Term
Chapter 2:
Switching costs refer to the
a. cost to a producer to exchange equipment in a facility when new technologies emerge.
b. cost of changing the firm’s strategic group.
c. one-time costs suppliers incur when selling to a different customer.
d. one-time costs customers incur when buying from a different supplier. |
|
Definition
|
|
Term
Chapter 1: The resource-based model of the firm argues that:
a. all resources have the potential to be the basis of sustainable competitive advantage.
b. resources alone can be a source of sustainable competitive advantage.
c. the key to competitive success is the structure of the industry in which the firm competes.
d. resources that are valuable, rare, costly to imitate, and non-substitutable form the basis of a firm’s core competencies. |
|
Definition
|
|
Term
Chapter 3:
Which of the following is a true statement about capabilities?
a. Capabilities exist when resources have been purposely integrated to achieve a specific task or set of tasks.
b. Valuable capabilities are based almost entirely on tangible resources.
c. Capabilities based on human capital are more vulnerable to obsolescence than other intangible capabilities because of the tendency for employee knowledge to become outdated.
d. The link between firm financial performance and capabilities is dependent on whether the capabilities are based on tangible or intangible resources. |
|
Definition
|
|
Term
Chapter 4:
Business-level strategies detail commitments and actions taken to provide value to customers and gain competitive advantage by exploiting core competencies in
a. the selection of industries in which the firm will compete.
b. specific product markets.
c. primary value chain activities.
d. particular geographic locations. |
|
Definition
|
|
Term
Chapter 5:
Sustained competitive advantage is most achievable in a ____ market.
a. slow-cycle
b. medium-cycle
c. standard-cycle
d. fast-cycle |
|
Definition
|
|
Term
Chapter 6:
Which acquisition would be considered the LEAST related?
a. a candy manufacturer purchases a chemical laboratory specializing in food flavorings
b. a chain of garden centers acquires a landscape architecture firm
c. a hospital acquires a long-term care nursing home
d. an upscale “white-tablecloth” restaurant chain acquires a travel agency |
|
Definition
|
|
Term
Chapter 7:
Currently, the rationale for making an acquisition includes each of the following EXCEPT
a. To increase market power.
b. To decrease taxes paid by shareholders.
c. To overcome entry barriers.
d. To increase diversification. |
|
Definition
|
|
Term
Chapter 8:
Which pair of industries would NOT be considered as “related and supporting” under Porter’s diamond model?
a. Japanese cameras and copiers
b. Italian leather-processing and shoes
c. U.S. computers and software
d. Highway systems and the supply of debt capital |
|
Definition
|
|
Term
Chapter 9:
A strategic alliance in which the partners own different percentages of the new company they have formed is called a(an)
a. equity strategic alliance.
b. joint venture.
c. nonequity strategic alliance.
d. cooperative arrangement. |
|
Definition
|
|
Term
Chapter 10:
A primary objective of corporate governance is to
a. determine and control the strategic direction of an organization, so that the top executives are focused on maximizing corporate profits.
b. ensure that the interests of top-level managers are aligned with the interests of shareholders.
c. lobby legislators to pass laws that are aligned with the organization’s interests.
d. resolve conflicts among corporate employees. |
|
Definition
|
|
Term
Chapter 11:
Typically, an organization using a simple structure would be
a. large.
b. small.
c. of any size if the firm is privately held.
d. a family-owned-and-managed firm of any size. |
|
Definition
|
|
Term
Chapter 12:
Which of the following is NOT associated with heterogeneous top management teams?
a. higher firm performance
b. innovation and strategic change
c. diminished debate among top managers
d. better strategic decisions |
|
Definition
|
|
Term
Chapter 13:
The development of the original personal computer (PC) was a(n) ____ innovation at the time, whereas adding a different kind of whitening agent to a soap detergent in an example of a(n) ____ innovation.
a. incremental; radical
b. radical; incremental
c. concentric; radical
d. radical; concentric |
|
Definition
|
|
Term
|
Definition
| Integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage. |
|
|
Term
| Define: Strategic Management |
|
Definition
| Analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages. |
|
|
Term
| Porter's Five Forces Model |
|
Definition
|
|
Term
|
Definition
Composed of dimensions in the broader society that influence and industry and the firms within it. Seven environmental segments:
(1)Demographic
(2)Economic
(3)Political/legal
(4)Sociocultural
(5)Technological
(6)Global
(7)Physical |
|
|
Term
|
Definition
VRIN:
Valuable- Contributes value to the customer, source of competitive advantage, neutralizes threats and exploits opportunities.
