Exam 1 Flashcards
(37 cards)
Strategy
An organizations overall direction to gain and sustain a competitive advantage to achiever mission and purpose
What is the big picture
Why do some organizations succeed and others fail?
Strategic leadership
Creating competitive advantage through amazement of an effective strategy making process
Strategy formulation
Selecting strategies based on analysis of an organizations external and internal environment
Strategic thinking
Plan, pattern, position, perspective, process
ROIC
Return on investment capital
Strategy is the link between what and what
The firm and it’s environment
Components of a mission statement
Mission, vision, values, major goals
Vision vs mission
Strategic vision concerns an organizations future, a mission conveys current business of the organization
Cognitive bias
Systematic errors in the human decision making process that arise from the way people process information
Prior hypothesis bias
Occurs wen decision makers already have a strong beliefs from something that has occurred before
Escalating commitment
Cognitive bias that occurs when decision makers commit even more after they hear that a project is failing
Reasoning by analogy
Use of simple analogies to make sense out of complex problems
Representativeness
Bias rooted in the tendency to generalize from a small sample or even a single vivid anecdote
Illusion of control
Cognitive bias rooted in the tendency to overestimate ones ability to control events
Availability error
Bias that arises from our predisposition to estimate the probability of an outcome based on how easy the outcome is to imagine
Techniques to improve decision making
Decision making, dialect inquiry, and outside view
Dialect inquiry
Generalization of a plan and a counter plan that reflect plausible but conflicting courses of action
Outside view
Identification of past failed/successful strategic initiatives to determine if they will work for current project
Process of identifying opportunities and threats
Scanning, monitoring, forecasting, assessing
Economies of scale
Reductions in unit costs attributed to a larger output
Absolute cost advantage
Used by leaders of an industry so new entrants cannot expect to match
Switching costs
Cost consumers beat to switch from the products offered by established companies to products offered by a new entrant
Risk of entry by potential competitors
Economies of scale, absolute cost advantage, brand loyalty, and switching costs
