant to a particular company? A. Those market opportunities that provide avenues for taking market share away fr om close rivals and enhance a companys image as a leader in product innovation an d s. C. Those market opportunities that help promote greater diversification of revenues and profits. D. Those market opportunities that match up well with the firms financial resources and competitive capabilities, offer the best growth and profitability, and present the most potential for competitive advantage. E. Those market opportunities that help correct a companys biggest weaknesses an d competitive deficiencies. 49. Which of the following is not an example of an external threat to a companys fut ure A. C. D. business The lack Slowdowns More intense of in a distinctive market competitive profitability? competence growth pressures product quality. B. Those market opportunities that offer the company a chance to raise entry barrier

B. New legislation that entails burdensome and costly government regulations

E. The introduction of restrictive trade policies in countries where the company does

50. Which of the following is not an example of a threat to a companys future profit ability? A. lp C. D. or suppliers 51. e y chains key SWOT of success key analysis rivals. factors. Shifts in Costly Likely entry retain buyer needs and new tastes of potent existing away from the regulatory new competitors customers industrys product requirements B. The lack of a well-known brand name with which to attract new customers and he

E. Growing bargaining power on the part of the companys major customers and maj

A. is a way to measure whether a companys value chain is longer or shorter than th B. is a tool for benchmarking whether a firms strategy is closely matched to industr C. reveals whether a company is competitively stronger than its closest rivals. D. provides a good overview of whether a companys situation is fundamentally healt hy or unhealthy. E. identifies the reasons why a companys strategy is or is not working very well. 52. chains dustry vals. D. revealing whether a companys market share, measures of profitability, and sales compare favorably or unfavorably vis--vis key competitors. E. assisting strategy-makers in crafting a strategy that is well-matched to the compa nys resources and capabilities, its market opportunities, and the external threats to its future well-being. 53. In doing SWOT analysis, which one of the following is not an example of a poten tial resource weakness or competitive deficiency that a company may have? A. rategies C. Lack of a strong brand image and reputation (as compared to rivals) D. Higher overall unit costs relative to rivals E. Too narrow a product line relative to rivals Less productive R & D efforts than rivals B. Having a single, unified functional strategy instead of several distinct functional st key The payoff of doing a of success thorough SWOT analysis is

A. identifying whether the companys value chain is cost effective vis--vis the value rivals. factors. B. helping strategy-makers benchmark the companys resource strengths against in C. enabling a company to assess its overall competitive position relative to its key ri

54. In doing SWOT analysis and trying to identify a companys market opportunities, which of the following is not an example of a potential market opportunity that a co mpany A. B. Serving Growing additional buyer preferences for may customer groups or for the market industrys substitutes have? segments product

C. Acquiring rival firms or companies with attractive technological expertise or capab ilities D. Expanding into new geographic markets E. Openings to win market share away from rivals 55. One of the lessons of SWOT analysis is that a companys strategy should A. table C. or E. All of these. 56. Which one of the following is not part of conducting a SWOT analysis? A. nst C. active Identifying a companys resource key a is companys about the strengths and competitive capabilities factors opportunities circumstances? B. Benchmarking the companys resource strengths and competitive capabilities agai industry Identifying and what success market companys seek to be grounded growth defend against in its and threats to the resource strengths competitive companys future and capabilities. advantage. profitability. unproven. B. be aimed at those market opportunities that offer the best potential for both profi

D. generally not place heavy demands on areas where company resources are weak

D. Drawing conclusions about the companys overall business situationwhat is attr unattractive E. Translating the results of the analysis into actions for improving the companys str ategy and market position 57. ities. B. identifying the companys resource strengths and identifying the companys best market how many market opportunities it opportunities. has. C. identifying the external threats to a companys future profitability and pinpointing D. drawing conclusions from the SWOT listings about the companys overall situation and translating these into strategic actions to better match the companys stra tegy t o its resource strengths and market opportunities, to correct the important weaknes ses, and to defend against external threats. E. making accurate lists of the companys strengths, weaknesses, opportunities, and The two most important parts of SWOT analysis are

A. pinpointing the companys competitive assets and pinpointing its competitive liabil

threats and then using these lists as a basis for ascertaining how well the companys strategy is working. 58. The three steps of SWOT analysis are

A. identifying the companys resource strengths and weaknesses and its opportunitie s and threats, drawing conclusions about the companys overall situation, and transl ating the conclusions into strategic actions to improve the companys strategy. B. pinpointing the companys competitive assets, pinpointing its competitive deficien cies, and determining whether it enjoys a competitive advantage. C. determining whether the company has more competitive assets than competitive l iabilities, determining whether the company has good market opportunities, and eva luating the seriousness of the threats to the companys future profitability. D. matching the companys strategy to its resource strengths, correcting the compa nys important resource weaknesses, and identifying the companys best market opp ortunities. E. benchmarking the companys strengths and weaknesses against those of key rival s, identifying its market opportunities and the external threats it faces, and determin ing the companys potential for establishing a competitive advantage over rivals. 59. Which one of the following is not something that can be gleaned from identifying a companys resource strengths, resource weaknesses, market opportunities, and ex ternal s ties C. Which resource weaknesses and deficiencies need to be corrected so as to better enable the pursuit of important market opportunities and to better defend against ce rtain D. How to turn a core external competence into a distinctive threats competence as cornerstones for its threats? strategy A. How to improve a companys strategy by using company strengths and capabilitie B. Which market opportunities are best suited to a companys strengths and capabili

E. Whether any of the companys resource strengths can be used to help lessen the i mpact of external threats 60. One of the most telling signs of whether a companys market position is strong o r A. C. tomer E. whether it is in a bigger or smaller strategic group than its closest rivals. whether whether its product it has is a precarious strongly lower or weakly differentiated price than from key is rivals. rivals. service.