Rare-Uncommon resources, rare to other competitors. ex-panda poop souvenir
Inimitable (or costly-to-imitate)-Physical uniqueness, path dependancy.
Nonosubstitutable- Must be no strategically equivalent valuable resources that are themselves not rare or inimitable. |
|
|
Term
|
Definition
| An integrated set of actions taken to produce goods or services with features that are acceptable to customers at the lowest cost, relative to that of competitors. |
|
|
Term
|
Definition
| An integrated set of actions taken to produce goods or services (at an acceptable costs) that customers perceive as being different in ways that are important to them. |
|
|
Term
| Purpose of a business-level strategy |
|
Definition
| Choosing to perform activities differently or to perform different activities than rivals. |
|
|
Term
|
Definition
An integrated set of actions taken to produce goods or services that serve the needs of a particular competitive segment.
Focus cost vs focused differentiation:
Examples of specific market segments:
1) Particular buyer group (ex youths, seniors)
2)different segment of a product line (ex. products for professional painters or the DIY group)
3)different geographic market (ex. northern vs southern Italy) |
|
|
Term
| Integrated cost leadership/differentiation strategy |
|
Definition
| Involves engaging in primary and support activities that allow a firm to simultaneously pursue low cost and differentiation. |
|
|
Term
|
Definition
An integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets.
Five business-level strategies:
1)Cost leadership
2)Differentiation
3)Focused cost leadership
4)Focused differentiation
5)Integrated cost leadership/differentiation |
|
|
Term
|
Definition
| Resources and capabilities that serve as a source of competitive advantage for a firm over its rivals. |
|
|
Term
|
Definition
| The set of factors that directly influences a firm and its competitive actions and 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. |
|
|
Term
| Components of the External Environmental Analysis |
|
Definition
-Scanning: Identifying early signals of environmental changes and trends
-Monitoring: Detecting meaning through ongoing observations of environmental changes and trends.
-Forecasting: Developing projections of anticipated outcomes based on monitored changes and trends.
-Assessing: Determining the timing and importance of environmental changes and trends for firm's strategies and their management. |
|
|
Term
|
Definition
| The nature and direction of the economy in which a firm competes or may compete. |
|
|
Term
|
Definition
| 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. |
|
|
Term
|
Definition
| Concerned with a society's attitudes and cultural values. |
|
|
Term
|
Definition
| Includes the institutions and activities involved with creating new knowledge and translating that knowledge into new outputs, products, processes, and materials. |
|
|
Term
|
Definition
| Includes relevant new global markets, existing markets that are changing, important international political events, and critical cultural and institutional characteristics of global markets. |
|
|
Term
| Physical Environment Segment |
|
Definition
| Refers to potential and actual changes in the physical environment and business practices that are intended to positively respond to and deal with those changes. |
|
|
Term
|
Definition
| Derived from incremental efficiency improvements through experience as a firm grows larger; therefore, the cost of producing each unit declines as the quantity of a product produced during a given period increases. |
|
|
Term
|
Definition
| New entrants can threaten the market share of existing competitors. The likelihood that firms will enter an industry is a function of two factors: (1) barriers to entry and (2) retaliation expected from current industry participants. |
|
|
Term
|
Definition
This is a factor of threat of new entrants.
Depends on:
-Economies of Scale
-Capital requirements
-Switching Costs
-Access to distribution channels
-Cost Disadvantages independent of scale
-Government Policy |
|
|
Term
| Bargaining power of suppliers |
|
Definition
Increasing prices and reducing the quality of their products are potential means suppliers use to exert power over firms competing within an industry.
Powerful supplier group when:
-dominated by a few large companies and is more concentrated than the industry to which it sells.
