badm study 1-7 Flashcards
(32 cards)
What is strategic management?
The process of formulating, implementing, and evaluating strategies to achieve competitive advantage and above-average returns.
Why is strategic management important for firms?
It helps firms navigate changing environments, allocate resources effectively, and sustain long-term success.
Define competitive advantage.
Occurs when a firm implements a value-creating strategy that competitors cannot easily duplicate.
What are above-average returns?
Profits that exceed what an investor expects from similar-risk investments.
How do competitive advantage and above-average returns relate to strategic management?
Strategic management helps firms develop and sustain competitive advantages, leading to above-average returns.
What are the key components of the strategic management process?
Analysis, strategy formulation, and implementation.
What does the A-S-P model stand for?
Analyze, strategize, performance
Analyze, formulate, implement.
How does globalization influence the competitive landscape?
Increases competition by expanding markets and exposing firms to international competitors.
What impact do technological changes have on firms?
Accelerate innovation, shorten product life cycles, and increase the need for adaptability.
Explain the I/O Model of Above-Average Returns.
Suggests that external industry factors determine a firm’s profitability.
What does the Resource-Based View (RBV) model emphasize?
Internal resources and capabilities are the primary drivers of above-average returns.
What are the three parts of a firm’s external environment?
General environment, industry environment, competitor environment.
What are the seven segments of the general environment?
- Demographic
- Economic
- Political/Legal
- Sociocultural
- Technological
- Global
- Sustainable/Physical
Explain Porter’s Five Forces Model.
Includes threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes, competitive rivalry.
What is environmental scanning?
The process of anticipating changes in the external environment.
Why is competitor analysis important?
Helps firms identify competitors’ strengths, weaknesses, and likely actions.
What is the relationship between resources, capabilities, and core competencies?
Resources are assets, capabilities result from combining resources, core competencies are unique capabilities providing a competitive advantage.
What are the four criteria for core competencies?
- Valuable
- Rare
- Costly to imitate
- Non-substitutable
What is value chain analysis?
Breaks down activities into primary and support functions to identify where a firm creates value.
Why do firms engage in outsourcing?
To cut costs and focus on core activities.
What are the potential risks of outsourcing?
Loss of control and dependence on external suppliers.
What challenges do firms face in sustaining competitive advantages?
Competitors imitate strategies, technologies evolve, and consumer preferences change.
What are the five generic business-level strategies?
- Cost leadership
- Differentiation
- Focused cost leadership
- Focused differentiation
- Integrated cost leadership/differentiation
What is competitive rivalry?
Direct competition among firms.
