WPC 480 MIDTERM EXAM QUESTIONS
AND ANSWERS
Strategic iiCompetitiveness ii- iiAnswers ii-achieved iiwhen iia iifirm iisuccessfully iiformulates
iiand iiimplements iia iivalue-creating iistrategy
Strategy ii- iiAnswers ii-integrated iiand iicoordinated iiset iiof iicommitments iiand iiactions
iidesigned iito iiexploit iicore iicompetencies iiand iigain iia iicompetitive iiadvantage
Competitive iiAdvantage ii- iiAnswers ii-when iiit iiimplements iia iistrategy iithat iicreates
iisuperior iivalue iifor iicustomers iiand iicompetitors iiare iiunable iito iiduplicate iior iifind iitoo
iicostly iito iitry iito iiimitate.
Above iiaverage iireturns ii- iiAnswers ii-returns iiin iiexcess iiof iiwhat iian iiinvestor iiexpects
iito iiearn iifrom iiother iiinvestments iiwith iia iisimilar iiamount iiof iirisk
Risk ii- iiAnswers ii-investors iiuncertainty iiabout iithe iieconomic iigains iior iilosses iithat iiwill
iiresult iifrom iia iiparticular iiinvestment
Average iireturns ii- iiAnswers ii-returns iiequal iito iithose iian iiinvestor iiexpects iito iiearn
iifrom iiother iiinvestments iiwith iia iisimilar iiamount iiof iirisk
Strategic iiManagement iiProcess ii- iiAnswers ii-full iiset iiof iicommitment, iidecisions, iiand
iiactions iirequired iifor iia iifirm iito iiachieve iistrategic iicompetitiveness iiand iiearn iiabove-
average iireturns
first iistep iiis iito iiANALYZE ii(external iiand iiinternal iiresources, iicapabilities, iicore
iicompetencies), iinext iiSTRATEGIZE ii(formulation iiand iiimplementation), iithen iitake
iiaction iito iienact iistrategy iito iihave iigood iiPERFORMANCE
Todays iicompetitive iimarkets: ii- iiAnswers ii-1. iiThe iiglobal iieconomy
2. iiGlobalization
3. iiRapid iitechnological iichange
4. iiIncreasing iiimportance iiof iiknowledge iiand iipeople
Hypercompetition ii- iiAnswers ii--A iiterm iioften iiused iito iicapture iithe iirealities iiof iithe
iicompetitive iilandscape. ii
-Emergence iiof iiGLOBAL iiECONOMY iiand iiTECHNOLOGY ii(rapid iichange) iiare iitwo
iiprimary iidrivers iiof iihyper-competitive iienvironments iiand iinature iiof iitodays
iicompetitive iilandscape
,Other iistrategic iioptions:
-Use iiof ii
price-quality iipositioning iito iibuild iimarket iipresence
-Creation iiof iinew iiknow-how iiand ii
use iiof iifirst-mover iiadvantage
-Protection iior iiinvasion iiof iiestablished iigeographic iior iiproduct iimarkets
The iiGlobal iicompetitive iilandscape ii- iiAnswers ii-Increasing: ii
-Market iivolatility iiand iiinstability iidue iito ii
the iirapid iipace iiof iichange iiin iimarkets
-Globalized iiflow iiof iifinancial iicapital
-Strategic iiand iioperational iicomplexity ii
of iiglobal-scale iicompetition ii
-Need iifor iiflexibility, iispeed, iiinnovation, ii
and iiintegration iiin iithe iiuse iiof iitechnology
-Rising iiproduct iiquality iistandards
Decreasing: ii
-Time iifor iiadapting iito iichange
-Traditional iisources iiof iicompetitive iiadvantage
-Traditional iimanagerial iimindset
Technology iiand iiTechnological iiChanges ii- iiAnswers ii-Technology iitrends iiimpacting
iithe iiglobal iicompetitive iienvironment
-Increasing iirate iiof iitechnology iidiffusion iiand iithe iiemergence ii
of iidisruptive iitechnologies
-The iiinformation iiage: iiInternet iiand iithe iiglobal iiproliferation iiof iilow-cost iicomputing
iipower
-Increasing iiknowledge iiintensity ii
as iian iiintangible iisource iiof iicompetitive iiadvantage
In iiorder iito iicope iiwith iinew iimarketplace... ii- iiAnswers ii-Strategic iiFlexibility
-coping iiwith iithe iiuncertainty iiand iirisks iiof iihypercompetitive iienvironments.
