Exam 1 Flashcards
(108 cards)
1
Q
an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage
A
strategic management
2
Q
the set of goal-directed actions a firm takes to gain a sustain superior performance relative to competitors
A
strategy
3
Q
a strategy is good when it enables a firm to achieve superior performance
A
good strategy
4
Q
the three elements of a good strategy
A
- diagnosis of the competitive challenge 2. a guiding policy to address the competitive challenge 3. a set of coherent actions to implement a firm’s guiding policy
5
Q
superior performance relative to other competitors in the same industry or the industry average
A
competitive advantage
6
Q
outperforming competitors or the industry average over a prolonged period
A
sustainable competitive advantage
7
Q
underperformance relative to other competitors in the same industry or the industry average
A
competitive disadvantage
8
Q
performance of two or more firms at the same level
A
competitive parity
9
Q
strategy is about creating superior ______ while containing the _____ to create it
A
value; cost
10
Q
managers achieve these combinations of value and cost through
A
strategic positioning
11
Q
the greater the difference between value creation and cost, the greater the firm’s _______________ and the more likely it will gain competitive advantage
A
economic contribution
12
Q
the key to successful strategy is to combine a set of activities to stake out a _______ within an industry
A
unique strategic position
13
Q
since clear strategic positioning requires _______, strategy is as much about deciding what not to do, as it is about deciding what to do
A
tradeoffs
14
Q
what is not strategy
A
- grandiose statements 2. a failure to face a competitive challenge 3. operational effectiveness, competitive benchmarking, or other tactical tools
15
Q
the first step to gaining and sustaining a competitive advantage is to define
A
the vision, mission, and values
16
Q
a statement about what an organization ultimately wants to accomplish; it captures the company’s aspiration
A
vision
17
Q
a stretch goal that pervades the organization with a sense of winning, which it aims to achieve by building the necessary resources and capabilities through continuous learning
A
strategic intent
18
Q
description of what an organization actually does-the products and services it plans to provide, and the markets in which it will compete
A
mission
19
Q
two types of vision statements
A
customer-oriented vision statements and product-oriented vision statements (this one often constrains a company’s ability to adapt to changing environments)
20
Q
statement of principles to guide an organization as it works to achieve its vision and fulfill its mission, for both internal conduct and external interactions; it often includes explicit ethical considerations
A
core values statement
21
Q
ethical standards and norms that govern the behavior of individuals within a firm or organization
A
organizational core values
22
Q
AFI strategy framework
A
a model that links three interdependent strategic management tasks-analyze, formulate, and implement-that, together, help managers plan and implement a strategy that can improve performance and result in competitive advantage
23
Q
a framework that categorizes and analyzes an important set of external factors that might impinge upon a firm; these factors can create both opportunities and threats for a firm
A
PESTEL model
24
Q
what does PESTEL stand for
A
political, economic, sociocultural, technological, ecological, and legal
25
firm performance attributed to the structure of the industry in which the firm competes
industry effects
26
firm performance attributed to the actions managers take
firm effects
27
a group of incumbent companies that face more or less the same set of suppliers and buyers
industry
28
a method to (1) identify an industry's profit potential and (2) derive implications for a firm's strategic position within an industry
industry analysis
29
a firm's strategic profile based on the difference between value creation and cost (V-C)
strategic position
30
a framework that identifies the five forces that determine the profit potential of an industry and shape a firm's competitive strategy
five forces model
31
what are the five forces
1. threat of entry 2. power of suppliers 3. power of buyers 4. threat of substitutes 5. rivalry among existing firms
32
the stronger the five forces, the ______ the industry's profit potential
lower
33
the weaker the five forces, the ______ the industry's profit potential
greater
34
the risk that potential competitors will enter an industry
threat of entry
35
obstacles that determine how easily a firm can enter an industry and often significantly predict industry profit potential
entry barriers
36
examples of barriers to entry
economies of scale, network effects, customer switching costs, capital requirements, advantages independent of size, government policy, and credible threat of retaliation
37
cost advantages that accrue to firms with larger output because they can spread fixed costs over more units, employ technology more efficiently, benefit from a more specialized division of labor, and demand better terms from their suppliers
economies of scale
38
the value of a produce or service for an individual user increases with the number of total users
network effects
39
costs incurred by moving from one supplier to another
customer switching costs
40
describe the "price of entry ticket" into a new industry
capital requirements
41
incumbent firms often possess cost and quality advantages that are ______. These advantages can be based on brand loyalty, proprietary technology, preferential access to raw materials and distribution channels, favorable geographic locations, and cumulative learning and experience effects.