B. whether its prices and costs are competitive with those of key rivals. stock D. the opinions of buyers regarding which seller has the best product quality and cus

61. Two analytical tools useful in determining whether a companys prices and costs are A. B. C. D. SWOT value competitive analysis SWOT chain position assessment competitive and analysis analysis and key success and and competitive factor are analysis. benchmarking. benchmarking. strength assessment.

E. driving forces analysis and SWOT analysis. 62. A companys value chain identifies

A. the steps it goes through to convert its net income into value for shareholders. B. the primary activities it performs in creating value for its customers and the relate d hands encies. E. the competencies and competitive capabilities that underpin its efforts to create v alue for customers and shareholders. 63. areholders the in A the form of companys higher dividends and value a higher stock chain price. assets. support of activities. end-users. C. the series of steps it takes to get a product from the raw materials stage into the D. the activities it performs in transforming its competencies into distinctive compet

A. consists of the primary activities that it performs in seeking to deliver value to sh B. depicts the internally performed activities associated with creating and enhancing companys competitive C. consists of two broad categories of activities: the primary activities that create cu stomer value and the requisite support activities that facilitate and enhance the perf ormance eloping of the new primary activities. products. D. concerns the basic process the company goes through in performing R&D and dev E. consists of the series of steps a company goes through to develop a new product, get it produced and distributed into the marketplace, and then start collecting reven ues and earning a profit. 64. Identifying the primary and secondary activities that comprise a companys valu e eater s n the value key value chain for success gives rise to chain shareholders. factors. costs). A. indicates whether a companys resource strengths will ultimately translate into gr B. reveals whether a companys resource strengths are well-matched to the industry C. is the first step in understanding a companys cost structure (since each activity i

D.

is

called

benchmarking.

E. is called resource value analysis. 65. A. tend The to be value essentially the chains sameany of differences rival are companies typically minor.

B. can differ substantially, reflecting differences in the evolution of each companys o wn particular business, differences in strategy, and differences in the approaches bei ng ed used internally and to how execute many are strategy. outsourced. C. are fairly similar or fairly different, depending on how many activities are perform D. can be either fairly similar or fairly different, depending on the extent to which ea ch companys primary and support activities are comprised of fixed cost activities an d s. 66. The three main areas in the value chain where significant differences in the costs of competing firms can occur include A. age of plants and equipment, number of employees, and advertising costs. B. operating-level activities, functional area activities, and line of business activities. C. the nature and make-up of their own internal operations, the activities performed by suppliers, and the activities performed by wholesale distribution and retailing allie s. D. human resource activities (particularly labor costs), vertical integration activities, and strategic partnership activities. E. variable cost activities, fixed cost activities, and administrative activities. 67. Activity-based costing is used to variable cost activities. E. are fairly similar except when rival companies have quite different product design

A. determine whether the value chains of rival companies are similar or different. B. benchmark the costs of primary value chain activities against the costs of the sup port value chain activities. C. determine the costs of each primary and support activity comprising a companys value chain and thereby reveal the nature and make-up of a companys internal cost structure. D. determine the costs of each strategic action a company initiates. E. None of these accurately describes what activity-based costing is about. 68. Activity-based cost accounting aims at

A. making cross-company comparisons of the costs of each value chain activity. B. dividing all company expenses into two categories: activities whose costs are vari able and activities whose costs are fixed.

C. determining the costs of each activity comprising a companys value chain by esta blishing expense categories for specific value chain activities and assigning costs to t he D. activity determining the responsible costs of each for strategic creating action a the company cost. initiates.

E. None of these accurately describes what activity-based costing is about. 69. in hain nd ch a companys value Activity-based chain of as primary is responsible each activities and for creating major support the costing cost. rival. activities. costs.

A. is an accounting system that assigns a companys expenses to whichever activity B. involves using benchmarking techniques to develop cost estimates for the value c activities classifying them C. is a powerful tool for identifying the different pieces of a companys value chain a D. involves determining which value chain activities represent variable costs and whi represent fixed E. is a tool for identifying the activities that cause a companys product to be strongl y differentiated from the products of rivals. 70. Which one of the following provides the most accurate picture of whether a com pany is cost competitive with its rivals? A. How the costs of the companys internally performed activities (its own value chai n) compare against the costs of the internally-performed activities of rival companie s B. d Costs in the value chains channel of the companys suppliers allies C. Costs in the value chains of a companys distributors and retail dealers and forwar D. The costs of a companys internally performed activities, costs in the value chains of both the companys suppliers and forward channel allies, and how all these costs compare against the costs that make up the value chain systems employed by rival f irms E. Whether the company has a longer or shorter value chain than its close rivals 71. Determining whether channel a companys prices and costs are competitive

A. requires looking at the costs of a companys competitively relevant suppliers and f orward allies (distributors/dealers). B. requires considering the costs of a companys internally performed activities. C. involves the use of benchmarking the costs in a companys value chain system (t he costs of its suppliers, its internally performed activities, the costs of its distributor s/dealers) against the costs of the value chain systems employed by rival firms. D. typically involves the use of activity-based cost accounting. E. All of these.

72. n making crosscompany

Benchmarking comparisons of the costs of these

involves activities.

A. comparing how different companies perform various value chain activities and the B. checking whether a company has achieved more of its financial and strategic obje ctives over the past five years relative to the other firms it is in direct competition wi th. C. studying whether a companys resource strengths are m ore/less powerful than th e resource strengths of rival companies. D. studying how a companys competitive capabilities stack up against the competiti ve capabilities of selected companies known to have world class competitive capabilit ies. E. comparing the best practices in one industry against the best practices in another industry. 73. A much-used and potent managerial tool for determining whether a company pe rforms particular functions or activities in a manner that represents the best practic e A. B. C. D. E. benchmarking. 74. Which of the following is not one of the objectives of benchmarking? A. To identify the best practices in performing various value chain activities B. To learn how best practice companies achieve lower costs or better results in perf orming and hain which benchmarked are support activities activities activities C. To help construct a company value chain and identify which activities are primary D. To develop cross-company comparisons of the costs of performing specific value c E. To take actions to improve a companys cost competitiveness when benchmarking reveals that its costs and results of performing an activity are not as good as what o ther companies have achieved 75. A. B. C. D. Benchmarking Hard Proof A Verification of provides a of total company of with which cost resource company cost of the following? availability. strategy. ownership. resource SWOT when both cost and effectiveness activity-based cost are taken into account is competitive strength analysis. costing. mapping. analysis.

evidence

competitiveness.