-requires iicontinuous iilearning iiand iiapplying iithe iinew iiand iiupdated iiskills iisets iiand
iicompetencies iito iithe iifirm's iicompetitive iiadvantage.
--must iiovercome iibuilt-up iiorganizational iiinertia.
What iiis iithe iimarketplace iilike iifor iitoday's iifirms? ii- iiAnswers ii-•A iipiece iiof iiit iihas
iimoved iionline
•Globalization, iifirms iiwere iicompeting iiwith iilocal iifirms, iinow iiyou're iicompeting iiwith
iinational iifirms ii
•Omni-channel
•More iiregulations iitrying iito iihold iiCEO's iimore iiaccountable ii
•Consumers iiare iimore iidemanding iibecause iithere iiare iiso iimany iiother iioptions iiso
iithey iiwant iibetter iiquality iifor iicheaper iiprice ii
, •Pressure iito iiinnovate ii
-Hypercompetition
Where iido iifirm iiprofits iicome iifrom? ii- iiAnswers ii-o iiSales iirevenue, iibrand iirecognition
o iiFirms iithat iihave iisomething iivaluable iiinternally iimake iia iilot iiof iimoney ii(resources,
iicapabilities) ii
o iiThe iinature iiof iithe iiindustry ii(some iijust iipicked iian iiindustry iithat iijust iiisn't iivery
iiprofitable) ii
o iiFirm iiperformance iicomes iifrom
♣ ii1. iiIndustry ii(I/O, iiPorters ii5 iiForces)
♣ ii2. iiFirm ii(e.g., iiResource-Based iiModel)
Can iiwe iimodel iithis? ii- iiAnswers ii-o iiYes, iithe iiI/O iiModel ii= iiindustry iibecomes
iihomogeneous
The iiI/O iiModel iiof iiAbove iiAverage iiReturns ii- iiAnswers ii-Model iion iipg. ii15
The iiExternal iiEnvironment ii--> iiAn iiAttractive iiIndustry ii--> iiStrategy iiFormulation ii-->
iiAssets iiand iiSkills ii--> iiStrategy iiImplementation ii--> iiSuperior iiReturns
The iiexternal iienvironment ii- iiAnswers ii--The iiexternal iienvironment iiimposes iipressures
iiand iiconstraints iithat iidetermine iistrategic iichoices
--Similarity iiin iiresources iicauses iicompetitors iito iipursue iisimilar iistrategies
--Resource iidifferences iiamong iicompetitors iiare iishort-lived iidue iito iiresource iimobility
iiacross iifirms
-Above iiaverage iiperformance iiwill iibe iicompeted iiaway iiquickly
--Industry iiattractiveness ii(average iiindustry iireturns) iiis iiwhat iimatters
Resources ii- iiAnswers ii-inputs iiinto iia iifirm's iiproduction iiprocess, iisuch iias iicapital
iiequipment, iithe iiskills iiof iiindividual iiemployees, iipatents, iifinances, iiand iitalented
iimanagers.
Capability ii- iiAnswers ii-capacity iifor iia iiset iiof iiresources iito iiperform iia iitask iior iian
iiactivity iiin iian iiintegrative iimanner
Core iicompetencies ii- iiAnswers ii-capabilities iithat iiserve iias iia iisource iiof iicompetitive
iiadvantage iifor iia iifirm iiover iiits iirivals
Porters iifive iiforces iimodel ii- iiAnswers ii-Industry iiRivalry iiis iiin iithe iimiddle iisurrounded
iiby: iibuyers, iisuppliers, iisubstitutes, iipotential iientrants
-Industry iiprofitability iiis iia iifunction iiof iiinteractions iiamong iithe iifive iiforces.
-Industry iiattractiveness iiis iipotential iifor iiearning iiabove-average iireturns iiby
--Producing iistandardized iigoods iior iiservices iiat iicosts iibelow iicompetitor iicosts ii(cost
iileadership).