independent of size
42
powerful suppliers are a threat to firms because
they reduce the industry's . profit potential by capturing part of the economic value created
43
two ways suppliers can reduce a firm's ability to obtain superior performance
1. they can raise the cost of production by demanding higher prices for their inputs or 2. they can reduce the quality of the input factor or service level delivered
44
relative bargaining power of suppliers is high when
1. supplier industry is more concentrated than the industry it sells to 2. suppliers do not depend heavily on the industry for revenues 3. incumbent firms face high switching costs 4. suppliers offer differentiated products 5. no readily available substitutes 6. suppliers can credibly threaten to forward-integrate
45
the power of buyers is high when
1. there are few buyers and each buyer purchases large quantities relative to the size of a single seller 2. industry's products are standardized or undifferentiated commodities 3. buyers face low or no switching costs 4. buyers can credibly threaten to backward integrate
46
the intensity of rivalry among existing competitors is determined largely by
competitive industry structure, industry growth, strategic commitments, and exit barriers
47
elements and features common to all industries, including the number and size of competitors, the firms' degree of pricing power, the type of product or service offered (commodity or differentiated), and the height of entry barriers
competitive industry structure
48
four main competitive industry structures
perfect competition, monopolistic competition, oligopoly, and monopoly
49
a _____ industry is fragmented and has many small firms, a commodity product, ease of entry, and little or no ability for each individual firm to raise its prices
perfectly competitive
50
a _____ industry has many firms, differentiated product, some obstacles to entry, and the ability to raise prices for a relatively unique product while retaining customers
monopolistically competitive
51
a _____ industry is consolidated with a few large firms, differentiated products, high barriers to entry, and some degree of pricing power
oligopolistic
52
a key feature of an oligopoly is that the competing firms are
interdependent
53
an industry is a ______ when there is only one, often large firm supplying the market. The firm may offer a unique product and the challenges to moving into the industry tend to be high
monopoly
54
firm actions that are costly, long-term oriented, and difficult to reverse
strategic commitments
55
obstacles that determine how easily a firm can leave an industry
exit barriers
56
the six force
the strategic role of complements
57
a produce, service, or competency that adds value to the original product offering when the two are used in tandem
complement
58
a company that provides a good or service that leads customers to value your firm's offering more when the two are combined
complementor
59
cooperation by competitors to achieve a strategic objective
co-operation
60
a process whereby formerly unrelated industries begin to satisfy the same customer need
industry convergence
61
the et of companies that pursue a similar strategy within a specific industry
strategic group
62
a framework that explains differences in firm performance within the same industry
strategic group model
63
_____ is strongest between firs that are within the same strategic group
competitive rivalry
64
_____ affects strategic groups differently
the external environment and the five competitive forces
65
industry specific factors that separate one strategic group from another
mobility barriers
66
what is the first thing you do when you begin to analyze five forces of an industry
define the industry
67
unique strengths, embedded deep within a firm, that are critical to gaining and sustaining competitive advantage
core competencies
68
any assets that a firm can draw on when formulating and implementing a strategy
resources
69
organizational and managerial skills necessary to orchestrate a diverse set of resources and deploy them strategically
capabilities
70
distinct and fine-grained business processes that enable firms to add incremental value by transforming inputs into goods and services
activities
71
a model that sees certain types of resources as key to superior firm performance
resource-based view
72
resources that have physical attributes and thus are visible
tangible resources
73
resources that do not have physical attributes and thus are invisible
intangible resources
74
two critical assumptions in the resource based model
1. resource heterogeneity and 2. resource immobility
75
