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| Set of actions that managers take to increase their company's performance relative to rivals |
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| The return that a company makes on the capital invested in the enterprise |
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| Achieved when a company's profitability is greater than the average profitability of all firms in its industry |
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| Sustained Competitive advantage |
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| Achieved when a company is able to maintain above-average profitability for a number of years |
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| Bears responsibility for the overall performance of the company or for one of its major subunits or divisions |
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| Responsible for supervising a particular function - that is, a task, activity, or operation like accounting, marketing, R&D, IT, or logistics. |
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| A company that competes in several different businesses and has created a separate self contained division to manage each of these |
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| Self contained division (with its own functions-for example, finance, purchasing, production, and marketing departments) that provides a product or service for a particular market |
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| Task of analyzing the organization's external and internal environments and then selecting appropriate strategies |
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| Putting strategies into action |
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| comparison of strengths, weaknesses, opportunities, and threats |
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| Action taken by lower-level managers who, on their own initiative, formulate new strategies and work to persuade top-level managers to alter the strategic priorities of a company |
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| Strategies that "emerge" in the absence of planning |
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| Formulating plans that are based on "what if" scenarios about the future |
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| Systematic errors in human decision making that arise from the way people process information |
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| A cognitive bias that occurs when decision makers who have strong prior beliefs tend to make decisions on the basis of these beliefs, even when presented with evidence that their beliefs are wrong |
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| A cognitive bias that occurs when decision makers, having already committed significant resources to a project, commit even more resources if they receive feedback that the project is failing |
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| Involves the use of simple analogies to make sense out of complex problems |
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| Cognitive bias rooted in the tendency to generalize from a small sample or even a single vivid anecdote |
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| Cognitive bias rooted in the tendency to overestimate one's ability to control events |
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| when one member of a decision-making group acts as a devil's advocate, bringing out all the considerations that might make the proposal unacceptable |
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| Generation of a plan (thesis) and a counter plan (an anti-thesis) that reflect plausible but conflicting courses of action |
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| Individuals or groups with an interest, claim, or stake in the company, in what it does, and in how well it performs |
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| Mechanisms that exist to ensure that managers pursue strategies in the interests of an important stakeholder group, the shareholders. |
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| Stockholders and employees, including executive officers, other managers, and board memebers |
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| Individuals and groups outside the company that have some claim on the company |
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| What it is that a company exists to do |
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| Beliefs about how managers and employees of a company should conduct themselves, how they should do business, and what kind of organization they should build to help the company achieve its mission |
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| Set of values, norms, and standards that control how employees work to achieve an organization's mission and goals |
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| Precise and measurable desired future state that a company attempts to realize |
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| Equity capital for which there is no guarantee that stockholders will ever recoup their investment or earn a decent return |
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| Problem that arises when managers pursue strategies that are not in the interests of stockholders |
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| Theory dealing with the problems that can arise in a business relationship when one person delegates decision making authority to another |
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| Arises whenever one party delegates decision making authority or control over resources to another |
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| person delegating authority to an agent, who acts on the principals behalf |
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| A person whom authority is delegated by a principal |
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| Situation in which one party to an exchange has more info about the exchange than the other party |
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| Mechanisms that principles put in place to align incentives between principals and agents and to monitor and control agents |
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| Threat arising from the risk of being acquired by another company |
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| Accepted principles of right or wrong that govern the conduct of a person |
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| Accepted principles of right or wrong governing the conduct of business people |
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| Situations where there is no agreement about exactly what the accepted principles of right and wrong are or where none of the available alternatives seem ethically acceptable |
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| Managers efforts to find a way to feather their own nests with corporation monies |
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| Efforts used to control corporate data to distort or hide info in order to enhance own financial situation or competitive position of firm |
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| Actions aimed at harming actual or potential competitors, most often by using monopoly power, thereby enhancing the long-run prospects of the firm |
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| Opportunistic exploitation |
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| Efforts to unilaterally rewrite the terms of a contract with suppliers, buyers, or complement providers in a way that is more favorable to the firm, often using their power to force the revision through |
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| Substandard working conditions |
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| Created when managers underinvest in working conditions or pay employees below market rates, in order to reduce their costs |
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| Environmental Degradation |
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| Pollution or other forms of environmental harm that result directly from a firm's actions |
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| Payment of bribes or other unethical acts by managers in effort to gain access to lucrative business contracts |
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| Formal statement of the ethical principles a business adheres to |
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| Conditions in company environment that it can take advantage of to formulate and implement strategies that will enable it to become more profitable |
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| Conditions in the external environment that endanger the integrity and profitability of a company's business |
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| Group of companies offering products or services |
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| Enterprises that serve the same basic customer needs |
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| Companies that are not completing but have the capability to do so |
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| Factors that make it costly for companies to enter industry |
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| Reductions in unit costs attributed to a larger output |
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| Preference of consumers for the products of established companies |
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| A cost advantage that is enjoyed by incumbents in an industry and that new entrants cannot expect to match |
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| Costs that consumers must bear to switch from the products offered by one established company to the products offered by a new entrant |
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| Competitive struggle between companies in an industry to gain market share from each other |
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| Industry dominated by a small number of large companies or, in extreme cases, just one company, which often is in a position to determine industry prices |
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| Costs that must be borne before the firm makes a single sale |
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| Economic, strategic and emotional factors that prevent companies from leaving the industry |
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| Bargaining power of buyers |
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| Ability of buyers to bargain down prices charged by companies in the industry or to raise the costs of companies in the industry by demanding better product quality and service |
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| Bargaining power of suppliers |
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| Ability of suppliers to raise the price of inputs or to raise the costs of the industry in other ways |
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| The products of different businesses or industries that can satisfy similar customer needs |
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