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MIE 480_Exam 1 Study Guide

MIE 480_Exam 1 Study Guide - MIE 480 Review Sheet Exam I...

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MIE 480 Review Sheet Exam I – Amanda Purefoy Rothaermel Chapter 1 : Only the questions below will be covered on the exam. 1. How does one know a firm has a competitive advantage? What do we mean when we say a firm has a sustainable competitive advantage? Superior value is created in what two ways? a. Competitive Advantage – superior performance telative to other competitiors in the same industry or the industry average. b. Sustainable Comp. Advantage – the ability to outperform rivals ot the industry average over time. c. Superior Value – The greater the difference between perceived value and cost, the greater the economic value the firm offers, and thus the stronger its strategic position. Companies that create higher value per unit cost have a competitive advantage. V-P = Consumer Surplus and P- C = Profit Margin. A competitive price or acceptable value at a lower price. 2. Strategy describes the managers’ quest for gaining and sustaining a competitive advantage. What are key attributes of strategy as it is established by top managers. What common activities in firms are not considered strategy defined as the firm’s overall quest for competitive advantage? a. Key Attributes of Strategy – Manager’s theory and assumptions about how to gain and sustain a competitive advantage based on their knowledge about how the business world works (their knowledge of their firm’s resources and capabilities, those of their collaborators and competitors, and the external environment). Being different (uniqueness) from your rivals. It is about creating value while containing cost. It is about deciding what to do and what not to do . It combines a set of activities to stake out a unique position . It requires long-term commitments that are often not easily reversible . It increases the chances of gaining and sustaining competitive advantage. b. Common Activities Not Considered Strategy – Strategic Initiatives, Operational Strategies, Tactical Maneuvers, and Benchmarking. 3. What are the three levels of management and the strategic role assigned to each? a. Corporate Executives – responsible for providing answers to the question of where to compete (in terms of industries, markets, and geographies), and how to create synergies among different business units. b. Strategic Business Unit (General) Managers – they must answer the strategic questions of how to compete in order to achieve superior performance. They must manage and align all value chain activities for competitive advantage. An SBU is a standalone division of a larger conglomerate, with its own profit and loss responsibility. c. Functional Managers (Unit Part) – are responsible for implementing business strategies within a single value chain activity. Are closer to the final products, services, and customers they are not only able to provide important information to the General Managers aiding them in formulating better business strategy, but sometimes also come up with strategic initiatives that may influence the direction of the company.
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