-Satisfactory substitute products are not available to industry firms
-Suppliers' goods are critical to buyers' marketplace success.
-Effectiveness of suppliers' products has created high switching costs for firms. |
|
|
Term
| Bargaining Power of Buyers |
|
Definition
Buyers bargain for higher quality, greater levels of service, and lower prices. This is achieved by encouraging competitive battles among industry firms.
Powerful buyers when:
-They purchase a large portion of an industry's total output
-Sales of the product being purchased account for a significant portion of the seller's annual revenues.
-They could switch to another product at little, if any, cost.
-Industry products are undifferentiated or standardized. |
|
|
Term
| Intensity of Rivalry Among Competitors |
|
Definition
Competitive rivalry intensifies when a firm is challenged by a competitor's actions or when a company recognizes an opportunity to improve its market position.
Dependent on:
-Numerous or equally balanced competitors
-Slow industry growth
-High fixed costs or high storage costs
-lack of differentiation or low switching costs
-High strategic stakes
-High exit barriers |
|
|
Term
|
Definition
Tool used by firms to select the value-creating competencies that should be maintained, upgraded, or developed and those that should be outsourced.
Primary Activities: involved with a product's physical creation, its sale and distribution to buyers, and its service after the sale.
Support activities: provide the assistance necessary for the primary activities to take place. |
|
|
Term
|
Definition
| Firms operating in the same market, offering similar products and targeting similar customers. |
|
|
Term
|
Definition
| Ongoing set of competitive actions and competitive responses occurring between competitors as they contend with each other for an advantageous market position. |
|
|
Term
|
Definition
| Total set of actions and responses of all firms competing within a market. |
|
|
Term
| Model of Competitive Rivalry |
|
Definition
|
|
Term
|
Definition
First step the firm takes to be able to predict the extent and nature of its rivalry with each competitor.
Depends on:
-market commonality: # of markets with which the firm and competitor are jointly involved.
-resource similarity: the extent of the firm's tangible/intangible resources are comparable to a competitor's. |
|
|
Term
| Drivers of competitive actions & responses |
|
Definition
-awareness: when competitors recognize degree of mutual interdependence that results from market commonality and resource similarity.
-motivation: firm's incentive to take action
-ability: firm's resources that allow competitive action and flexibility in responsiveness.
-resource dissimilarity: the greater the resource imbalance between acting firm and competitors, the greater will be the delay in response. |
|
|
Term
|
Definition
| Strategic or tactical action the firm takes to build or defend its comptitive advantages or improve its market position. |
|
|
Term
| Strategic action/response |
|
Definition
| Market-based move that involves a significant commitment of organizational resources and is difficult to implement and reverse. |
|
|
Term
|
Definition
| Market-based move that is taken to fine-tune a strategy; it involves fewer resources and is relatively easy to implement and reverse. |
|
|
Term
|
Definition
Factors:
-First-mover incentives: First mover=the firm that takes an initial competitive action in order to build or defend its competitive advantages or to improve its market position.
-Organizational Size: affects the likelihood of taking competitive actions.
-Quality: exists when the firm's goods/services meet or exceed customers' expectations. |
|
|
Term
|
Definition
Factors:
-Type of competitive action
-Actor's reputation: evaluate the responses that the competitor has taken previously when attacked.
-Dependence on the Market: Denotes the extent to which a firm's revenues/profits are derived from a particular market. Firm's with high market dependence are likely to respond strongly to attacks. |
|
|
Term
| Competitive Dynamics: 3 market cycles |
|
Definition
1)Slow-cycle markets: firm's competitive advantages are shielded from imitation commonly for long periods of time and where imitation is costly.
2)Fast-cycle markets: firm's capabilities that contribute to competitive advantages aren't shielded from imitation and where imitation is often rapid and inexpensive.
