Distinctive Competences

A firm's competencies that are superior to those of competitors.

VRIO Framework

Barney's proposed analysis to evaluate a firm's key resources in terms of value, rareness, imitability, and organization

Durability

The rate at which a firm's underlying resources and capabilities depreciate or become obsolete.

Imitability

The rate at which a firm's underlying resources and capabilities can be duplicated by others.

Transparency

The speed with which other firms can understand the relationship of resources and capabilities supporting a successful firm's strategy.

Transferability

The ability of competitors to gather the resources and capabilities necessary to support a competitive challenge.

Replicability

The ability of competitors to duplicate resources and imitate another firm's success.

Explicit Knowledge

Knowledge that can be easily articulated and communicated.

Tacit Knowledge

Knowledge that is not easily communicated because it is deeply rooted in employee experience or in a corporation's culture.

Business Model

The mix of activities a company performs to earn a profit

Value Chain

A linked set of value creating activities that begins with basic raw materials coming from suppliers and ends with distributors getting the final goods into the hands of the ultimate consumer.

Simple Structure

A structure for new entrepreneurial firms in which the employees tend to be generalists and jacks-of-all-trades.

Functional Structure

An approach taken by a functional area to achieve corporate and business unit objectives and strategies by maximizing resource productivity. 

 Divisonal Structure

An organizational structure in which employees tend to be functional specialists organized according to product/market distinctions. 

Strategic Business Units (SBU)

A division or group of divisions composed of independent product-market segments that are given primary aurthority for the management of their own functions.

Conglomerate Structure

An assemblage of legally independent firms (subsidiaries) operating under one corporate umbrella but controlled through the subsidiaries' boards of directors.

Marketing Mix

The particular combination of key variables (product, place, promotion, and price) that can be used to affect demand and to gain competitive advantage.

Financial Leverage

The ratio of total debt to total assets.

Capital Budgeting 

The process of analyzing and ranking possible investments in terms of the additional outlays and additional receipts that will result from each investment.

R&D Intensity

A company's spending on research and development as a percentage of sales revenue.

Technology Transfer

The process of taking a new technology from the laboratory to the marketplace.

Operating Leverage

The impact of a specific change in sales volume on net operating income.

Propitious Niche

A portion of a market that is so well suited to a firm's internal and external environment that other corporations are not likely to challenge or dislodge it.

TWOS Matrix

A matrix that illustrates how external opportunities and threats facing a particular company an be matched with that company's internal strengths and weaknesses to result in four sets of strategic alternatives.

Business Strategy

Competitive and cooperative strategies that emphasize improvements of the competitive position of a corporation's products or services in a specific industry or market segment.

Competitive Scope

The breadth of a company's or a business unit's target market.

Competitive Strategy

A strategy that states how a company or a business unit will compete in an industry.

Cooperative Strategies

Strategies that involve working with other firms to gain competitive advantage within an industry.

Collusion

The active cooperation of firms within an industry to reduce output and raise prices in order to get around the normal economic law of supply and demand. This practice is usually illegal.

Strategic Alliance

A partnership of two or more corporations or business units to achieve strategically significant objectives that are mutually beneficial.

Mutual Services Consortium

A partnership of similar companies in similar industries that pool their resources to gain a benefit that is too expensive to develop alone.

Joint Venture

An independent business entitiy created by two or more companies in a strategic alliance.

Licensing Arrangement

An agreement in which the licensing firm grants rights to another firm in another country or market to produce and/or sell a branded product.

Value-Chain Partnership

A strategic alliance in which one company or unit forms a long-term arrangement with a key supplier or distributor for mutual advantage.

Corporate Strategy

A strategy that states a company's overall direction in terms of its general attitude toward growth and the management of its various business and product lines.

Directional Strategies

A plan that is composed of three general orientations: Growth, Stability, and Retrenchment Strategies.

Growth Strategies

A directional strategy that expands a company's current activities.

Stability Strategies

Corporate strategies to make no change to the company's current direction or activities.

Retrenchment Strategies

Corporate strategies to reduce a company's level of activities and to return it to profitability.

Vertical Growth

A corporate growth strategy in which a firm takes over a function previously provided by a supplier or distributor.

Vertical Integration

The degree to which a firm operates in multiple location on an industry's value chain from extracting raw materials to retailing.

Backward Integration

Assuming a function previously provided by a supplier.

Forward Integration

Assuming a function previously provided by a distributor.

Full Vertical Integration

A growth strategy under which a firm makes 100% of its key suppliers internally and completely controls its distributors.

Taper Integration

A type of vertical integration in which a firm internally produces les than half of its own requirements and buys the rest from the outside suppliers.

Quasi-Integration

A type of vertial growth/integration in which a company does not make any of its key supplies but purchases most of its requirements from outside suppliers that are under its partial control.

Horizontal Integration

The degree to which a firm operates in multiple geographic locations at the same point in an industry's value chain.

BCG Matrix

A simple way to portray a corporation's portfolio of products or divisions in terms of growth and cash flow.

Question Marks

New Products that have potential for success and need a lot of cash for development.

Example: After years of fruitlessly experimenting with an electric car, GM finally decided in 2006 to take a change in developing the Chevrolet Volt.

Star

Market leader that is bale to generate enough cash to maintain its high market share.

Example: HP in the printer business

Cash Cows

A product that brings in far more money than is needed to maintain its market share.

Example: VCR's to DVD's

Dogs

Have low market share and do not have the potential (because they are in an unnatractive industry) to bring in much cash.

Example: IBM selling PC to China's Lenovo Group