AND ANSWERS
Strategic iiCompetitiveness ii- iiAnswers ii-achieved iiwhen iia iifirm iisuccessfully iiformulates
iiand iiimplements iia iivalue-creating iistrategy
Strategy ii- iiAnswers ii-integrated iiand iicoordinated iiset iiof iicommitments iiand iiactions
iidesigned iito iiexploit iicore iicompetencies iiand iigain iia iicompetitive iiadvantage
Competitive iiAdvantage ii- iiAnswers ii-when iiit iiimplements iia iistrategy iithat iicreates
iisuperior iivalue iifor iicustomers iiand iicompetitors iiare iiunable iito iiduplicate iior iifind iitoo
iicostly iito iitry iito iiimitate.
Above iiaverage iireturns ii- iiAnswers ii-returns iiin iiexcess iiof iiwhat iian iiinvestor iiexpects
iito iiearn iifrom iiother iiinvestments iiwith iia iisimilar iiamount iiof iirisk
Risk ii- iiAnswers ii-investors iiuncertainty iiabout iithe iieconomic iigains iior iilosses iithat iiwill
iiresult iifrom iia iiparticular iiinvestment
Average iireturns ii- iiAnswers ii-returns iiequal iito iithose iian iiinvestor iiexpects iito iiearn
iifrom iiother iiinvestments iiwith iia iisimilar iiamount iiof iirisk
Strategic iiManagement iiProcess ii- iiAnswers ii-full iiset iiof iicommitment, iidecisions, iiand
iiactions iirequired iifor iia iifirm iito iiachieve iistrategic iicompetitiveness iiand iiearn iiabove-
average iireturns
first iistep iiis iito iiANALYZE ii(external iiand iiinternal iiresources, iicapabilities, iicore
iicompetencies), iinext iiSTRATEGIZE ii(formulation iiand iiimplementation), iithen iitake
iiaction iito iienact iistrategy iito iihave iigood iiPERFORMANCE
Todays iicompetitive iimarkets: ii- iiAnswers ii-1. iiThe iiglobal iieconomy
2. iiGlobalization
3. iiRapid iitechnological iichange
4. iiIncreasing iiimportance iiof iiknowledge iiand iipeople
Hypercompetition ii- iiAnswers ii--A iiterm iioften iiused iito iicapture iithe iirealities iiof iithe
iicompetitive iilandscape. ii
-Emergence iiof iiGLOBAL iiECONOMY iiand iiTECHNOLOGY ii(rapid iichange) iiare iitwo
iiprimary iidrivers iiof iihyper-competitive iienvironments iiand iinature iiof iitodays
iicompetitive iilandscape
,Other iistrategic iioptions:
-Use iiof ii
price-quality iipositioning iito iibuild iimarket iipresence
-Creation iiof iinew iiknow-how iiand ii
use iiof iifirst-mover iiadvantage
-Protection iior iiinvasion iiof iiestablished iigeographic iior iiproduct iimarkets
The iiGlobal iicompetitive iilandscape ii- iiAnswers ii-Increasing: ii
-Market iivolatility iiand iiinstability iidue iito ii
the iirapid iipace iiof iichange iiin iimarkets
-Globalized iiflow iiof iifinancial iicapital
-Strategic iiand iioperational iicomplexity ii
of iiglobal-scale iicompetition ii
-Need iifor iiflexibility, iispeed, iiinnovation, ii
and iiintegration iiin iithe iiuse iiof iitechnology
-Rising iiproduct iiquality iistandards
Decreasing: ii
-Time iifor iiadapting iito iichange
-Traditional iisources iiof iicompetitive iiadvantage
-Traditional iimanagerial iimindset
Technology iiand iiTechnological iiChanges ii- iiAnswers ii-Technology iitrends iiimpacting
iithe iiglobal iicompetitive iienvironment
-Increasing iirate iiof iitechnology iidiffusion iiand iithe iiemergence ii
of iidisruptive iitechnologies
-The iiinformation iiage: iiInternet iiand iithe iiglobal iiproliferation iiof iilow-cost iicomputing
iipower
-Increasing iiknowledge iiintensity ii
as iian iiintangible iisource iiof iicompetitive iiadvantage
In iiorder iito iicope iiwith iinew iimarketplace... ii- iiAnswers ii-Strategic iiFlexibility
-coping iiwith iithe iiuncertainty iiand iirisks iiof iihypercompetitive iienvironments.