3)Standard-cycle markets: firm's competitive advantages are partially shielded from imitation and imitation is moderately costly. |
|
|
Term
|
Definition
| Specifies actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets. |
|
|
Term
| Levels and Types of Diversification |
|
Definition
|
|
Term
| Reasons for Diversification |
|
Definition
|
|
Term
|
Definition
| Cost savings that the firm creates by successfully sharing some of its resources and capabilities or transferring one or more corporate-level core competencies that were developed in one of its businesses to another of its businesses. |
|
|
Term
| Value-Creating Diversification |
|
Definition
|
|
Term
|
Definition
| Exists when firm is able to sell its products above the existing competitive level, to reduce costs of primary and support activities below the competitive level, or both. |
|
|
Term
|
Definition
| Exists when a company produces its own inputs (backward integration) or owns its own source of output distribution (forward integration). |
|
|
Term
| Corporate-level core competencies |
|
Definition
| Complex sets of resources and capabilities that link different businesses, primarily through managerial and technological knowledge, experience, and expertise. |
|
|
Term
| Unrelated Diversification |
|
Definition
-Corporate parenting: Add value to acquired businesses by performing activities such as auditing their mfg operations, improving their acctg activities, and centralizing union negotiations.
-Corporate Restructuring: Find poorly performing firms, sell off parts, change strategies, etc. |
|
|
Term
|
Definition
| Exists when the value created by business units working together exceeds the value that those same units create working independently. |
|
|
Term
| Portfolio Management: BCG matrix |
|
Definition
|
|
Term
| Value-reducing diversification |
|
Definition
Top-level executives may diversify in order to diversify their own employment risk, as long as profitability does not suffer excessively.
-Adds benefits to managers but not shareholders. |
|
|
Term
| Value-neutral Diversification incentives |
|
Definition
-Antitrust regulation & tax laws
-Low performance
-Uncertain Future cash flows
-Synergy and Firm risk reduction
-Resources and diversification |
|
|
Term
| Means to Achieve Diversification |
|
Definition
1)Merger & Acquisition
2)International Development (new markets)
3)Pooling resources of other companies with a firm's own resource base (joint venture & strategic alliance) |
|
|
Term
|
Definition
| Strategy through which two firms agree to integrate their operations on a relatively coequal basis. |
|
|
Term
|
Definition
| Strategy through which one firm buys a controlling, or 100%, interest in another firm with the intent of making the acquired firm a subsidiary business within its portfolio. |
|
|
Term
|
Definition
| Special type of acquisition wherein the target firm does not solicit the acquiring firm's bid; thus, takeovers are unfriendly acquisitions. |
|
|
Term
|
Definition
| Acquirer and acquired companies compete in the same industry |
|
|
Term
|
Definition
| Firm acquires a supplier or distributor of one or more of its goods or services; leads to additional controls over parts of the value chain |
|
|
Term
|
Definition
| Firm acquires another company in a highly related industry |
|
|
Term
| Problems with achieving acquisition success |
|
Definition
1)Integration difficulties
2)Inadequate evaluation of target
3)Large or extraordinary debt
4)Inability to achieve synergy
5)Too much diversification
6)Managers overly focused on acquisitions
7)Too large |
|
|
Term
|
Definition
| Strategy though which a firm changes its set of businesses or its financial structure. |
|
|
Term
|
Definition
1)Downsizing: reduce # of firms' employees (& possibly # of operating units)
2)Downscoping: Eliminate bussinesses unrelated to firms' core businesses.
3)Leveraged buyouts (LBOs): One party buys all of a firm's assets. |
|
|
Term
|
Definition
1)Management buyouts
2)Employee buyouts
3)Whole-firm buyouts |
|
|
Term
| Reasons for International Expansion |
|
Definition
-Increase size of potential markets
-Attain economies of scale
-Extend life cycle of products
-Optimize physical locations for activities in value chain |
|
|
Term
| Opposing Pressures of 4 int'l expansion strategies |
|
Definition
|
|
Term
|
Definition
-Pressure for both local adaptation and low costs are rather low
-Primary goal is worldwide exploitation of the parent firm’s knowledge and capabilities.
-All sources of core competencies are centralized.
