Term
| in which situations can a company run successful business without any business strategy? |
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Definition
monopoly
stable market
small number of competitors
high and stable demand for goods
government protectionism
predictable future |
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Term
| Evolution of Management Systems: 1900-1930 |
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Definition
Recurring vision of future
Use of procedures manual and financial control
"Management by control" |
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Term
| Evolution of Management Systems: 1950 |
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Definition
Prediction of future by extrapolation
management by objectives and long term planning
"management by extrapolation" |
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Term
| Evolution of Management Systems: 1970 |
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Definition
predictable threats and opportunities
periodic strategic planning and strategic management
"management by anticipation of change" |
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Term
| Evolution of Management Systems: 1990-present |
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Definition
Partially predictable "weak signals" and unpredictable surprises
strategic management, weak signal management, suprise management
"management by flexible/rapid response" |
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Term
| What factors can increase the level of uncertainty for a company |
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Definition
economic
social
political
cultural
demographic/environmental
technology
competition |
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Term
|
Definition
potential new entry
power of suppliers
pressures of substitute products
power of buyers
rivals
[government (influences all forces and sometimes plays competitive role)] |
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Term
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Definition
| a firms ability to create value in a way that its rivals cannot |
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Term
| How to achieve sustained competitive advantage |
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Definition
1. adapting to change in external trends, internal capabilities, and resources
2. effectively formulating, implementing, and evaluating strategies |
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Term
| Strategic planning process |
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Definition
vision and mission statement
goals and objectives
SWOT
strategic alternatives analysis
strategy selection/formulation
strategy implementation
strategy monitoring and evaluation |
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Term
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Definition
| set of decision making principles for which a company administration is using in order to achieve the company's goals |
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Term
| 4 areas for business strategy application |
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Definition
performance measures
rules for developing the firm's relationship with its external environment
rules for establishing the internal relations and processes within the organization (administrative strategy)
rules for day to day procedures (operating policies) |
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Term
| 2 keys to strategy formulation |
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Definition
take advantage of external opportunities
avoid/minimize impact of external threats |
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Term
| corporate level strategy should ask |
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Definition
in which markets do we compete today?
in which markets do we want to compete in tomorrow?
how does our ownership of a business ensure its competitiveness today and in the future? |
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Term
| business level strategy should ask |
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Definition
how do we compete in this market today?
how will we compete in this market in the future? |
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Term
| factors in ethical decision making |
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Definition
authority structures
incentive systems
role of corporate governance |
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Term
| potential biases in decision making |
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Definition
common illusions about ourselves
escalating commitments
self-serving fairness bias
overconfidence bias
ethnocentrism and stereotyping
risk assessment |
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Term
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Definition
what do we want to become?
agreement on the basic vision for which the firm strives to achieve in the long run is critically important to the firm's success.
express long term action horizons
ambitions and force the firm to stretch
ambiguity allows flexibility for changing strategy or implementation tactics |
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Term
|
Definition
what is our business?
enduring statement of purpose, distinguishes one firm from another, declares the firm's reason for being
inspiring
less than 250 words
identify the utility of a company's products/services
social responsibility
enduring
nine components |
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Term
|
Definition
creates commonality of interests
reduce daily monotony
provides opportunities and challenges |
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Term
| questions for defining a mission statement |
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Definition
whose needs are we going to satisfy?
what are our clients needs?
how are we going to satisfy these needs? |
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Term
| 9 items included in mission statement |
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Definition
customer
products or services
markets
tech
concern for survival, profitability, or growth
philosophy
self-concept
concern for public image
concern for employees |
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Term
| benefits from a strong mission |
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Definition
unanimity of purpose
resource allocation
organizational climate
focal point of work structure |
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Term
|
Definition
reflect future growth
provide criteria for strategy selection
basis for generating and evaluating strategic options
generate strategic alternatives
are dynamic in nature
arouse positive feelings and emotions
motivate readers to action
generate favorable impression of the firm
reconciles interests among diverse stakeholders
finely balanced between specificity and generality |
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Term
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Definition
| a criterion by which the firm's success (or failures) is determined |
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Term
|
Definition
economic
non-economic
organizational
short-term
long-term |
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Term
|
Definition
specific
measurable
attainable
result oriented
time bound |
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Term
|
Definition
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Term
|
Definition
opportunities-a condition in the general environment that, if exploited helps a company achieve success
threats-a condition in the general environment that may hinder a company's efforts to achieve strategic competitiveness |
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Term
| segments of the external environment |
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Definition
demographic
economic
political/legal
sociocultural
technological
global |
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Term
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Definition
| a group of companies offering products or services that are close substitutes for each other- that is products or services that satisfy the same basic customer needs |
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Term
| supply side of the market |
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Definition
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Term
| demand side of the market |
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Definition
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Term
|
Definition
| the basic customer needs that are served by a market |
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Term
|
Definition
| a group of closely related industries |
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Term
| external analysis methods |
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Definition
scanning
monitoring
forecasting
assessing |
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Term
| sources of corporate info |
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Definition
moody's manuals
standard corporation descriptions
value lined investment surveys
dun's business rankings
S&P industry surveys
industry week
forbes, fortune, business week |
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Term
| High rivalry limits the profitability of an industry by |
|
Definition
price discounting
new product introductions
advertising campaigns
service improvement |
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Term
| the intensity of a rivalry is greatest if |
|
Definition
competitors are numerous or equal in size or power
industry growth is slow
exit barriers are high |
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Term
| rivalry is especially destructive to profitability if it gravitates to price competition |
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Definition
products are nearly identical
fixed costs are high and marginal costs are low
the product is perishable |
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Term
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Definition
| degree to which new competitors can enter an industry and intensify rivalry |
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Term
|
Definition
supply side economies of scale: firms that can produce larger volumes can spread fixed costs over more units and reduce cost per unit
demand side benefits of scale: a buyers willingness to pay for a product increases with the number of other buyers who also patronize the company.
