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Bu111 midterm 1&4.docx

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Wilfrid Laurier University
Leanne Hagarty

Bu111 mid-term Review The relationship between the firm and its external environment 1. Critical success factors: what they are, why they are important, how they connect to each other. What How Why Achieving Financial -generating income/revenue -required for business to be Performance sustainable Meeting Customer Needs -reliability, variety, - customers provide revenue timeliness, quality, safety and sales Building Quality Products - quality assurance - encourages customers to and Services buy products/services - builds reputation Encouraging Innovation and -training program , - business should be Creativity incentives, open forum constantly changing and adapting to environment Gaining Employee - incentive plans, training, - employees are driving force Commitment participate in management behind a business decision making Creating a Distinct - adding value - encourage customers and Competitive Advantage out compete competitors 2. Diamond-E model: key variables, connections among variables, principal logic, examples • Key variable: >>Management preferences: bias, approach, desires outlooks >>Organization: structure capabilities culture, leadership style >>Resource: human resource, capital resource, financial resource. >>Strategy: what opportunities the business is pursuing – determines the resources, organizational capabilities, and the management preferences • The critical linking variable in the model. -> Any variable can either drive or constrain • Principal logic: consistency or alignment
 – strategy must be consistent with internal workings of company (preferences, resources, etc.) – strategy must align with the external environment may have the best strategy but may not be right for that environment environment is changing, so strategy must adapt • First task: deal with strategy-environment linkage assess forces at work, and their implications Technological Factors 1.Opportunities and threats of technology Opportunity • Speeds up production 
 – Reduces cost
 –Enables larger quantities – Increases efficiency • Better products
 – Quality – Innovation – Consistent Quality • Communication gaps are bridged – Letters vs. texting • Affects Porter’s forces
 – Ex. Customers can check prices online Threats • Easy to recreate (imitate) • Excessive Information • Unfamiliarity to organizations • Constant change can be a hassle • Differences in standards through evolution – DVDs vs. VHS 2.Technology standard wars – description, impact, scope Description: battle between incompatible technologies. Can determine survival of companies involved. Not limited to information technology. 3. Installed base, lock-in, switching costs, complementary goods, network effects – description, importance, example • Installed base – number of users Bigger = great influence More customer means more influence • Lock–in (sunk investment) = size of investment Larger = greater resistance to switch • Switching costs – cost of moving - Entry barrier; - Makes lock in worse • Complementary goods Need for value Creates vicious or virtuous cycle •
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