-Susceptible to higher levels of currency and political risks |
|
|
Term
|
Definition
-High pressure to lower costs & low pressure for local adaptation
-Emphasizes economies of scale |
|
|
Term
|
Definition
-Low pressure to lower costs & high pressure for local adaptation
-Emphasis is differentiating products and services to adapt to local markets
-Authority is more decentralized to accommodate local demand. |
|
|
Term
|
Definition
-Optimization of tradeoffs associated with efficiency, local adaptation, and learning
-Firm’s assets and capabilities are dispersed according to the most beneficial location for a specific activity
-Enhance both economics of scale and flexible adoptation |
|
|
Term
| Potential Risks of International Expansion |
|
Definition
-Management risks: culture,customs,language
-Political & economic risk
-Currency risks: currency exchange fluctuations |
|
|
Term
| Entry Modes of International Expansion |
|
Definition
|
|
Term
|
Definition
| Primary type of cooperative strategy in which firms combine resources and capabilities to create a competitive advantage. |
|
|
Term
|
Definition
| Two or more firms create a legally independent company to share resources and capabilities to develop a competitive advantage |
|
|
Term
| Equity strategic alliance |
|
Definition
| Two or more firms own a portion of the equity in the venture they have created, which is not necessarily legally independent. |
|
|
Term
| Nonequity strategic alliance |
|
Definition
| Two or more firms develop a contractual relationship to share some of their unique resources and capabilities to create a competitive advantage |
|
|
Term
| Types of business-level cooperative strategies |
|
Definition
-Complementary strategic alliances (CSA):Vertical and horizontal
-Competition response strategy
-Uncertainty-reducing strategy
-Competition-reducing strategy |
|
|
Term
| Complementary Strategic alliance (CSA) |
|
Definition
Firms share some of their resources and capabilities in complementary ways to develop competitive advantages
-Vertical=different stages of value chain
-horizontal=same stages of value chain |
|
|
Term
| Corporate-level cooperative strategies (CLCS) |
|
Definition
help firm to diversify itself in terms of products offered, markets served or both.
Types: Diversifying, Synergistic, Franchising |
|
|
Term
| Primary approaches of managing cooperative strategy |
|
Definition
1) cost minimization
2)opportunity maximization |
|
|
Term
| Strategic Control Systems |
|
Definition
-Traditional control system: 'feedback approach'
-Contemporary control system: continual monitoring of the environments (internal/external) |
|
|
Term
|
Definition
| Set of mechanisms used to manage the relationships (and conflicting interests) among stakeholders, and to determine and control the strategic direction and performance of organizations (aligning strategic decisions with company values) |
|
|
Term
|
Definition
| Exists when one or more persons (the principal or principals) hire another person or persons (the agent or agents) as decision-making specialists to perform a service. |
|
|
Term
|
Definition
| Seeking self-interest with guile (i.e., cunning or deceit) |
|
|
Term
| Problems with agency theory |
|
Definition
1)Conflicting interests and goals of principals and agents
2)Different attitudes and preferences toward risk |
|
|
Term
|
Definition
| Sum of incentive costs, monitoring costs, enforcement costs, and individual financial losses incurred by principals, because governance mechanisms cannot guarantee total compliance by the agent |
|
|
Term
|
Definition
-elected by shareholders
-group of elected individuals whose primary responsibility is to act in the onwers' best interest by formally monitoring and controlling the corporation's top-level managers. |
|
|
Term
|
Definition
| Governance mechanism defined by both the number of large-block shareholders and the total percentage of shares they own |
|
|
Term
|
Definition
| Shareholders owning a concentration of at least 5 percent of a corporation’s issued shares |
|
|
Term
|
Definition
| Financial institutions such as stock mutual funds and pension funds that control large-block shareholder positions |
|
|
Term
|
Definition
| Governance mechanism that seeks to align the interests of top managers and owners through salaries, bonuses, and long-term incentive compensation, such as stock awards and stock options |
|
|
Term
| Market for corporate control |
|
Definition
| external governance mechanism consisting of a set of potential owners seeking to acquire undervalued firms and earn above-average returns on their investments |
|
|
Term
| Internal Governance Mechanisms (Modern Corporation) |
|
Definition
1)Ownership concentration
2)Board of Directors
3)Executive Compensation |
|
|
Term
|
Definition
| Specifies the firm's' formal reporting relationships, procedures, controls, and authority and decision-making processes. |
|
|
Term
|
Definition
| The owner (manager) makes all major decisions and monitors all activities while the staff serves as and extension of the manager's supervisor authority. |
|
|
Term
|
Definition
| Consists of a Chief executive officer (CEO) and a limited corporate staff, w/ functional line managers in dominant organizational areas such as production, accounting, marketing, R&D, engineering, and human resources. |
|
|
Term
| Multidivisional structure (M-form) |
|
Definition
| Consists of a corporate office and operating divisions, each operating division representing a separate business or profit center in which the top corporate officer delegates responsibilities for day-to-day operations and business-unit strategy to division managers. |
|
|
Term
|
Definition
M-form structure characterized by complete independence among the firm's divisions which compete for corporate resources.