customer switching costs: fixed costs that buyers face when they change suppliers
capital environments
unequal access to distribution channels
restrictive government policy |
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Term
|
Definition
| how potential entrants believe incumbents may react will influence their decisions to enter or stay out of an industry |
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Term
| the threat of a substitute is high if: |
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Definition
it offers an attractive prices-performance trade-off to the industry
the buyer's cost of switching to the substitue is low |
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Term
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Definition
| degree to which firms in the buying industry are able to dictate terms on purchase agreements that extract some of the profit that would otherwise go to competitors in the focal industry |
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Term
| customers capture more value by |
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Definition
forcing down prices
demanding better quality or more services
playing industry participants off against one another |
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Term
| the power of buyers can increase if |
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Definition
there are few buyers and/or they can buy large volumes of product
the industry's products are standardized or undifferentiated |
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Term
| which industries allow buyers to capture more of the profits |
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Definition
| those with many suppliers and few buyers |
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Term
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Definition
| degree to which firms in the supply industry are able to dictate terms to contracts and thereby extract some of the profit that would otherwise be available to competitors |
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Term
| suppliers capture more value by |
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Definition
charging higher prices
limiting quality or services
shifting costs to industry participants |
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Term
| a supplier group is powerful if |
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Definition
it is more concentrated to the industry it is selling to
the supplier group doesn't depend heavily on the industry for its revenues
industry participants face switching costs in changing suppliers
suppliers offer products that are differentiated
there is no substitute for the supplier's offering |
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Term
| to neutralize supplier power |
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Definition
| standardize specifications for parts so your company can switch more easily among vendors |
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Term
| to counter customer power |
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Definition
| expand your services so it's harder for customers to leave you for a rival |
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Term
| to temper price wars initiated by established rivals |
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Definition
| invest more heavily in products that differ significantly from your competitors |
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Term
| to scare off new entrants |
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Definition
| elevate the fixed costs of competing: for instance, by escalating your R&D expenditures |
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Term
| to limit the threat of substitutes |
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Definition
| offer a better value through wider product accessibility |
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Term
| steps to determine if an acceptable profit can be earned |
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Definition
1. identify key aspects or elements of each competitive force
2. evaluate how strong and important each element is for the firm
3. decide whether the collective strength of the elements is worth the firm entering or staying in the industry |
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Term
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Definition
essence of what makes an organization unique in its ability to provide value to its customers
firms strengths that cannot be easily matched or imitated by competitors
building competitive advantage involves taking advantage of distinctive competencies
strategies designed to improve on a firm's weaknesses and turn to strengths |
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Term
|
Definition
assets that can be seen and quantified
financial (borrowing capacity, ability to generate internal funds)
organizational (planning, motivational, controlling, staffing systems)
physical (access to raw materials, sophistication of equipment)
technological (patents, trademarks, copyrights, trade secrets) |
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Term
|
Definition
assets that are rooted deeply in the firm's history and have accumulated over time
human (knowledge, trust, managerial capabilities, organizational culture)
innovation (ideas, scientific capability, capability to innovate, knowledge management)
reputational (reputation with customers, brand name, perceptions of quality, rep with suppliers |
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Term
|
Definition
a firm's skill at using its resources to create goods and services...
the firms capability or ability to integrate firms resources to achieve a desired objective
become important when they combine resources in unique combos that create economic value and can lead to the competitive advantage |
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Term
|
Definition
distribution: effective use of logistics management technique
HR: motivating, empowering, and retaining employees
MIS: control of inventory via point of purchase data collection
Marketing: effective promotion of brand-name products, effective customer service
Manufacturing: miniaturization of components and products
R&D: innovative technology |
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Term
| 4 criteria of sustainable competitive advantage |
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Definition
valuable capabilities
rare capabilities
costly to imitate capabilities (historical, ambiguous cause, social complexity)
nonsubstitutional capabilities |
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Term
|
Definition
allows the firm to understand the parts of its operations that create value and those that do not.
