Competitive Advantage
What are the two main types of competitive advantage?
Cost leadership & differentiation.
What are the three key decisions in corporate strategy?
Industry value chain, product diversification, and geography.
What does Porter's 5 Forces framework analyse?
Industry profitability.
What does PESTEL stand for?
Political, Economic, Social, Technological, Environmental, and Legal.
What are the four main types of innovation?
Incremental, radical, disruptive, and architectural.
Which company is famous for its cost-leadership strategy in retail?
Walmart.
What is it called when a firm expands into different stages of its supply chain, closer to the customer?
What force examines how easy it is for new companies to enter an industry?
Threat of new entrants.
A government increasing corporate taxes would fall under which PESTEL category?
Political (taxation policy).
What type of innovation improves an existing product rather than creating something entirely new?
Incremental.
What is the name of the effect where a product gains more value as more people use it?
Positive network effect.
Disney acquiring Pixar is an example of what type of integration?
Horizontal integration.
In what type of industry is the bargaining power of suppliers HIGH?
One with few suppliers, e.g., semiconductor industry, aerospace industry, oil & gas industry, pharmaceutical industry...
How does inflation affect businesses (regarding costs, consumer purchasing power)
Increases costs, reduces consumer purchasing power.
What two types of innovation create entirely new markets?
Radical and architectural.
What strategy combines cost-leadership and differentiation?
Blue Ocean strategy.
What corporate strategy involves owning multiple businesses that are similar to each other?
Related diversification.
What does a high threat of substitutes do to an industry's profitability? Why?
Lowers profitability because customers have alternatives.
What social factor has pushed many companies to offer remote work options?
Work-life balance, changing employee expectations (strongly affected by Covid-19 as well).
What two types of innovation make use of existing technology to innovate?
Incremental and architectural.
What framework evaluates firm resources' ability to sustain a competitive advantage over time?
VRIO framework.
What is it called when a company owns businesses in completely unrelated industries? How are those companies named?
Unrelated diversification. A conglomerate.
Which force (of the 5) is strongest in the airline industry, making it hard to be profitable?
Rivalry among existing competitors: intense price wars, low differentiation.
What is an example of an environmental factor that affects businesses?
Climate change regulations, sustainability preassures, carboon footprint reduction, etc.
What is known as "reverse innovation"?
An innovation that was developed for emerging economies before being introduced in developed economies (e.g., GE's portable ultrasound machines).