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Lecture

Set One Answer.docx

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Department
Business
Course
BU481
Professor
Tabatha Dominguez
Semester
Fall

Description
Set One 1 According to the articleEvaluating Strategic Alternatives and the discussions in class please define and describe in details the tests that should be used to assess and rank strategic alternatives Please provide three reasons why the financial test is the last oneEach of the five test questions are critical to any strategy review because it measure the credibility of proposed strategy and to determine if the mgmt has confidence that the promised returns on investment will be realized The test questions works better when there is rich array of strategic alternatives from which to choose It gives managers a basis of comparison and enhances creativity by suggesting combinations of different strategiesTest One How attractive is the market opportunityShould be presented in a balanced view of the threats vs opportunity uncovered during the situation assessment It can be applied to PEST environment that will find the events and trendsThese factors are points of competitive mkt areo Market size and growtho Market demando Present and prospective intensity of competitiono Presence of protected market segments o High or low cost mkt to serve o Breakeven share high or low fixed cost business useful measure of vulnerability of profits to volatility in market demand Better market opportunity looks at all these criteria higher long run average profitability of all players in mktPotential of high average profit provides encouragement for new entranto When strategy falls short of its mkt penetration objectives there might be some profit possibilitiesHigh barriers to entry are costly for new entrants to surmount overcome o May make entry completely unattractive to outsidersFull fledged assessments of market attractiveness must consider events and trends in macroeconomics and industry environment also conditions within segments of mkt the strategy proposes to target Test Two How sustainable is the competitive advantageLaw of Nemesis belief holds that nothing good lasts indefinitely other competitors will alwaysfind ways to share the wealth of the market leaderAttractive opportunities always motivate competitors to try to match leapfrog or offset the advantage the leader has achieved Those firms with highly durable advantages based on gaining a resource or capability skills that is unique and tightly secured within the organ Competitive advantage is becomingdifficult to strengthensustain emphasis is shifting form seeking an questioned static adv to building organ that continually seek new sources to advantageMost contestable are price advantage which rapidly countered by competitors and most product innovationo 70 secured detail of new products How does a business assess how long its advantages will last and will continue to yield superior profitability o 1 which ones yield a price premium because customer get either superior value or lower costs o 2 how will these proposed strategy enhance these differentiation or cost advantages or create new advantages o 3 How difficult will it be for competitors to copy these advantages and how long it will take themBarriers to imitation 1 SupplySide Barriers internal strength that permit the business to outperform the competition a distinctive capabilities complex bundles of skills and knowledge that ensure superior coordination of activities and superior utilization of assets b proprietary technology product process and managerial innovations can be protected with patents copyrights or confidentiality c economies of scale andor scope substantial cost advantages can be realized and protected through investments that cannot be readily copied by other firms 2 DemandSide Barriers links the firms has to the mktexternally do you have customers Customer and channel relationships must be able to engage in joint problem solving and to coordinate numerous activities is difficult set of skills to master o When joint investment has been made customer face high costs if they decide to switch suppliers Brand equity serves as quality and creates positive image in consumers mindso Durable advantage because it represent long history of superior value which cannot be easily matched by competitorsTest 3 What are the prospects predictions for successful implementationAsks whether the intentions can be realizedThree conditions must be fulfilled before we can be satisfied that strategy can deliver promised resultso 1 Feasibility Do the business possess the necessary skills and resourcesIf the business does not have the skills and resources needed must look at if they have time to develop them before the opportunity closesFinancial and physical resources are first constraints against which strategic alternative is tested If limitations are restrictive taking the strategy would jeopardize the competitive position and will become rejectedTests the access to markets technology servicing capabilitiesNegative or uncertain answers should trigger a search for modification to outcome problems may lead rejection of strategyo 2 Supportability Do the key implementers understand the strategy and are they committed to itCommitment from mgrs beliefs basic needs job contextA elements of the strategy must be readily communicable If not understoodstrategy will not work Good strategyis easily understood by all functions B strategy should challenge and motivate key personnel
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