Chapitre 1: Strategy And Strategic Management Process Flashcards
What is strategy?
A strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage
A firm has a competitive advantage when?
By implementing a chosen strategy, it creates superior value for customers and when competitors are not able to imitate the value the firm’s products create or find it too expensive to attempt imitation
What is the Models of above-average returns
Above-average returns are returns in excess of what an investor expects to earn from other investments with a similar amount of risk
Name two models of above-average returns
Industrial organization (IO) or IO economics
Resource-based (RB) or resource-based view (RBV)
What is the IO model’s logic
The profitability potential of an industry, as well as the actions firms should take to operate profitably, are determined by a set of industry characteristics
The IO model suggests that returns are influenced more so by the characteristics of the external environment than a firm’s unique internal resources and capabilities
What are the set of industry characteristics that determined the profitability potential of an industry according to the IO model
Economies of scale
Barriers to market entry
Diversification
Product differentiation
The degree of concentration of firms in the industry
Market frictions
What are the 4 assumptions of the IO model
1- the external environment determines the strategies that would result in above-average returns
2- most firms competing within an industry or within a segment of that industry are assumed to control similar strategically relevant resources
3- firms’ resources are assumed to be highly mobile
4- organizational decision makers are rational individuals (profit-maximizers)
The IO model challenges firms to find the most attractive industry in which to compete
What is the RB model (resource-based)
Resources are inputs into a firm’s production process, such as
1- physical capital
2- human capital
3- organizational capital
Resources have a greater likelihood of being a competitive advantage when integrated to form a capability
What is a capability
A capability is the capacity for a set of resources to perform a task or an activity in an integrative manner
What is a core competencies
A core competencies are capabilities that serve as a resource of competitive advantage for a firm over its rivals ( importance of the rareness)
What are the 4 assumption of the resource based model
1- differences in firms’ performances across time are due primarily to their unique resources and capabilities rather than the industry’s characteristics
2- firms acquire different resources and develop unique capabilities based on how they combine and use the resource
3- firms’ resources are not highly mobile across firms
4- differences in resources and capabilities are the basis of competitive advantage
As a source of competitive advantage, a capability must not be easily imitated
The uniqueness of resources and capabilities is the basis of a firm’s strategy and its ability to earn above-average returns