E. Improvements to internal processes.

76. A. C. D.

The the

most decision when

difficult of to to

part to

of do

benchmarking it the at

is all.

whether initiate utilize in

B. how to gain access to information regarding rivals practices and costs. process. process. what information the analysis

E. when to stop the process and move forward with strategy. 77. Which of the following areas within a companys total value chain system, can m anagers A. B. C. D. E. All of these. 78. The options for remedying an internal cost disadvantage include The A Suppliers improve companys part None of channel distribution efficiency own the portion of of and activity overall the value value effectiveness? segments. chain. chain. these.

A. investing in productivity-enhancing, cost-saving technological improvements. B. redesigning the product or some of its components to facilitate speedier and more economical manufacture or assembly. C. implementing the use of best practices, particularly for high-cost activities. D. eliminating some cost-producing activities from the value chain, especially low val ue-added E. All of these. 79. Which of the following is not a good option for trying to remedy high internal cos ts vis--vis rivals firms? A. Investing in productivity-enhancing, cost-saving technological improvements B. Redesigning the product or some of its components to permit more economical m anufacture cost more or assembly reduction economically C. Implementing aggressive strategic resource mapping to permit across-the-board D. Outsourcing high-cost activities to vendors or contractors who can perform them E. Relocating high-cost activities (like manufacturing) to geographic areas (like Chin a or Latin America or Eastern Europe) where they can be performed more cheaply 80. A companys strategic options for remedying cost disadvantages in internally per formed articularly value chain low activities do not include activities). A. revamping its value chain to eliminate or bypass some cost-producing activities (p value-added B. implementing the use of best practices, particularly for high-cost activities. activities.

C. investing in productivity-enhancing, cost-saving technological improvements. D. switching to activity-based costing. E. outsourcing the performance of high-cost activities to vendors that can perform th em more cheaply. 81. The options for remedying a supplier-related cost disadvantage include A. trying to negotiate more favorable prices with suppliers and switching to lower pri ced B. C. shifting forward into the substitute vertical production of substitute inputs. integration. products.

D. shifting from a low-cost leadership strategy to a differentiation or focus strategy. E. cutting selling prices and trying to win a bigger market share. 82. Which of the following is not an option for remedying a supplier-related cost disa dvantage? A. Integrate backward into the business of high-cost suppliers in an effort to reduce the B. D. costs Negotiate Switch of more to the favorable lower items prices priced being with substitute purchased. suppliers. inputs.

C. Collaborate closely with suppliers to identify mutual cost-saving opportunities. E. Persuade forward channel allies to implement best practices. 83. Which of the following is not an option for remedying a cost disadvantage associ ated with activities performed by forward channel allies (wholesale distributors and r etail dealers)? A. Shifting to a more economical distribution strategy such as putting more emphasi s on cheaper distribution channels (perhaps direct sales via the Internet) or perhaps integrating forward into company-owned retail outlets B. Trying to make up the difference by cutting costs earlier in the value chain C. Pressuring distributors-dealers and other forward channel allies to reduce their co sts and markups so as to make the final price to buyers more competitive with the p rices of rivals D. Insisting on across-the-board cost cuts in all value chain activitiesthose perform ed by suppliers, those performed in-house, and those performed by distributors-deal ers E. Working closely with forward channel allies to identify win-win opportunities to re duce costs 84. A company that does a first-rate job of managing its value chain activities relativ e A. is likely to have to more distinctive competencies competitors than rivals.

B. stands a good chance of achieving competitive advantage by performing its value chain activities either more proficiently or at lower cost. C. is almost certainly going to have a longer and more profitable value chain. D. usually has strong proficiencies in activity-based costing and benchmarking. E. usually has the fewest primary activities and the lowest costs in the industry. 85. Properly managing the value chain activities in comparison to the rivals A. is one of the most dependable ways a company can build a competitive advantag e over rivals. B. allows a company to avoid the impact of the five competitive forces. C. is one of the best ways for a company to avoid being impacted by the industrys d riving D. allows a company to move into a higher strategic E. helps neutralize external threats to a companys future business prospects. 86. For a company to translate its performance of value chain activities into competi tive advantage, it must A. develop core competencies and maybe a distinctive competence over rivals and th at are instrumental in helping it deliver attractive value to customers or else be mor e B. C. stry. E. have more competitive assets than competitive liabilities. 87. To build a competitive advantage by out-managing rivals in performing value ch ain activities, a company must A. position itself in the industrys more favorably situated strategic group. B. develop resources strengths that will enable it to pursue the industrys most attra ctive opportunities. C. develop core competencies and maybe a distinctive competence that rivals dont have or cant quite match and that are instrumental in helping it deliver attractive va lue to customers or else be more cost efficient in how it performs value chain activiti es such that it has a low-cost advantage. D. outsource all of its value chain activities to world-class vendors and suppliers. E. eliminate its resource weaknesses. 88. ise. A resource analysis cost efficient have have at in more how core least it performs three value distinctive chain than activities. rivals. competencies forces. group.

competencies.