-requires iicontinuous iilearning iiand iiapplying iithe iinew iiand iiupdated iiskills iisets iiand
iicompetencies iito iithe iifirm's iicompetitive iiadvantage.
--must iiovercome iibuilt-up iiorganizational iiinertia.
What iiis iithe iimarketplace iilike iifor iitoday's iifirms? ii- iiAnswers ii-•A iipiece iiof iiit iihas
iimoved iionline
•Globalization, iifirms iiwere iicompeting iiwith iilocal iifirms, iinow iiyou're iicompeting iiwith
iinational iifirms ii
•Omni-channel
•More iiregulations iitrying iito iihold iiCEO's iimore iiaccountable ii
•Consumers iiare iimore iidemanding iibecause iithere iiare iiso iimany iiother iioptions iiso
iithey iiwant iibetter iiquality iifor iicheaper iiprice ii
, •Pressure iito iiinnovate ii
-Hypercompetition
Where iido iifirm iiprofits iicome iifrom? ii- iiAnswers ii-o iiSales iirevenue, iibrand iirecognition
o iiFirms iithat iihave iisomething iivaluable iiinternally iimake iia iilot iiof iimoney ii(resources,
iicapabilities) ii
o iiThe iinature iiof iithe iiindustry ii(some iijust iipicked iian iiindustry iithat iijust iiisn't iivery
iiprofitable) ii
o iiFirm iiperformance iicomes iifrom
♣ ii1. iiIndustry ii(I/O, iiPorters ii5 iiForces)
♣ ii2. iiFirm ii(e.g., iiResource-Based iiModel)
Can iiwe iimodel iithis? ii- iiAnswers ii-o iiYes, iithe iiI/O iiModel ii= iiindustry iibecomes
iihomogeneous
The iiI/O iiModel iiof iiAbove iiAverage iiReturns ii- iiAnswers ii-Model iion iipg. ii15
The iiExternal iiEnvironment ii--> iiAn iiAttractive iiIndustry ii--> iiStrategy iiFormulation ii-->
iiAssets iiand iiSkills ii--> iiStrategy iiImplementation ii--> iiSuperior iiReturns
The iiexternal iienvironment ii- iiAnswers ii--The iiexternal iienvironment iiimposes iipressures
iiand iiconstraints iithat iidetermine iistrategic iichoices
--Similarity iiin iiresources iicauses iicompetitors iito iipursue iisimilar iistrategies
--Resource iidifferences iiamong iicompetitors iiare iishort-lived iidue iito iiresource iimobility
iiacross iifirms
-Above iiaverage iiperformance iiwill iibe iicompeted iiaway iiquickly
--Industry iiattractiveness ii(average iiindustry iireturns) iiis iiwhat iimatters
Resources ii- iiAnswers ii-inputs iiinto iia iifirm's iiproduction iiprocess, iisuch iias iicapital
iiequipment, iithe iiskills iiof iiindividual iiemployees, iipatents, iifinances, iiand iitalented
iimanagers.
Capability ii- iiAnswers ii-capacity iifor iia iiset iiof iiresources iito iiperform iia iitask iior iian
iiactivity iiin iian iiintegrative iimanner
Core iicompetencies ii- iiAnswers ii-capabilities iithat iiserve iias iia iisource iiof iicompetitive
iiadvantage iifor iia iifirm iiover iiits iirivals
Porters iifive iiforces iimodel ii- iiAnswers ii-Industry iiRivalry iiis iiin iithe iimiddle iisurrounded
iiby: iibuyers, iisuppliers, iisubstitutes, iipotential iientrants
-Industry iiprofitability iiis iia iifunction iiof iiinteractions iiamong iithe iifive iiforces.
-Industry iiattractiveness iiis iipotential iifor iiearning iiabove-average iireturns iiby
--Producing iistandardized iigoods iior iiservices iiat iicosts iibelow iicompetitor iicosts ii(cost
iileadership).
