BUSI690 Rothaermel Ex 1 Essay

Words: 2050
Pages: 9

Rothaermal Exercise 1
Ryan Cherry
BUSI 690 – Policy and Strategy in Global Competition
January 18, 2015

Chapter 1
Discussion Question 1.1: How is a strategy different from a business model? How is it similar?
Strategy refers to an organization’s “overall efforts to gain and sustain competitive advantage” (Rothaermel, 2013, p. 9). An organization’s business model, on the other hand, “details the [organization’s] competitive tactics and initiatives”, which includes the steps necessary to put the organization’s strategy into action (Rothaermel, 2013, p. 11). The strategy is the theory of how the organization will make money, while the business model is the action necessary to achieve the theoretical strategy (Rothaermel, 2013).
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For example, in what way might weak forces increase industry profits, and in what way do strong forces reduce industry profits? The five forces as identified by Porter are: (1) threat of entry, (2) power of suppliers, (3) power of buyers, (4) threat of substitutes, and (5) rivalry among existing competitors (Rothaermel, 2013). Generally speaking, where the five forces are stronger, an industry’s profit potential is lower; while an industry’s profit potential is higher when the five forces are weaker (Rothaermel, 2013). As an example, industry profits are greater when the bargaining power of buyers and suppliers is weaker, because the industry is better able to receive the price which it has set for the product or service. On the other hand, when buyers and suppliers have stronger bargaining power, they are able to set the price at an amount which they deem fit, meaning less profits for the industry.
Chapter 4
Discussion Question 4.1: Why is it important to study the internal resources, capabilities, and activities of firms? What insights can be gained? The firm must study and understand its internal resources, capabilities, and activities in order to be successful. Only through studying and understanding these elements will the firm be able to discover its core competencies (Rothaermel, 2013). A firm’s core competencies are its “unique strengths … that allow a firm to differentiate its products and services