Business Strategy I
What are the three major business strategies?
Cost-leadership, differentiation, and blue ocean strategies
How is business strategy different from corporate strategy?
Corporate strategy deals with where (which industry/ country) to compete in.
Innovation that targets new markets with existing technologies is known as disruptive innovation.
Explain whether the statement is true or false.
False.
What is the type of integration occurs when a firm becomes its distributors or retailers.
Forward integration
What are the four types of diversification?
Single business, dominant business, related diversification, and unrelated diversification
Cost of input factors, economies of scale, learning curves, and experience curve.
How do firms pursue differentiation strategies (i.e. the three value drivers)?
Product features, customer services, and complements.
In an industry lifecycle, what are the five different stages?
Introduction, growth, shakeout, maturity, and decline
If a firm's internal cost is high than external cost of doing an economic activity, what should the firm do?
No vertical integration
If a firm earns 75 percent of its revenues from a single product line or market, what diversification does it have?
Dominant business
How do firms pursue a blue-ocean strategy?
Value innovation
What does it mean when the firm is able to achieve an 80 percent learning curve?
The new per-unit cost will reduce by 20% if the cumulative output is doubled.
In the crossing-the-chasm framework, who are the major different customer groups entering different stages?
Tech enthusiasts, early adopters, early majority, late majority, and laggards.
Which theory argues that firms vertically integrate to minimize transaction costs of dealing with suppliers and buyers?
Transaction cost economics
When Disney leverages its characters across movies, theme parks, and merchandise, what type of diversification does it have?
Related diversification
How do firms lower costs with economies of scale? How does it work?
Firms producing a larger quantity of the same product can enjoy lower per-unit cost.
When a firm minimizes cost, what business strategy is the firm pursuing?
Cost leadership strategy
How is the industry lifecycle framework different from the crossing-the-chasm framework?
The industry lifecycle focuses on a smooth S-shaped transition from one stage to another
The crossing-the-chasm framework focuses on the gaps between stages, and the largest gap is between the second and third stages.
What do the "make" and "buy" in the “make-or-buy” decision mean?
Make = do it yourself = Vertical integration
Buy = buy from market = No vertical integration
On average, does related diversification perform better than unrelated diversification? Why?
Better, diversification premium
How are economies of scale and learning curve effects different?
Economies of scale is about bigger = cheaper.
Learning curve effects is about older = cheaper.
How are blue ocean and red ocean strategies different?
Blue ocean strategies are about competing in untapped market and creating additional demand.
What are the four types of innovations? Give examples
Incremental, radical, architectural, and disruptive
Name one major advantage and one major disadvantage of using the market mechanism.
Advantage = efficient
Disadvantage = opportunism
Which type of diversification is traded at a discount? Why?
Unrelated diversification, diversification discount