D. have competencies that allow it to produce the highest quality product in the indu

A. is often based on cross-department combinations of intellectual capital and expert

B. uses a companys valuable and rare resource strengths and competitive capabiliti es ise. D. refers to a companys most efficiently executed value-chain activity. E. uses industry key success factors to provide a company with a core competence t hat rivals cannot effectively imitate. 89. A. s. C. concentrates on minimizing the costs associated with the design of a product or s ervice. D. deliberately develop valuable competencies and capabilities that add to a compan ys competitive power in the marketplace. E. focuses on working with forward channel allies to develop capabilities to outmatch the capabilities of rivals. 90. The value of doing competitive strength assessment is to focuses on exploiting a Value-creating companys best-executed operating activities strategy. to deliver value to customers that rivals have difficulty matching. C. is typically based on a stand-alone resource strength such as technological expert

B. is based upon efficient performance of the companys primary value chain activitie

A. determine how competitively powerful the companys core competencies are. B. learn if the companys market opportunities are better than those of its rivals. C. learn whether a company has a distinctive competence. D. learn how the company ranks relative to rivals on each of the important factors th at determine market success and ascertain whether the company has a net competit ive n rivals. 91. A. Doing determining a whether competitive a company strength has a assessment cost-effective value entails chain. advantage or bigger disadvantage vis--vis profits key rivals. than E. determine whether a companys resource strengths are sufficient to allow it to ear

B. ranking the company against major rivals on each of the important factors that de termine market success and ascertaining whether the company has a net competitiv e advantage or disadvantage versus major rivals. C. identifying a companys core competencies and distinctive competencies (if any). D. analyzing whether a company is well positioned to gain market share and be the i ndustrys profit leader. E. developing quantitative measures of a companys chances for future profitability.

92. Assigning a weight to each measure of competitive strength assessment is gener ally analytically superior because A. a weighted ranking identifies which competitive advantages are most powerful. B. an unweighted ranking doesnt discriminate between companies with high and low market ies. D. weighting each companys overall competitive strength by its percentage share of total industry profits produces a more accurate measure of its true competitive stren gth. E. all of the various measures of competitive strength are not equally important. 93. Competitive strength can be determined by assigning measures based on percei ved importance because A. it provides a more accurate assessment of the strength of competitive forces. B. it eliminates the bias introduced for those firms having large market shares. C. the different measures of competitive strength are unlikely to be equally importan t. D. the results provide a more reliable measure of what competitive moves rivals are likely to make next. E. weighting each companys overall competitive strength by the size of its market s hare produces a more accurate measure of its true competitive strength. 94. In a weighted competitive strength assessment, the sum of the weights should a dd A. B. C. D. E. None of these. 95. In a weighted competitive strength analysis, each strength measure is assigned a A. its weight percentage share of based total industry on revenues. advantage. up to 100%. 1.0. 10. 100. shares. C. it singles out which competitor has the most competitively potent core competenc

B. the importance of each competitive strength measure in building a sustainable co mpetitive marketplace. D. its percentage share of total industry profits. E. what it takes to provide better analytical balance between the companies with hig C. its perceived importance in determining a companys competitive success in the

h ratings and the companies with low ratings and thus get the sum of the weights to add up to 1.0. 96. A. B. C. D. A higher companys overall implied overall overall of weighted net strength rating does versus versus not signal rivals. rivals. advantage.

greater stronger weaker possession

competitive

advantage

competitiveness competitiveness competitive

E. None of these. 97. Calculating competitive strength ratings for a company and its rivals using the in dustrys most telling measures of competitive strength or weakness A. is a way of determining which competitor has the biggest overall competitive adv antage in the marketplace and which competitor is faced with the biggest overall co mpetitive oduct ic ts s. 98. tor Quantitative measures has of a companys the competitive strength fewest. and is the low-cost disadvantage. quality. groups. leader. B. is the most reliable indicator of which industry member has the highest overall pr C. is a powerful way of revealing which competitors are in the best and worst strateg D. is the most reliable indicator of which industry member has the lowest overall cos E. pinpoints which industry rivals are most insulated from the industrys driving force

A. signal which competitor has the most distinctive competencies and which competi B. provide useful indicators of how a company compares against key rivals, factor by factor and capability by capabilitythus indicating whether the company has a net o verall competitive advantage or disadvantage against each rival. C. reveal which competitors are in the best and worst strategic groups. D. show which industry rival has the best overall market opportunities and which co mpetitor has the poorest market opportunities. E. pinpoint which industry rival is subject to the least amount of competitive pressur es from the five competitive forces. 99. Which one of the following is an accurate interpretation of the scores that result from dvantage doing over a competitive companies with strength lower assessment? scores. A. High scores signal a strong competitive position and possession of a competitive a B. High scores indicate that a company is a power-user of best practices while low sc

ores

signal

minimal

or

ineffective

adoption

of

best

practices. value chain. rivals.

C. The company with over

the lowest

score has its

the lowest-cost

D. The company with the lowest score has the strongest net competitive advantage E. High scores indicate which rivals are most vulnerable to competitive attack. 100.Which one of the following is not something that can be learned from doing a co mpetitive key revamping e the makeup advantage of its it value strength assessment? rivals chain enjoys A. The factors on which a company is competitively strongest and weakest vis--vis B. Whether a company should correct its weaknesses by adopting best practices and C. Which of the rated companies is competitively strongest and what size competitiv D. Whether a company has a net competitive advantage or a net competitive disadv antage relative to key rivals (with the size of the advantage/disadvantage being indi cated by the differences among the companies competitive strength scores) E. Which rival company is competitively weakest and the areas where it is most vuln erable to competitive attack 101.Calculating competitive strength ratings for a company and comparing them aga inst o unprofitable mploying the strength ratings for its key competitors helps indicate A. which weaknesses and vulnerabilities of competitors the company might be able t attack strategic defensive years successfully. groups. strategies. ahead. B. which competitors are in profitable strategic groups and which competitors are in C. which competitors are employing offensive strategies and which competitors are e D. which competitors are likely to make money and which are likely to lose money in E. what the industrys key success factors are. 102.Identifying the strategic issues a company faces and compiling a worry list of problems and roadblocks is an important component of company situation analysis b ecause A. without a precise fix on what problems/issues a company confronts, managers ca nnot mpanys s are less know what the industrys and what value chain key success business activities to factors are. outlook. benchmark. B. the worry list sets the management agenda for taking actions to improve the co performance clear about C. without a precise fix on what problems/roadblocks a company confronts, manager