-Also called holding company structure, congolomerate |
|
|
Term
|
Definition
| A combination of the functional and divisional structures. Individuals who work in a matrix organization become responsible to two managers: the project manager and the functional area manager |
|
|
Term
| Worldwide Geographic area structure |
|
Definition
| Emphasizes national interests and facilitates the firm's efforts to satisfy local differences. |
|
|
Term
| Worldwide product divisional structure |
|
Definition
| Centralized decision-making authority in the WW division headquarters coordinates and integrates decisions and actions among divisional business units |
|
|
Term
| Strategic Network for Cooperative strategies |
|
Definition
| Matches cooperative strategy with network structure. |
|
|
Term
|
Definition
| the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary |
|
|
Term
|
Definition
-Preselect and shape skills of tomorrow’s leaders
-Internal managerial labor market:opportunities for managerial positions to be filled from within the firm
-External Managerial Labor Market: opportunities for managerial positions to be filled by candidates from outside of the firm |
|
|
Term
|
Definition
| Composed of key individuals who are responsible for selecting and implementing firm’s strategies; usually includes officers of the corporation (VP and above) and BOD |
|
|
Term
|
Definition
| consists of individuals with varied functional backgrounds, experiences & education |
|
|
Term
| Key Strategic Leadership Actions |
|
Definition
1)Effectively managing firm's resource portfolio
2)Sustaining an effective organizational culture
3)Emphasizing ethical practices |
|
|
Term
| "SMART" criteria for strategic objectives |
|
Definition
-Specific
-Measurable
-Appropriate
-Realistic
-Timely |
|
|
Term
|
Definition
-Provides a meaningful integration of many issues that come into evaluating a firm’s performance
-Four key perspectives:
1)Customer
2)Internal
3)Innovation & learning (growth)
4)Financial |
|
|
Term
|
Definition
| Process by which individuals or groups identify and pursue entrepreneurial opportunities without the immediate constraint of the resources they currently control |
|
|
Term
|
Definition
| Replacing products/production methods with new ones. |
|
|
Term
| Strategic Entrepreneurship |
|
Definition
| Entrepreneurial actions (exploiting found opportunities in the external environment) through a strategic perspective (innovation efforts) |
|
|
Term
| Three types of innovation |
|
Definition
1)Invention:create/develop new product
2)Innovation:bring something new into use
3)Imitation:adoption of innovation by similar firms |
|
|
Term
|
Definition
-fundamental changes/breakthroughs
-major departure from existing practices
-can be highly disruptive
-typically long term (10+ yrs) |
|
|
Term
|
Definition
-enhance existing practice
-small improvements in products & processes
-may be 6mos-2yrs
-may use milestone approach driven by goals/deadlines |
|
|
Term
|
Definition
| -create entirely new market through introduction of a new kind of product/service. |
|
|
Term
|
Definition
| -make product/service perform better in ways that customers in mainstream market already value. |
|
|
Term
|
Definition
-create product design
-apply technology to develop new products for end users |
|
|
Term
|
Definition
| -improve efficiency of organizational process |
|
|
Term
| Induced strategic behavior |
|
Definition
| Top-down process whereby the firm’s current strategy and structure foster product innovations that are closely associated with that strategy and structure |
|
|
Term
| autonomous strategic behavior |
|
Definition
| Bottom-up process in which product champions pursue new ideas, often through a political process, to develop and coordinate the commercialization of a new good or service |
|
|
