BUSİNESS MANAGEMENT

Sustainable competitive advantage is either being ahead of competitors or achieving higher performance than the industrial average for a long time. The correct answer is E.

Internal stakeholders are stockholders, board of directors, executive officers, other managers, and employees. External stakeholders are all other individuals and groups that have some claim on the company. This group includes customers, suppliers, alliance partners, creditors, local and national governments, unions, local communities, media, and the public. The correct answer is E.

Stakeholders can be divided into two groups: internal stakeholders and external stakeholders. Internal stakeholders are stockholders, board of directors, executive officers, other managers, and employees. External stakeholders are all other individuals and groups that have some claim on the company. This group includes customers, suppliers, alliance partners, creditors, local and national governments, unions, local communities, media, and the public. The correct answer is D.

A vision is a statement about where the company wants to be in the future. It is composed of the desired achievements of the company. The correct answer is D.

In a monopoly, a single producer sells an undifferentiated product such as water, natural gas, and rail transportation in Turkey with a large degree of pricing power in a consolidated market. The correct answer is C.

Inamonopoly, a single producer sells an undifferentiated product such as water, natural gas, and rail transportation in Turkey with a large degree of pricing power in a consolidated market. The correct answer is C.

Perfect competition markets have many producers which sell an undifferentiated product with a little or no pricing power in a fragmented market. The correct answer is B.

Margin is the difference between value and total costs. The correct answer is A.

Oligopolies have a couple of producers which sell a differentiated or an undifferentiated product with some pricing power in a consolidated market. The correct answer is A.

Substitutes. These are products which can replace other products. For example, tea can be a substitute for coffee and vice versa. The threat of substitute products is high if (1) good substitutes are readily available or new ones are emerging; (2) substitutes are attractively priced; (3) substitutes have comparable or better performance characteristics; (4) customers have low costs in switching to substitutes; and (5) customer companies grow more comfortable with using substitutes. The correct answer is B.

Sustainable competitive advantage is either being ahead of competitors or achieving higher performance than the industrial average for a long time.

Stakeholders are the actors who can affect or can be affected by the achievement of a company’s objective. Internal stakeholders are stockholders, board of directors,
executive officers, other managers, and employees. External stakeholders are all other individuals and groups that have some claim on the company.

In oligopoly, a few producers—more than one but not a large number—sell products which may be either undifferentiated or differentiated such as mobile phone service in Turkey, cola beverages in the global market, and manufacturing of commercial airplanes with some pricing power in a consolidated market. Oligopolies have a couple of producers which sell a differentiated or an undifferentiated product with some pricing power in a consolidated market.

The analysis of industry structure. The concept of market structure has proven to be very useful in informing both research and government policy. However, the concept can sometimes be inconvenient to use to identify threats in a company’s local environment.22 Michael E. Porter’s well-known analytical framework, the Five Forces model, is essential in identifying opportunities and threats facing a specific company in an industrial context. Porter developed two important assumptions that form the basis of his five forces model: (1) rather than defining competition narrowly as rivalry to explain and predict a firm’s performance, competition must be viewed more broadly through considering the other forces in an industry, (2) the profit potential of an industry is a function of the five forces that shape competition.

The Five Forces Model refers to a framework that was developed for identifying opportunities and threats facing a specific company in the industrial context. Porter suggested that the competitiveness of an industry can be analyzed based on five forces: rivalry among existing competitors; threats of new entrants; bargaining power of buyers and suppliers; and substitute products.

Resources, capabilities, and core competencies. All assets which the company can use when formulating and implementing strategies are resources. Resources can be tangible or intangible. Tangible resources, such as labor, capital, and land, have physical characteristics and are visible. Intangible resources, such as brand equity, reputation, and intellectual property (e.g. patents, copyrights, and trade secrets), have no physical characteristics and are invisible. Competitive advantage tends to be developed from intangible rather than tangible resources. Tangible resources can be bought on the open market easily by anyone who has the necessary cash. However, it is very difficult to buy intangible resources if not impossible and it takes longer to build them.

Strategic alliance is the cooperation of companies for realizing their strategic objectives. Companies can choose to bring their resources and capabilities together. An “alliance” is any medium to long-term cooperative relationship between companies. It excludes one-time or short-term contracts and other agreements and does not imply some joint working relationship between companies over time. We term alliances often “strategic” because they are normally formed to help the partner companies realize their strategic objectives on the basis that this can be done better through cooperation than alone.

Incremental innovation refers to exploiting the existing knowledge base and small improvements of existing products whereas radical innovation refers to exploring novel
knowledge and development of new and different products.

Economies of scale, which refers to decreases in average costs per unit of production as output increases, have important effects on lowering costs. The main reasons for decreasing costs while increasing production output are (1) spreading fixed, advertising, selling, and distributing costs over more units; (2) having specialized employees and systems and equipment like 3-D printers and manufacturing robots, which lead to higher efficiency; and (3) providing discounts on bulk purchases of raw material inputs and component.

Global integrationlocal responsiveness framework indicates that cost pressure often require global integration and local responsiveness press companies to adapt locally. In both domestic and international competition, pressures for cost reductions are almost universal. What is unique in international competition is the pressure for local responsiveness, which is reflected in different consumer preferences and host country demands. Consumer preferences vary extremely around the world.

A home replication strategy includes selling the same products in both domestic and foreign markets. It enables companies to leverage their home-based core competencies in foreign markets. A home replication strategy is either the first step companies take when beginning to conduct business abroad, or adopted by companies which own luxury brands.

A localization strategy requires maximizing local responsiveness hoping that local consumers will perceive the products as local ones. A localization strategy results from the combination of high pressure for local responsiveness and low pressure for cost reductions.

A global-standardization strategy is composed of achieving significant economies of scale and low cost inputs by pursuing a global division of labor based on wherever best-of-class capabilities reside at the lowest cost. This strategy results from the combination of high pressure for cost reductions and low pressure for local responsiveness.

A transnational strategy combines the benefits of a localization strategy (high local responsiveness) with those of a global-standardization strategy (lowest-cost position attainable). This strategy is generally used by companies that adopt an integration strategy at the business level by attempting to reconcile product differentiations at low cost. Moreover, global learning and diffusion of innovations (from home country to host countries and vice versa) are important elements of a transnational strategy.