D. the worry list helps company managers clarify their thinking about how best to modify the companys value chain. E. these issues and obstacles must be cleared before management can focus clearly on what is the best strategy for the company to pursue. 103.Identifying the strategy-related issues and problems that company managers ne ed ompetitive es, and to address and resolve entails environment. competitiveness. A. drawing on what was learned from having analyzed the companys industry and c B. drawing on the evaluations of the companys own resources, internal circumstanc C. looking in on what challenges/obstacles/roadblocks the company has to overcome in order to be financially and competitively successful in the years ahead. D. developing a worry list of how to, whether to., and what to do about.. E. All of these. 104.Identifying the strategic issues and problems that merit front-burner managerial attention A. is accomplished in part by using the results of analyzing the companys external e nvironment to help come up with a worry list of how to, whether to., and w hat ormance to and do business about.. outlook. B. helps set managements agenda for taking actions to improve the companys perf C. is done in part by evaluating the companys own internal situationits resources and competitive positionto help come up with a worry list of how to, whether to., panys E. All of these. 105.Which of the following is not part of the task of identifying the strategic issues a nd A. B. problems Analyzing Evaluating the that the companys what merit own front-burner companys resources they managerial external and think competitive the attention? environment position faces and present what strategy to or to do modify about.. it. D. is done in part as a basis for drawing conclusions about whether to stick with com

C. Surveying a companys board members, managers, select employees, and key in vestors E. Assessing what challenges the company has to overcome in order to be financially and competitively successful in the years ahead regarding strategic issues company D. Developing a worry list of how to, whether to., and what to do about..

106.Which of the following is not accurate as concerns the task of identifying the str ategic issues and problems that merit front-burner managerial attention? A. It entails drawing upon the results and conclusions from analyzing the companys external wn about.. D. Identifying the strategic issues and problems that the company faces is the first t hing that company managers need to do before starting to analyze the companys in ternal and external environment. E. Developing a list of what issues and problems that managements need to address (and to resolve) should always precede deciding upon a strategy and what actions to take to improve the companys position and prospects. resources and competitive environment. position. B. It entails drawing on the results and conclusions from evaluating the companys o C. It entails developing a worry list of how to, whether to., and what to do

Q-1 What are the different Heads of Income according to Income Tax Act ?
There are 5 different Income heads. The Income under each head will be charged to Income Tax. Thus the tax will be computed on the basis of total income. 1. 2. 3. 4. Salaries including Allowances, value of Perquisites, Profits in lieu of salary and Pensions. Income from House Property whether residential, commercial or let out. Profits & Gains of Business / Profession. Capital Gains - Short & Long Term.

Income from other Sources including Bank Interest, Interest on Securities, Lotteries, Cross word Puzzles, Races, Games, Gift received on or after 1-9-2004 in excess of Rs. 50,000 in cash etc. from unrelated persons.

Q-2 Who All Have To Pay Income-Tax ?

a. Individual including Non-resident, Hindu Undivided Families (HUF), Bodies of Individuals (BOI), Association of Persons (AOP) & Artificial Juridical Persons ( such as Deities of Temples) having taxable income exceeding Rs.1,60,000 (Rs. 1,90,000 for Resident Women assesses below 65 Years and Rs. 2,40,000 for Resident Senior Citizens for Asssessment Year 2011-2012) Societies & Charitable / Religious Trusts having taxable income exceeding Rs.1,60,000. All Partnership Firms irrespective of their Income. Co-Op. Societies irrespective of their Income. All Companies irrespective of Income. Local Authorities like, Panchayats, Municipal Corporation etc.

b. c. d. e. f.

Q-3 How Income-Tax Will Be Charged By The Income Tax Department ?

Income Tax is charged on 5 different heads. Aggregate of taxable income under each head of income is known as Gross Total Income and

so Taxable Income = Gross Total Income - Allowance Deductions. Deduction of Expenditure : In computing income under various heads, deduction is allowed towards expenditure incurred in relation to earning the income. However, no deduction shall be allowed in respect of expenditure incurred in relation to incomes exempt from tax. Computation of Gross Total Income : It is the aggregate of incomes under various heads of income calculated after set-off of unabsorbed depreciation/loss, carried forward from earlier years. Set-off and Carry Forward : Set-off means adjustment of certain losses against the income under other sources / heads. Carry forward implies carrying forward of certain losses for set-off in subsequent years. Total / Taxable Income : Total / Taxable Income is computed after deducting permissible deductions under section 80A to 80U, from the Gross Total Income. Where the Gross Total Income of the Assesses includes Short-Term Capital Gains from transfer of equity shares / units of an equity oriented mutual fund subject to Securities Transaction Tax or any Long-Term Capital Gains, then no deduction shall be allowed against such Capital Gains.
On this Taxable Income, Income Tax will be calculated as per the applicable rates

Q-4 Meaning of Assessment Year & Previous Year :

Assessment Year : [ Sec. 2 (9)]

Assessment Year means the period of 12 months commencing on the 1st day of April every year. In India, the Govt. maintains its accounts for a period of 12 months i.e. 1st April to 31st March every year. As such it is known as Financial Year. The Income Tax department has also selected same year for its Assessment procedure. The Assessment Year is the Financial Year of the Govt. of India during which income a person relating to the relevant previous year is assessed to tax. Every person who is liable to pay tax under this Act, files Return of Income by prescribed dates. These Returns are processed by the Income Tax Department Officials and Officers. This processing is called Assessment. Under this Income Returned by the assessee is checked and verified. Tax is calculated and compared with the amount paid and assessment order is issued. The year in which whole of this process is under taken is called Assessment Year. At present the Assessment Year 2010-2011 ( 1-4-2010 to 31-3-2011) is going on. Example- Assessment year 2008-09 which will commence on April 1, 2010, will end on March 31, 2011.