shows how a product moves from the raw materials stage to the final customer |
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Term
| How to do a value chain analysis |
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Definition
desegregate the firm into separate activities
identify resources and capabilities associated with each activity
identify linkages/relationships across activities
determine what changes in firm activities need to be made to support strategy |
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Term
|
Definition
inbound logistics
operations
outbound logistics
marketing and sales
service |
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Term
|
Definition
infrastructure of the firm
HR management
technology development
procurement |
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Term
|
Definition
| purchase of a value creating activity from an external supplier |
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Term
|
Definition
improves business focus
gain access to world class capabilities
accelerate re-engineering benefits
share risks
free resources for other purposes
seek greatest value
evaluate resources and capabilities |
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Term
| 3 factors of profitability |
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Definition
value customer places on the company's products/services
price that a company charges for products/services
the costs of creating those products/services |
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Term
|
Definition
utility-price
the amount that consumers benefit by being able to purchase a product for a price that is less than they would be willing to pay |
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Term
|
Definition
1. raise prices to reflect higher utility
2. lower prices to generate demand |
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Term
| elements of competitive advantage |
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Definition
superior quality
superior customer responsiveness
superior efficiency
superior innovation |
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Term
|
Definition
efficiency = output/input
employee productivity (output produced per employee)
capital productivity (sales produced per dollar of capital invested in a business) |
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Term
|
Definition
excellence and reliability
when a customer perceives that a product's attributes provide them, with higher utility than attributes of products sold by rivals |
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Term
| superior customer responsiveness` |
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Definition
time it takes for a good to be delivered/service performed
to excel, a company must be do a better job identifying customer needs and satisfying them than their competitor do |
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Term
|
Definition
product innovation-creates value by creating new products
process innovation-creates more value by lowering production costs |
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Term
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Definition
| more value with lest work |
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Term
| why a company loses competitive advantage |
|
Definition
inertia
prior strategic commitments
the icarus paradox |
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Term
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Definition
| use a firms internal strengths to take advantage of external opportunities |
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Term
|
Definition
| improving internal weaknesses by taking advantage of external opportunities |
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Term
|
Definition
| use a firms strengths to avoid or reduce the impact of external threats |
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Term
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Definition
| defensive tactics aimed at reducing internal weaknesses and avoiding external threats |
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Term
|
Definition
growth
limited growth (stability)
retrenchment (liquidation, cuts, shortening and reorientation)
combination |
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Term
|
Definition
enhances multidivisional firm in formulating strategies
autonomous divisions= business portfolio
divisions may compete in different industries
focus on market share position and industry growth rate |
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Term
|
Definition
high growth rate, high market share
support and strengthen them
strategic options: integration, market penetration, market development, product development |
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Term
|
Definition
low growth rate, high market share
control production costs and investment, estimate possibility of investing money in stars and cats
strategic options: diversification, retrenchment, product development, divestiture |
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Term
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Definition
high growth rate, low market share
research possibility of converting cats into stars in the case of a special investment to cats
strategic options: market penetration, market development, product development, divestiture |
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Term
|
Definition
low growth rate, low market share
try to be rid of dogs if there is no special reason to keep them (PR) |
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Term
| 3 approaches to strategy development |
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Definition
proter's 5 generic strategies
synergy
product life cycle |
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Term
| 2 ways to achieve advantage over rivals |
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Definition
differentiation-produce a differentiated product and charge sufficiently higher prices to more than offset the added costs of differentiation
low-cost- produce an equivalent product at a lower cost |
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Term
| Porter's generic competitive strategies |
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Definition
cost leadership
differentiation
integrated cost leadership/differentiation
focus cost leadership
focused differentiation |
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Term
|
Definition
everything possible at a lower cost so it can offer things for cheaper than competitors
must also focus on high quality to retain customers
pros: if competitors have simular prices on their products the cost leader will make more money
able to charge less due to low cost structure |
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Term
|
Definition
standardized products
reduce differentiation
define possible minimum of features acceptable in the market
lowest competitive price
how to produce the fewest number of products that will be desired by the largest number of people |
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Term
|
Definition
tech change may eliminate cost advantage
competitors learn to imitate value chain
focus on efficiency may blind firm to changes in customer preferences |
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Term
|
Definition
combination of cost leadership and focused strategies
compete in one or few segments
small volume products |
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Term
|
Definition
integrated set of actions taken to produce goods that customers precieve as being different in ways that are important to them
satisfies needs in ways competitors can't
customers pay a premium when products features are worth extra money |
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Term
|
Definition
competitor may be able to focus on a mkore narrowly defined competitive segment and outfocus the focuser
large competitors may enter niche market
preferences of niche market may change and become simular to those of broad market |
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Term
| integrated cost leadership/differentiation strategy |
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Definition
involves engaging in primary and support activities that allow a firm to simultaneously pursue a low cost and differentiation
KEY: flexible management systems
information networks
total quality management systems (commitment to customer at every step) |
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Term
| risks of integrated cost leadership/differentiation strategy |
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Definition
involves compromises and trade offs between maximizing low cost and maximizing differentiation
may get stuck in the middle
successful integrators are rare |
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Term
|
Definition
market-when one product fortifies and promotes the sale of another product or service
cost-
tech-presupposes transferring of tech from one app to another
management-when one manager can easily swap with another seamlessly |
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Term
| product life cycle (strategies) |
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Definition
precommercialization (innovation)
introduction (infiltration)
growth (advancement)
maturity (defense)
decline (withdrawal) |
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