Chapter 8 and Chapter 9 Strategic Managment
Chapter 8 and Chapter 9 Strategic Managment BUAD 4890
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This 4 page Class Notes was uploaded by Anna Notetaker on Thursday October 13, 2016. The Class Notes belongs to BUAD 4890 at Middle Tennessee State University taught by Richard Mpoyi in Fall 2016. Since its upload, it has received 15 views. For similar materials see Strategic Management in BUAD at Middle Tennessee State University.
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Date Created: 10/13/16
Strategic Management Chapter 8: 1.First Mover Advantages a.Initial Brand Loyalty (Kleenex) b.Market Share (100%, going into the blue ocean) c. Economies of Scale (cost of production is low) d.Establishing Switching Costs i. AT&T was the first supplier with IPhone (inclusively). When customers decided to switch providers, they had to weigh the cost of losing the IPhone in the switch… Another example would be switching providers while in contract. Often you physically have to pay a fee to switch or get out of the contract early. e.Accumulate Valuable Knowledge i. Demographics, suppliers, customers, technology, distribution, etc. – the company is starting their own learning curve (shot in the dark). 2.First Mover Disadvantages a.Significant Upfront Costs b.More Prone to Mistakes c. Invest in the Wrong Resources and Capabilities i. 2005 – Blackberry Phone… investments were made to focus entirely on the top management teams in a business, this is super limiting and eventually ended the product since it was not focused on everyday individuals as well as lower level management teams. d.Investing in Obsolete Technology i. Invest in version 1 when version 2 is on the horizon. ii. This isn’t necessarily bad choices, but rather pouring money and investments into making a product better and stronger, only to have competition too strong. 3.Miles and Snow (First Mover Advantage Typology) a.Prospectors (True Pioneers) – firms that look at advantages and is willing to invest and take risks despite the disadvantages. EX: McDonalds b.Analyzers (2 ndMovers/1 Follower) – sit and wait, yield and get in quickly in an attempt to avoid disadvantages and gain advantages from others… 6 months typically. EX: Burger King c. Defenders – Defend own turf before making a move. Sit back and make sure it is profitable and opens a bunch at one time…. Years typically. EX: Subway *** Potential Success can be found in Prospectors, Analyzers, and Defenders*** d.Reactors – choose to make a move when there is no other choice or option EX: Ma & Pop Store Chapter 9 1.Multi-Country Vs Global a.Multi-country: localized, high revenue and high cost, few countries (500) b.Global: standardized, low revenue and low cost, many countries (50) **BSG GAME: # of models would be localized (500) or standardized (50)** 2.Foreign Market Expansion: a.Exporting – produce domestic and ship internationally b.Licensing – right to production, foreign market right on behalf c. Franchising – giving business model and massive amounts of training d.Alliances – 2 or more firms collaborate to purse mutually benefit outcomes, 2 or more work together to broadly help one another ( a + b = Ab + Ba ) e.Joint Ventures – ( a + b = a + b + c ) f. Acquisitions – ( a + b = A ) g.Greenfield Venture ** The following increases as it goes further down: Risk, Control, and Cost** 3.Alliances Vs Acquisitions a.Alliances i. Equity (5%/5%) – you owe a portion of the company and same for them ii. Non-equity – agreement is inclusive iii. Complementary Resources and Capabilities iv. Share Knowledge v. Forced by local Laws vi. Defensive Move b.Acquisitions i. Full Access ii. Full Control iii. Risk 4.When are Acquisitions more Appropriate? a.Vast difference in Company’s size (Pepsi and Nantucket Nectar) b.Vast difference in Company’s profitability (more profitable, less profitable) c. Low volatility d.Low dynamism e.Low uncertainty
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