Previous Year : [ Sec. 3 ]

As the word Previous means coming before , hence it can be simply said that the Previous Year is the Financial Year preceding the Assessment Year e.g. for Assessment Year 2008-2009 the Previous Year should be the Financial Year ending 31st March 2008. Previous Year in case of a continuing Business : It is the Financial Year preceding the Assessment Year. As such for the assessment year 2008-2009, the Previous Year for continuing business is 2007-2008 i.e. 1-4-2007 to 31-32008. Previous Year in case of newly set up Business : The Previous Year in case of newly started business shall be the period between commencement of business and 31st March next following . e.g. in case of a newly started business commencing its operations on Diwali 2007, the Previous Year in relation to Assessment Year 2008-2009. shall be the period between Diwali 2007 to 31 March 2008. Previous Year in case of newly created source of income : In such case the Previous Year shall be the period between the day on which such source comes existence and 31st March next following. Sl. No. 1. 2. 3. 4. 5. 6. Income Cash Credit Unexplained Investment Unexplained Bullion, Cash, Jewelley Partly explained Investment Unexplained Expenditure Payment of Hundi, Money in Cash Section Previous Year [68] [69] [69A] [69B] [69C] [69D] Financial Year in which found to be entered. Financial Year preceding the Assessment Year Financial Year in which found in the possession of the assessee. Financial Year in which Investment was made. Financial Year in which expenditure was incurred. Financial Year in which such payment was made.

Q-5. Income earned against the following Investments are totally Tax-FREE !
1.

2.
3.

4.
5.

Dividend received on Shares, Equity Oriented Funds of UTI & other Mutual Funds. Interest received on 6.5%,7%,8%,8.5% & 9% RBI Tax Free Relief Bonds. Interest on PPF/GPF/EPF Any amount received from Life Insurance against insurance policies (except on Jeevan Aadhar, Keyman Insurance, Jeevan Dhara, Jeevan Akshay, New Jeevan Dhara & New Jeevan Akshay & similar other policies of Private Life Insurers).

However, from F/Y 2003-2004 Premiums exceeding 20% of the SA, in any year, will not enjoy Tax Free Return u/s 10 (10 D) (except on death). 6. Long Term Capital Gain earned on Sale of listed securities (Shares)

A person is a being, such as a human, that has certain capacities or attributes constituting personhood, which in turn is defined differently by different authors in different disciplines, and by different cultures in different times and places. In ancient Rome, the word "persona" (Latin) or "prosopon" (: Greek) originally referred to the masks worn by actors on stage. The various [1] masks represented the various "personae" in the stage play.

As`sess`ee

n. 1. One who is assessed

Is called assesse

income
Definitions (4)
1. The flow of cash or cash-equivalents received from work (wage or salary), capital (interest or profit), or land (rent). 2. Accounting: (1) An excess of revenue over expenses for an accounting period. Also called earnings or gross profit. (2) An amount by which total assets increase in an accounting period. 3. Economics: Consumption that, at the end of a period, will leave an individual with the same amount of goods (and the expectations of future goods) as at the beginning of that period. Therefore, income means the maximum amount an individual can spend during a period without being any worse off. Income (and not the GDP) is the engine that drives an economy because only it can create demand. 4. Law: Money or other forms of payment (received periodically or regularly) from commerce, employment, endowment, investment, royalties, etc.

3.winning strategy
In set theory, a branch of mathematics, determinacy is the study of under what circumstances one or the other player of a game must have.

4 key success factors

Definition
The combination of important facts that is required in order to accomplish one or more desirable business goals. For example, one of the key success factors in promoting animal food products might be to advertise them in a way that appeals to those consumers who love animals

Definition of 'Backward Integration'

A form of vertical integration that involves the purchase of suppliers. Companies will pursue backward integration when it will result in improved efficiency and cost savings. For example, backward integration might cut transportation costs, improve profit margins and make the firm more competitive.

By way of contrast, forward integration is a type of vertical integration that involves the purchase or control of distributors.

backward integration
Definition
Type of vertical integration in which a consumer of raw materials acquires its suppliers, or sets up its own facilities to ensure a more reliable or costeffective supply of inputs.

strategic vision
Definition
Ideas for the direction and activities of business development. Generally included in a document or statement so all company managers can share the same vision for the company and make decisions according to the shared principles and company mission.

Big Business

SME

Sole Trader

Strategic group mapping A mechanism for understanding the other players that operate in your field
The big idea
Strategic group mapping is a technique for looking at your position in your sector, field or market. Hunt coined the term strategic group in 1972 when he noticed sub -groups of businesses with similar characteristics in the same market. Michael Porter then expanded the concept in the 1980s. There are a number of benefits to strategic group mapping: It can help you identify who your direct and indirect competitors (or possible partners) are It can illustrate how easy it might be to move from one strategic group to another

It may help identify future opportunities or strategic problems It ensures you take your customers or beneficiaries views into account when developing or assessing your strategy

sustainable competitive advantage

Competitive advantage is a position of a company in a competitive landscape that allows the company earning return on investments higher...

Sustainable Competitive Advantage

Competitive advantage is gained when a firm acquires attributes that allow it to perform at a higher level than others in the same industry.
Vertical integration describes a company's control over several or all of the production and/or distribution steps involved in the creation of its product or service.

strategic intent
Definition
A readily grasped declaration of the course that the management of a business plans on taking the company in over some future time frame. The strategic intent of a business needs to be easily understood by every member of the firm so that all staff can be working toward a consistent overall goal

Which of the following are common shortcomings of company vision statements?

