Ch 1-4 Study guide Flashcards
Strategic planning model
SWOT analysis, formulation, implementation, exection & control
SWOT analysis
Internal strenghts and weaknesses, external oppurtunities and threats
formulation
mission, objectives, and strategy held up by organizational structure and policy guidelines
implementation
budgets, programs, procedures
execution and control
monitor feedback
critical success factor
strategic innovation
life cycle stages
introduction, growth, maturity, decline
introduction
R&D, tech change, attention to quality, design change, process change
growth
improve product, economies of scales, process improvement of distribution, value added, forecasting
maturity
focus on standardizing, efficiency, cost cuts, few changes, optimal capacity
decline
cost control, reduce capacity, cut products
how competitive forces shape strategy according to michael porter
by being aware of competitive forces, an organization can position itself to be less vulnerable to attack
innovation and oppurtunity according to joseph schumpter
all organizations must transform if they are to survive the natural process of creative destruction
Transformation, the recipe according to paul romer
inputs (labor, materials, capital, management) are transformed by the U.S. economic system into outputs (goods and services)
stakeholders
identify what are the interest, oppurtunities, and threats, social issues and concerns for internal and external stakeholders
internal stakeholders
employees, stockholders, managers
external stakeholders
customers, suppliers, partners, community, government
sustained competitive advantage
outperforming competitors or the industry average over a prolonged period of time
strategies
low cost, differentation, integration
low cost strategy
sell a comparale product for a lower price
ex of low cost strategy
southwest airlines strive to recruit best personnel available, have an innovative flight schedule, have strong customer support, and provide high pay for eomployees for a low cost
differentiation
products will sell better if they are different in a way that people can appreciate
ex of differentiation
RCA used its R&D strength and its organizational structure to market the color TV succesfully
Integration
combining low cost and differentiation
ex of integration
JetBlue works to successfully combine low cost and differentiation
black swan events
incidents that describe highly improbable but high impact events
ex of a black swan event
fall of the Berlin Wall that led to the collapse of the Soviet Union
Creative Destruction
efers to the incessant product and process innovation mechanism by which new production units replace outdated ones. It was coined by Joseph Schumpeter
strategy
set of goal directed actions a firm takes to gain and sustain superior performance relative to competitors
Porters 5 forces
Threat of new entrants, bargaining power of customers, threat of substitutes, bargaining power of suppliers, inustry competitive rivalry
competitive advantage
superior performance relative to other competitors in the same industry or the industry avverage
sustainable competitive advantage
maintain over a long period of time
strategy is not
a grandiose statement
organizational performance is determined by
industry and firm effects
industry effects
caused by the structure of the industry
firm effects
firm performance attriuted to the actions managers take
AFI framework
analyze, formulate, and implement
levels of strategy
business, corporate, and global
corporate strategy
concerns questions relating to where to compete
business strategy
concerns questions relationg to how to compete
global strategy
concerns how to implement business strategy
vision
aspiration of the firm that lays the foundation for its mission-“to”
mission
what an organization does, including products, services, and which markets “by”
Top down
rational, top down process aiding in programming for future success ,information flows one way, top down,centralized deciison making
bottom up
autonmous actions, serendipity, resource allocation process
strategic leadership
the behaviors and styles of executives that influence others to achieve the organizations vision and mission
variables to consider in strategic leadership
rate of environmental change, firm size, commitment of employees
profit vision
succes measured by financial performance
not for profit visions
ddifferent metric for successful performance, vision is aspirational, not solely financial
customer oriented vision
allows firms to adapt to changing environments, defines a business in terms of providing solutions ot customer needs, more flexible.
product oriented vision
defines a business in terms of a good ro service. force managers to take a myopic view. statements less flexible, flexibility needed to achieve competitive advatnage
ex of a product oriented vision
U.S. locomotive industry. led to a change in leadership ebcause they didn’t focus on the next succes in the industry, just on the product
ex of customer oriented vision
southwest airlines, happy employees=happy customers
values
ethical standards/norms that govern the behavior of individuals in a firm.
