·         Strategic Competitiveness

o   Achieved when a firm successfully formulates and implements a value-creating strategy

·         Strategy

o   An integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage

·         Competitive Advantage

o   What a firm achieves when it implements a strategy that creates superior value for customers and competitors are unable to duplicate or find too costly to try to imitate

·         Above-Average Returns

o   Are returns in excess of what an investor expects to earn from other investments with a similar amount of risk

·         Risk

o   Is an investor’s uncertainty about the economic gains or losses that will result from a particular investment

·         Average Returns

o   Are returns equal to those an investor expects to earn from other investments with a similar amount of risk

·         Strategic Management Process

o   Is the full set of commitment, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns

·         Hypercompetition (pg. 7)

o   Used to capture the competitive landscape

o   Assumptions of market stability are replaced by notions of inherent instability and change

o   It results from the dynamics of strategic maneuvering among global and innovative combatants

o   It is a condition of rapidly escalating competition based on:

§  Price-quality positioning

§  Competition to create new know-how and establish first-mover advantage, and

§  Competition to protect or invade established product or geographic markets

o   Firms aggressively challenge competitors in hopes of improving their competitive position and performance

o   Factors that create hypercompetitive environments and influence the nature of current competitive landscape:

§  Emergence of a global economy and technology

·         Specifically rapid technological change (two primary drivers of hypercompetitive environments)

·         Global Economy

o   One in which goods, services, people, skills, and ideas move freely across geographic borders

·         Globalization (pg. 9)

o   The increasing economic interdependence among countries and their organizations as reflected in the flow of:

§  Goods and services

§  Financial capital, and

§  Knowledge across country borders

o   Product of a large number of firms competing against one another in an increasing number of global economies.

·         Perpetual Innovation (pg. 10)

o   Used to describe how rapidly and consistently new, information-intensive technologies replace older ones.

o   The shorter the product life cycles resulting from rapid diffusions of new technologies place a competitive premium on being able to quickly introduce new, innovative goods and services into the marketplace

·         Strategic Flexibility

o   Is a set of capabilities used to respond to various demands and opportunities existing in a dynamic and uncertain competitive environment

·         Resources

o   Are inputs into a firm’s production process, such as capital equipment, the skills of individual employees, patents, finances, and talented managers

·         Capability

o   The capacity for a set of resources to perform a task or an activity in an integrative manner

·         Core Competencies

o   Capabilities that serve as a source of competitive advantage for a firm over its rivals

·         Vision

o   A picture of what the firm wants to be and, in broad terms, what it wants to ultimately achieve

·         Mission

o   Specifies the businesses in which the firm intends to compete and the customers it intends to serve

·         Stakeholders

o   Are the individuals, groups, and organizations that can affect the firm’s vision and mission, are affected by the strategic outcomes achieved, and have enforceable claims on the firm’s performance

·         Strategic Leaders

o   People located in different areas and levels of the firm using the strategic management process to select strategic actions that help the firm achieve its vision and fulfill its mission

·         Organizational Culture

o   Refers to the complex set of ideologies, symbols, and core values that are shared throughout the firm and that influence how the firm conducts business

·         Profit Pool

o   Entails the total profits earned in an industry at all points along the value chain

·         General Environment

o   Is composed of dimensions in the broader society that influence an industry and the firms within it

·         Industry Environment

o   The set of factors that directly influence a firm and its competitive actions and competitive responses:

§  The threat of new entrants, the power of suppliers, the power of buyers, the threat of product substitutes, and the intensity of rivalry among competitors

·         Opportunity

o   A condition in the general environment that if exploited effectively, helps a company achieve strategic competitiveness

·         Threat

o   Is a condition in the general environment that may hinder a company’s efforts to achieve strategic competitiveness

·         Demographic Segment

o   Concerned with a population’s size, age structure, geographic distribution, ethnic mix, and income distribution

·         Economic Environment

o   Refers to the nature and direction of the economy in which a firm competes or may compete

·         Political/Legal Segment

o   The arena in which organizations and interest groups compete for attention, resources, and a voice in overseeing the body of laws and regulations guiding interactions among nations as well as between firms and various local governmental agencies

·         Sociocultural Segment

o   Concerned with a society’s attitudes and cultural values

·         Technological Segment

o   Includes the institutions and activities involved with creating new knowledge and translating that knowledge into new outputs, products, processes, and materials

·         Global Segment

o   Includes relevant new global markets, existing markets that are changing, important international political events, and critical cultural and institutional characteristics of global markets

·         Physical Environment Segment

o   Refers to the potential and actual changes in the physical environment and business practices that are intended to positively respond to and deal with those changes