assumption in the resource-based view that a firm is a bundle of resources and capabilities that differ across firms
resource heterogeneity
76
assumption in the resource-based view that a firm has resources that tend to be "sticky" and that do not move easily from firm to firm
resource immobility
77
a theoretical framework that explains and predicts firm-level competitive advantage
VRIO framework
78
What does VRIO stand for
valuable, rare and costly to imitate, the firm itself must be organized to capture the value of the resource
79
a resource is this if it helps a firm exploit an external opportunity or offset an external threat
valuable resource
80
a resource is this if the number of firms that possess it is less than the number of firms it would require to reach a state of perfect competition
rare resource
81
a resource is this if firms that do not possess the resource are unable to develop or buy the resource at a comparable cost
costly-to-imitate resource
82
two ways to copy or imitate a valuable and rare resource
direct imitation and substitution (strategic equivalence) or combining both
83
the characteristic of having in place an effective organizational structure, processes, and systems to fully exploit the competitive potential of the firm's resources, capabilities, and competencies
organized to capture value
84
barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy
isolating mechanisms
85
examples of isolating mechanisms
better expectations of future resource value, path dependence, casual ambiguity, social complexity, and IP protection
86
a situation in which the options one faces in the current situation are limited by decisions made in the past
path dependence
87
a situation in which the cause and effect of a phenomenon are not readily apparent
casual ambiguity
88
a situation in which different social and business systems interact with one another
social complexity
89
a critical intangible resource that can provide a strong isolating mechanism, and thus help to sustain a competitive advantage
IP protection
90
a former core competency that turned into a liability because the firm failed to hone, refine, and upgrade the competency as the environment changed
core rigidity
91
a firm's ability to create, deploy, modify, reconfigure, upgrade, or leverage its resources in its quest for competitive advantage
dynamic capabilities
92
a model that emphasizes a firm's ability to modify and leverage its resource base in a way that enables it to gain an sustain competitive advantage in a constantly changing environment
dynamic capabilities perspective
93
the firm's current level of intangible resources
resource stocks
94
the firm's level of investments to maintain or build a resource
resource flows
95
the internal activities a firm engages in when transforming inputs into outputs; each activity adds incremental value
value chain
96
firm activities that add value directly by transforming inputs into outputs as the firm moves a product or service horizontally along the internal value chain
primary activities (like supply chain mgt, operations, distribution, marketing and sales)
97
firm activities that add value indirectly, but are necessary to sustain primary activities
support activities (like R and D, information systems, HR, accounting and finance, infrastructure)
98
the conceptualization of a firm as a network of interconnected activities
strategic activity system
99
a ____ increases the likelihood that a firm is able to gain a competitive advantage
strategic fit
100
a framework that allows managers to synthesize insights obtained from an internal analysis of the company's strengths and weaknesses with those from an analysis of external opportunities and threats to derive strategic implications
SWOT analysis
101
individuals or organizations that own one or more shares of stock in a public company
shareholders
102
the money provided by shareholders in exchange for equity share in a company; it cannot be recovered if a firm goes bankrupt
risk capital
103
return on risk capital that includes stock price appreciation plus dividends received over a specific period
total return to shareholders
104
a firm performance metric that captures the total dollar market value of a company's total outstanding shares at any given point in time
market capitalization
105
difference between value and cost (V-C)
economic value created
106
the maximum price a consumer is willing to pay for a product or service based on the total perceived consumer benefits
reservation price
107
the dollar amount (V) that a consumer attaches to a good or service; the customer's maximum willingness to pay
value
108
difference between price charged (P) and the cost to produce (C), or P-C; also called producer surplus
profit