2 important functions of values
- form a foundation for firm’s vision and mission 2. serve as guardrails to keep company on track
scenario planning
managers envision what if scenarios to anticipate plausible futures, takes place at corporate and business levels of strategy, addresses both optimistic and pessimistic futures
economic factors
economy wide phenomena, affect firm strategy. growth rates, interest rates, levels of emploment, price stability, currency exchange rates.
political environment
processes/actions of government that can influence the decisions and behaviors of firms
legal environment
laws, mandates, regulations, ans court decisions-all of which can have a direct bearing on a firm’s profit potential
sociocultural factors
capture cultures, norms, and values for society, are dynamic and differ from group to group
demographc trends
capture population characteristics realted to age, gender, family size, sexual orientation, religion, and socioeconomic class
technological factors
capture the application of knowledge to create new processes and products
innovations in process technology
lean manufacturing, six sigma quality, biotechnology
nanotechnology revolution
initial staes-major upheaval for several industries-medical devices to new age materials for earthquake resistant buildingd
ecological factors
broad environmental issues
ex of ecological factors
natural environment, global warming, sustainable economic growth,
business and natural world are
interdependent and inextricably lnked
managing realtionship between business and natural world
directly influences the continued existence of human societies and the orgnizations we create
five forces in the airline industry
low entry barriers, powerful suppliers, powerful buyers, strong substitute threat, intense rivalry
result of five forces in the airline industry
low overall industry profit potential, unattractive industry for investment
the static five forces model cannot determine
the speed of change for an industry
as consolidated industries tend to be ____ than fragmented ones, firms tend to change their industry strcture towards ____
more profitable, being more consolidates through horizaonal mergers and acquisitions
industry convergence
a process whereby formerly unrelated industries begin to satisfy the same customer need
ex of industry convergence
convergence of media industries due to technological progress in IT, telecommunications, and digital media
firms in the same strategic group
follow a similar strategy
strategic group differences identify
business elvel strategies
direct competitors
same strategic group firms
_____ rivalry exceeds ___ rivalry
intra group, inter group
entry barriers
economis of scales, network effects, customer switching costs, capital requirements, advantages independent of size, credible threat of retalitaion
powerful suppliers
can demand higher prices for their inputs, capture part of the economic value created
signs if strong suppliers
industry is concentrated, dont depend heavily on incumbents industry, incumbent firms face high switching costs, products are differentiated, limited substitutes, have credible forward integration threats
powerful buyers
can demand a lower price or higher product quality
powerful buyers reduce industry profit potential
through price discounts (limite revenue), through incraesed quality/better service (higher costs), as they capture part of the economic value created
threat of sustitutes
threat derivs from products/services fullfilling the needs of current customers from outsde hte industry
powerful substitutes
proce performance:has an attractive trade off, the buyers swithcing cost is low
competitive industry structure
captured by number ad size of industry competitors, pricing power possess by firms, products/services offered by firms, height of entry barriers
mobility barriers
restricts movement bewtween groups (seperate one strategic group from another)
airline industry strategic groups
hub and spoke group iwht international routes, point to point airline groups do not
competitive advantage derives from core competiencies, which enable
differentation of products/services creating perceived value, or cost leadership, offering comparable value as lower cost
nike core competencies
just do it, unlock human potential, anyone can be a hero
PESTEL
Political, economic, sociocultural, technological, ecological, legal
resource based view
resources are key to superior performance, if they exhibit VRIO attributs, they become building blocks for gaining/sustaining competitive advantage
VRIO
valubale, rare, costly to imitate, irganized to caputre value of the resource
competititve advatnge is more likely to develop from ___ rather than
intangible, tangbile resources
tangible resources
labor, capital, land, buildings, plant, equipment, supplies
intangible resources
culture, knowledge, brand equity, reputation, intellectual property
intellectual propert
patents, copyrights, trademarks, trade secretes
Isolation mechanisms, how to sustain a competitive advantage
better expectations of future values, path dependence, casual ambiguity, social complexity
better expectation of future values
buy resources at a low cost, nike signing mega athletes early in career, highway expansion
path dependence
current alternatives are limited by past decisions, geographic concentration of carpet industry
casual ambiguity
cause of success or failure not apparent. why is apple so successful
social complexity
two or more systems interact creating many possiblities. 3 = 3, 5 = 10
value chain analysis
internal activities a firm engages in whe transforming inputs to outputs, each activity adds incremental valuea nd assocaited costs, helps assess what adds value and what does not
primary activities
firm activities that add value directtly by transforming inputs into outputs as the firm moves a product or sevice horzontally along the internal value chaing
support activities
firm activities that add value indiretly, but are necessary to sustain primary activities
