Analytics-based Strategic Management: Final Exam

1. Social complexity

2. Uncertainty

3. Information impactedness

4. Qualitative judgment

1. Agency efficiency

2. Technical efficiency

(3) Strategic perspective

(4) Dynamic capabilities

1. Centralization

2. Decentralization

1. Unitary functional structure: A single dep. responsible for basic business functions. Logic of functional specialization. Stable cond and operational effi.

2. Multidivisional structure: Autonomous divisions led by hq. Reduce inefficiencies by by divided labor into hq and divisions. ICM, Decentralized authority.

3. Matrix structure: Organized along multiple dimensions. intersections report to two hierarchies. Valuable when Econ of scale and scope or agency p motives organizing along multi dim

4. Network structure: Basic unit: employees, who contribute to multi task and can be reconfigured as task change. Greater tech efficiencies for complex task. Incurs coordination costs. Preferable when: tech efficiency > coronation costs

1. U-shape 19th to exploit Econ scale and scope

2. M-shape 20th More diversity

3. Matrix and network today more flexible to integrate local and global environment

1. Structure and strategy involve over year through local interaction with environment rather than management initiative.

2. Strategy and structure enables management to quickly response to difficult and unusual prob

1. Common history

2. Common regulatory environment

3. Common technical constraints

1. Power

2. Culture

Important when goal conflicting, lacking formal authority, and complete contract

1. Economics of scale

2. Economics of scope

3. Learning curve

1. Indivisibilities and the spreading of fixed costs:

1) Spreading of product specific fixed costs: Capital costs

Low ac due to capital utilization -> short term Econ of scale

2) Alternative technologies:

Low ac due to more automated production process -> long term Econ of scale

2. Increased productivity of variable inputs (specialization): Increase productivity

3. Inventories: Econ of scale increase when firm carry inventory. Firms with high sales reduce ac of good sold

4. Physical properties cube-square rule

1. Labor cost and firm size

2. Spreading specialized resources too thin

3. Bureaucracy

1. Purchasing

2. Advertising

3. Research and development

Accept price below AC.

Organize to increase learning

1. Economies of scale and scope

2. Economizing transaction costs

3. Internel capital markett

4. Shareholder investment portfolio

5. Acquiring undervalued firms

1. Empire building

2. Increase compensation

3. Reduce risk of getting fired

There is some failure in corporate governance and control

1. Value: Product sale forecasts

2. Price: Margin/contribution

3. Cost: Cost accounting/ABC

1. Reservation price method

2. Attribute rating method

3. Hedonic pricing analysis

4. Conjoint analysis

The vertical chain begins with the acquisition of raw materials and ends with sale to end customer Define make vs buy

1. Exploiting sale and scope economies and learning economies

2. Reduce bureaucracy effects: Agency cost, influence cost

The cost of using market contract: avoid opportunism

1. Bounded rationality

2. Difficulties specifying or measuring performance

3. Asymmetric information

1. Site specificity

2. Physical asset specificity

3. Human asset specificity

The plot implies that

1. The market have higher technical efficiency than vertical integration

2. More relation-specific asset (k) leads to weaker economies of scale using the market

1. Value: Sales forecast

2. Price: General product price, Relation-specific price

3. Cost: Investment cost, product average cost

1. Perfect competition H<0.2

2. Monopolistic competition H<0.2

3. Monopoly H>0.6

4. Oligopoly 0.2<H<0.6

1. Cournot quantity competition: Profit miaximazating quantities: Capital intensive industry

2. Bertrand price competition: Profit miaximazating prices. P>MC, undercutting rivals price -> P=MC

1. Blockaded entry

2. Accommodated entry

3. Deterred entry

1. Structural entry barriers

2. Strategic entry barriers

a) Control of essential resources

b) Economies of scale and scope

c) Marketing advantages

a) Limit pricing: Contestable limit pricing(mc advantage), strategic limit pricing(set price below mc)

b) Predatory pricing: Large incumbent, loss offset by later price. Rational bc asymmetry information, lower new entrant's exception

c) Capacity expansion: lower new entrant's exception; works if mc advantages, low demand growth, sunk cost capacity, new entrant have no reputation

1. Value: Buyer demand function estimation

2. Price: Competitor price

2. Cost: Own cost function, competitor cost function

1. Discount. rates are low

2. Firm follow tit-for-tat strategies

1. Concentration (N): Decrease make it easier for the condition to hold. Firm gets higher benefits from higher prices.

2. Discount rate and reaction speed (i)

3. Monopoly profits: Higher increases the gain

4. Current profits: Lower increases the gain

1. Developing a cost advantage

2. Developing a differentiation advantage

1. Many sellers

2. Cost advantages over others

3. Excess capacity

3. Undifferentiated products

1. Exogenous (technological requirements)

2. Endogenous (strategic choice)

1. MSE

2. Brand loyalty and reputation

3. Access to critical resources

4. Government policies ...

1. Availability of close substitutes/complements

2. Price-value characteristics of substitutes/complements

3. Price elasticity of industry demand

1. Competitiveness of the input market

2. Relative concentration of upstream/downstream

3. Purchase volume by downstream

...

1. Increase your customers wtp

2. Decrease your suppliers opportunity cost

3. Decrease other's customers wtp

4. Increase other's suppliers opportunity cost

Econ attractiveness and completive position in the market

It create more economic value than its competitor (B-C)

Value appropriation: customer: b-p

firm: p-c

Value creation: b-p+p-c=b-c

1. Accounting profits

2. Market capitalization

3. Sales

4. Market share

5. Price differentials

1. Value: Buyer benefits

2. Price

3. Costs: Econ costs

1. R & C (RBV)

2. The value chain

1. Configure value chain differently; if similar, needs r & c that others do not have

2. Perform activities effectively

a collection of value creating activities, value is created as products moves along the vertical chain of activities, each activities can add to benefits or costs.

How a firm position itself to compete in the market

Three ways of creating more value than competitors: Cost leadership, Benefit leadership, Focus strategies

1. Asset mass efficiencies

2. Time compression diseconomies: decreasing return

3. Interconnectedness: influenced by other asset

4. Asset erosion

5. Causal ambiguity: Source of asset flow is unknown

1. Heterogeneity: a. Some r & c are more efficient than others, b. There r & c are rare

2. Imperfect mobility a. cannot bough & sold if relation-specific b. Prevent payment bid up c. Risk of acquire offsets its value

3. Isolation mechanism a. Impediment to imitation. b. early moving advantages

1. Socially complex data analytics capabilities

2. Dynamic capabilities

3. Shifting level of competition from static to dynamic

1. Entrepreneurship

2. Innovation

3. Dynamic capabilities