·         Industry

o   A group of firms producing products that are close substitutes

·         Strategic Group

o   A set of firms that emphasize similar strategic dimensions and use a similar strategy

·         Competitor Intelligence

o   The set of data and information the firm gathers to better understand and better anticipate competitors’ objectives, strategies, assumptions, and capabilities

·         Complementors

o   Companies or networks of companies that sell complementary goods or services that are compatible with the focal firm’s good or service

·         A Global Mind-Set

o   The ability to analyze, understand, and manage an internal organization in ways that are not dependent on the assumptions of a single country, culture, or context

·         Value

o   Measured by a product’s performance characteristics and its attributes for which customers are willing to pay

·         Tangible Resources

o   Are assets that can be observed and quantified

·         Intangible Resources

o   Included assets that are rooted deeply in the firm’s history, accumulate over time, and are relatively difficult for competitors to analyze and imitate

·         Valuable Capabilities

o   Allow the firm to exploit opportunities or neutralize threats in its external environment

·         Rare Capabilities

o   Capabilities that few, if any, competitors possess

·         Costly-to-Imitate

o   Capabilities that other firms cannot easily develop

·         Nonsubstitutable Capabilities

o   Capabilities that do not have strategic equivalents

·         Value Chain Activities

o   Activities or tasks the firm completes in order to produce products and then sell, distribute, and service those products in ways that create value for customers

·         Support Functions

o   Include the activities or tasks the firm completes in order to support the work being done to produce, sell, distribute, and service the products the firm is producing

·         Outsourcing

o   The purchase of value-creating activity or a support function activity from an external supplier

·         Business-Level Strategy               

o   An integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by explanting core competencies in specific product markets

·         Market Segmentation

o   A process used to cluster people with similar needs into individual and identifiable groups

·         The Cost Leadership Strategy

o   An integrated set of actions taken to produce goods or services with features that are acceptable to customers at the lowest costs, relative to that of competitors

·         Differentiation Strategy

o   An integrated set of actions taken to produce goods or services (at an acceptable cost) that customers perceive as being different in ways that are important to them

·         Focus Strategy

o   An integrated set of actions taken to produce goods or services that serve the needs of a particular competitive segment

·         Integrated Cost Leadership/Differentiation Strategy

o   Involves engaging in primary value chain activities and support functions that allow a firm to simultaneously pursue low cost and differentiation

·         Total Quality Management (TQM)

o   A managerial process that emphasizes an organization’s commitment to the customer and to continuous improvement of all processes through problem-solving approaches based on empowerment of employees

·         Competitors

o   Firms operating in the same market, offering similar products, and targeting similar customers

·         Competitive Rivalry

o   The ongoing set of competitive actions and competitive responses that occur among firms as they maneuver for an advantageous market position

·         Competitive Behavior

o   The set of competitive actions and competitive response the firm takes to build or defend its competitive advantages and to improve its market position

·         Multimarket Competition

o   Occurs when firms compete against each other in several product or geographic markets

·         Competitive Dynamics

o   Refer to all competitive behaviors – that is, the total set of actions and responses taken by all firms competing within a market

·         Market Commonality

o   Concerned with the number of markets with which the firm and a competitor are jointly involved and the degree of importance of the individual markets to each

·         Resource Similarity

o   The extent to which the firm’s tangible and intangible resources are comparable to a competitor’s in terms of both type and amount

·         Competitive Action

o   A strategic or tactical action the firm takes to build or defend its competitive advantages or improve its market position

·         Competitive Response

o   A strategic or tactical action the firm takes to counter the effects of a competitor’s competitive action

·         Strategic Action or a “Strategic Response”

o   A market-based move that involves a significant commitment of organizational resources and is difficult to implement and reverse

·         Tactical Action or a “Tactical Response”

o   A market-based move that is taken to fine-tune a strategy; it involves fewer resources and is relatively easy to implement and reverse

·         First Mover

o   A firm that takes an initial competitive action in order to build or defend its competitive advantages or to improve its market position

·         Second Mover

o   A firm that responds to the first mover’s competitive action, typically through imitation

·         Late Mover

o   Is a firm that responds to a competitive action a significant amount of time after the first mover’s action and the second mover’s response

·         Quality

o   Exists when the firm’s goods or services meet or exceed customers’ expectations

·         Slow-Cycle Markets

o   Those in which the firm’s competitive advantages are shielded from imitation commonly for long periods of time and where imitation is costly

·         Fast-Cycle Markets

o   Markets in which the firm’s capabilities that contribute to competitive advantages aren’t shielded from imitation and where imitation is often rapid and inexpensive

·         Standard-Cycle Markets

o   Markets in which the firm’s competitive advantages are moderately shielded from imitation and where imitation is moderately costly