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Midterm

MGT 3660 Study Guide - Midterm Guide: Active Management, Resource Depletion, Cost Leadership


Department
Management
Course Code
MGT 3660
Professor
nathaniellupton
Study Guide
Midterm

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Managing Innovation Midterm
Value Creation
DIFFERENT TYPES OF VALUE
Economic Value (e.g. growth imperative)
Increasing willingness to pay/reducing costs to industry-leading levels (aka
maximizing profitability).
Social Value (e.g. improve living conditions imperative)
Expectations of firms are increasing due to poverty, inequality, resource
depletion, environmental degradation, etc.
Thought uestio: hat is a fis ole i eatig soial alue?
Shared value (Ecooic ad social value utually reinforcing)
What is good for society is good for business not a tradeoff.
Works by focusing on constraints to economic development outside of what is
foall osideed the fi.
Implies a cooperative relationship with suppliers, buyers, etc.
Active management of environment rather than passive reaction.
WHAT IS PROFIT
Profit (Π) = revenue (R) total costs (TC)
R = price (P) x quantity (Q)
TC = fixed costs (FC) + variable costs (VC)
VC = Q x marginal cost (MC)
Hence:
Revenue ----------Costs---------
Π = P x Q (FC + Q x MC )
Or
Π = (P MC) x Q FC
PO‘TE‘“ GENE‘IC “T‘ATEGIE“
Cost leadership
Reduce costs in every segment of the value chain as much as possible
operational efficiency
Dot egatiel ipat the quality of the product.
Differentiation
Iease ou ustoes illigess to pa though ehaed ualit
Buyers must value the source of differentiation
WHAT IS THE PURPOSE OF PROFIT?
Fund innovation, finance growth, meet contingencies improve competitiveness
Reward stakeholders (investment vs. divestment)
Employees
Owners
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THE VALUE CHAIN
SOCIAL VALUE
Principles and/or normative standards of behavior broadly held within a society.
…is desiale i its o ight.
…is elated to ualit of life, idepedet of eooi alue.
…is taditioall eedded ithi a society (as is business!)
Creating more social value means creating more of what society values.
… the eat atue of hih is ope to opiio
Economic value may be deceptively attractive because it can be measured in
dollars, and larger numbers are matheatiall geate tha salle oes.
Session 5: National Advantage
NATIONAL COMPARATIVE ADVANTAGE (PORTER 1990)
Business Strategy: Why are some firms more successful than others?
Industry Structure: Why are some industries more attractive than others?
National Comparative Advantage: Why do some countries produce stronger competitors
(in specific industries) than others?
PO‘TE‘“ NATIONAL DIAMOND MODEL
Firm strategy, structure and rivalry
Factor conditions
Demand conditions
Related and supporting industries
DIAMOND MODEL EXPLANED
Countries develop strong industries when:
There is a lot of rivalry - only the strongest firms survive.
Buyers are demanding only strong firms can satisfy them.
Factor conditions (land, labor, capital) favor the industry.
Related and supporting industries are also strong.
Ioud
Logistis
Opeatios
Outoud
Logistis
“ales ad
Maketig
Afte
sales
seie
Poueet
Maageet / ogaizatio stutue
Hua esoues
eseah ad deelopet
find more resources at oneclass.com
find more resources at oneclass.com
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