Answer:

They do not provide direction to decision makers when faced with product/market choices. B. They are not motivational. C. They are too broad and do not rule out any opportunity management might wish to pursue. D. They are externally focused instead of having an internal focus.

Strategic Management Process - Meaning, Steps and Components

The strategic management process means defining the organizations strategy. It is also defined as the process by which managers make a choice of a set of strategies for the organization that will enable it to achieve better performance. Strategic management is a continuous process that appraises the business and industries in which the organization is involved; appraises its competitors; and fixes goals to meet all the present and future competitors and then reassesses each strategy. Strategic management process has following four steps: 1. Environmental Scanning- Environmental scanning refers to a process of collecting, scrutinizing and providing information for strategic purposes. It helps in analyzing the internal and external factors influencing an organization. After executing the environmental analysis process, management should evaluate it on a continuous basis and strive to improve it.

2.

Strategy Formulation- Strategy formulation is the process of deciding best course of action for accomplishing organizational objectives and hence achieving organizational purpose. After conducting environment scanning, managers formulate corporate business and functional strategies.

3.

Strategy Implementation- Strategy implementation implies making the strategy work as intended or putting the organizations chosen strategy into action. Strategy implementation includes designing the organizations structure, distributing resources, developing decision making process, and managing human resources.

4.

Strategy Evaluation- Strategy evaluation is the final step of strategy management process. The key strategy evaluation activit are: appraising internal and external factors that are the root of present strategies, measuring performance, and taking remedia corrective actions. Evaluation makes sure that the organizational strategy as well as its implementation meets the organization objectives.

These components are steps that are carried, in chronological order, when creating a new strategic management plan. Present businesses that have already created a strategic management plan will revert to these steps as per the situations requirement, so as to make essential changes.

Components of Strategic Management Process Strategic management is an ongoing process. Therefore, it must be realized that each component interacts with the other components and that this interaction often happens in chorus.

Strategic Management Process - Meaning, Steps and Components

The strategic management process means defining the organizations strategy. It is also defined as the process by which managers make a choice of a set of strategies for the organization that will enable it to achieve better performance. Strategic management is a continuous process that appraises the business and industries in which the organization is involved; appraises its competitors; and fixes goals to meet all the present and future competitors and then reassesses each strategy. Strategic management process has following four steps: 1. Environmental Scanning- Environmental scanning refers to a process of collecting, scrutinizing and providing information for strategic purposes. It helps in analyzing the internal and external factors influencing an organization. After executing the environmental analysis process, management should evaluate it on a continuous basis and strive to improve it.

2.

Strategy Formulation- Strategy formulation is the process of deciding best course of action for accomplishing organizational objectives and hence achieving organizational purpose. After conducting environment scanning, managers formulate corporate business and functional strategies.

3.

Strategy Implementation- Strategy implementation implies making the strategy work as intended or putting the organizations chosen strategy into action. Strategy implementation includes designing the organizations structure, distributing resources, developing decision making process, and managing human resources.

4.

Strategy Evaluation- Strategy evaluation is the final step of strategy management process. The key strategy evaluation activit are: appraising internal and external factors that are the root of present strategies, measuring performance, and taking remedia corrective actions. Evaluation makes sure that the organizational strategy as well as its implementation meets the organization objectives.

These components are steps that are carried, in chronological order, when creating a new strategic management plan. Present businesses that have already created a strategic management plan will revert to these steps as per the situations requirement, so as to make essential changes.

Components of Strategic Management Process Strategic management is an ongoing process. Therefore, it must be realized that each component interacts with the other components and that this interaction often happens in chorus.

SUCCESS FACTORS

Some managers use the phrase "key success factors" to refer to those competitive factors that are most important to the industry in question. Some managers prefer to get at the same issues by asking: What makes the difference between success and failure in this business? Unfortunately, this type of assessment often becomes a simple exercise in developing lists. Key success factors are those few critical or strategic factors that mean the difference between success and failure. Insightful conclusions are preferred over long lists. Key success factors will vary from industry to industry, but within an industry each factor becomes a challenge to all firms competing for the same market.

Key success factors generally include exceptional management of several of the following:

Product design Market segmentation Distribution ad promotion Pricing Financing Securing of key personnel Research and development Production Servicing Maintenance of quality/value Securing key suppliers

Strategy, Strategic Advantages And Competing On Business Capabilities Part 1: The External Environment and Strategy Formulation - By Matt Kermode
Futures Trading And The Transfer Of Risk - By Matt Kermode Options Trading And How They Can Reduce Risk - By Matt Kermode

What is strategy and why is it important?

Johnson and Scholes (2006) define strategy as the direction and scope of an organization over the longterm: which achieves advantage for the organization through its configuration of resources within a challengingenvironment, to meet the needs of markets and fulfill stakeholderexpectations. Deconstructing the sentence provides insight into the meaning of this definition. 1. Strategy selects the direction of the organization. In other words, strategy plots the course for the future of the business. 2. Strategy selects the markets in which the business will compete and the activities it performs (scope). 3. Strategy focuses on how the business will perform better than the competition (advantage). 4. Strategy determines what resources (skills, assets, finance, relationships, technical competence, facilities, people) are required to compete in the market (resources).

5. Strategy manages the external factors that affect the business (environment). 6. Finally, strategy is a guide used to meet the needs of those who have a vested interest in the organization such as investors, shareholders, employees, suppliers, and the community (stakeholder). Why is strategy important? The business environment can be thought of as a chess tournament. You might be able to win a few games without having a strategy. However, there are grandmasters in the tournament, just as there are strong players in the marketplace. In order to compete and win, you need a good strategy. Similar to chess, your strategy will depend on your competitors moves. Organizations rely on the judgments of employees to perform activities that benefit the company. Strategy provides a framework that guides the decision-making process. An organization that does not singularly focus on aligning decisions with strategy will eventually be outcompeted by one that does. The lack of focus results in inefficiencies, lower profits, and higher costs. Formulating a strategy Insightful analysis of a companys external environment is a prerequisite for crafting a strategy that is an excellent fit with the companys situation, is capable of building competitive advantage, and holds good prospect for boosting company performance the three criteria of a winning strategy (Gamble, 2010). Analysis of a firm (or potential firm) revolves around seven questions. What are the industrys dominant economic features? Answering this question requires considering eleven factors: market size and growth rate, number of rivals, geography of competitive rivalry, number of buyers, degree of product differentiation, speed of product innovation, supply and demand conditions, pace of technological change, vertical integration, economies of scale, and learning curve effects. What kinds of competitive forces are industry members facing, and how strong is each force? The standard analytical framework used to answer this question is the five forces model of competition.

The answers to these questions will help determine the attractiveness of new markets and what strategies to employ in existing ones. For example, if I am building a time machine in my basement I will need a flux capacitor (obviously). However, if there is only one company that supplies this product; they have a strong bargaining position. Suppliers hold a strong position when: (1) suppliers are concentrated, (2) too few goods are chased by too many buyers, (3) a supplier's goods are unique or highly differentiated with few or no substitutes, (4) suppliers are forward integrated, and/or (5) high costs are involved in switching from one supplier to another. Suppliers in these positions can demand a premium for their products. Upon completion of the time machine, if Doc Brown and Marty McFly are the only people interested in my time machine, they have a very strong bargaining position. More specifically, buyers tend to have power when: (1) the buyers are concentrated or organized, (2) their purchases represent a large part of the supplier's revenue, (3) their purchases represent a large part of their own costs or, (4) there are too many suppliers chasing too few buyers. The threat of substitute products is another consideration. One consideration is how easy is it to replicate the product. If Bill and Ted can build a time machine to go on an excellent adventure, my product must easy to replicate. Furthermore, how will partial substitutes affect revenues? If I am using my product to sell time tourism, will flights to the Orion Nebula affect sales? One way to protect yourself from substitutes is branding. There are many MP3 players on the market, but the iPod dominates the market share. Finally, one must consider the treat of new entrants. The main consideration in this segment of the analysis is determining the barriers to entry. A barrier to entry in the time travel business is a throughout understanding of string theory and quantum gravity. More common barriers to entry are: (1) heavy advertising expenditures to

get a foothold in the market, (2) economies of scale, necessitating heavy investment in large plants to achieve competitive pricing, (3) restricted access to distribution channels, (4) well established brands, and/or (5) fierce competition. What forces are driving industry change and what impact will these changes have on competitive intensity and industry profitability? The most powerful change agents are driving forces. The most common driving forces are: changes in an industrys long-term growth rate, globalization, new internet capabilities and applications, product innovation, technological change and manufacturing process innovation, marketing innovation, entry or exit of a major firm, buyer preference shifting towards product customization, reductions in industry uncertainty and business risk, government policy change, and evolving societal concerns, attitudes, and lifestyles (Gamble, 2010). It is imperative to grasp how the driving forces are interacting. Specifically, are these forces conjointly creating an environment that is increasing demand, competition, and/or profits or are they decreasing these factors? What market positions do industry rivals occupy who is strongly positioned and who is not? The best practice for answering this question is to use the strategic group mapping technique. This technique compares the market positioning of different firms, or strategic groups. It is most useful when there are numerous firms competing in an industry and in-depth analysis is not pragmatic. It is important to define the x and y-axis in terms of value-propositions. As a rule of thumb, the closer the firms are on the map, the more competitive the rivalry. A gap in the map may be a market to exploit.

What strategic moves are rivals likely to make? Answering this question this question requires gather business intelligence. It is important to monitor competitors press releases and financial statements. In addition, it is prudent to analyze competitors

strengths and weaknesses and determine which firms are likely to increase or decrease their market share. Evaluation of these factors requires analyzing why the competition is poised to do better or worse than rivals. Are they driving forces affecting a strategic grouping? Has the competitions strategy resulted in competitive advantages or disadvantages? Does the competition have the resources and adaptability to compete in the changing environment? Predicting the competitions actions requires careful analysis. However, there are two principle components that increase the probability of accurate predictions. The first is the rivals financial position. Financially sound organizations have the resources to explore a greater number of options. Financially weak organizations may be prone to try something drastic. The second component is incentive. Which organizations have strong incentive to expand to new geographic regions, acquire competitors, or move to new markets? In other words, how much growth are investors requiring? What are the key factors for future competitive success? An industrys key success factors (KSFs) are those competitive factors that most affect industry members ability to proper in the marketplace (Gamble, 2010). KSFs are of primary importance to all members within the industry. For example, KSFs for the Smartphone industry are design, and production costs. Poor design and high production costs will inevitably lead to losses. There are three questions that can generally determine an industrys KSFs. What are the criterion buyers use to choose between competing sellers? What resources and competitive capabilities are essential for success in the industry? What factors will put organizations at a competitive disadvantage? It is rare that there are more than 5 or 6 KSFs for an industry. KSFs and sound strategy are inextricably linked. Strategy should focus on being good at all the industrys KSFs and great at 1 or 2. Companies that are better at distinct KSF than their rivals almost always enjoy higher market share and a competitive advantage. Does the outlook for the industry offer the company a good opportunity to earn attractive profits? The final question requires integrating the information from all the preceding analyses and formulating an informed opinion. However, there are certain questions that are more important than others. For example, does the industry have growth potential? Are there driving forces that are increasing or decreasing industry profitability? These 7 questions are a necessary prerequisite to the formation of a sound strategy that will result in competitive advantages. Because the external environment is dynamic, constant re-evaluation of these questions is required to be assured your strategy has not become obsolete. The pinnacle of sound strategy is the development of sustainable competitive advantages. Competitive advantages and competing on business capabilities is discusses in article 2.