Chapter 1 Flashcards
strategic leadership
creating competitive advantage through effective management of the strategy-making process
strategy formulation
selecting strategies based on analysis of an organization’s external and internal environment
strategy implementation
putting strategies into action
risk capital
equity capital invested with no guarantee that stockholders will recoup their cash or earn a decent return
shareholder value
returns that shareholders earn from purchasing shares in a company
profitability
the return a company makes on the capital invested in the enterprise
profit growth
the increase in net profit over time
competitive language
the achieved advantage over rivals when a company’s profitability is greater than the average profitability of firms in its industry
sustained competitive advantage
a company’s strategies enable it to maintain above-average profitability for a number of years
business model
the conception of how strategies should work together as a whole to enable the company to achieve competitive advantage
general managers
managers who bear responsibility for the overall performance of the company or for one of its major self-contained subunits or divisions
functional managers
managers responsible for supervising a particular function, that is, a task, activity, or operation such as accounting, marketing, research and development, information technology or logistics
multidivisional company
a company that competes in several different businesses and has created a separate, self-contained division to manage each
business unit
a self-contained division that provides a product or service for a particular market
mission
the purpose of the company, or a statement of what the company strives to do
vision
the articulation of a company’s desired achievements or future state
values
a statement of how employees should conduct themselves and their business to help achieve the company mission
SWOT analysis
the comparison of strengths, weaknesses, opportunities, and threats
4 categories of SWOT analysis
- functional-level strategies
- business-level strategies
- global strategies
- corporate-level strategies
function-level strategies
directed at improving the efficiency and effectiveness of operations within a company
manufacturing, marketing, materials management, product development, customer service
business-level strategies
the business’s overall competitive theme, the way it positions itself in the marketplace to gain competitive advantage, and the different positioning strategies that can be used in different industry settings
cost leadership, differentiation, niche focus
global strategies
how to expand operations outside the home country to grow and prosper in a world where competitive advantage is determined at a global level
corporate-level strategies
Answer the ?s: What business or businesses should we be in to maximize the long-run profitability and profit growth of the organization, and how should we enter and increase our presence in these businesses to gain competitive advantage?
scenario planning
formulating plans based upon “what if” scenarios aboutthe future
cognitive biases
systematic errors in decision making that arise from the way people process information
prior hypothesis bias
cognitive bias that occurs when decision-makers have strong prior beliefs and tend to make decisions on the basis of these beliefs, even when presented with evidence that their beliefs are wrong
escalating commitment
cognitive bias that occurs when decision-makers, having already committed significant resources to a project, commit even more resources after receiving feedback that the project is failing
reasoning by analogy
use of simple analogies to make sinse out of complex problems
representativeness
a bias rooted in the tendency to generalize from a small sample or even a single, vivid anecdote
illusion of control
cognitive bias rooted in the tendency to overestimate one’s ability to control events
availability error
bias that arises from our predisposition to estimate the probability of an outcome based on how easy the outcome is to imagine
devil’s advocacy
technique in which one member of a decision-making team identifies all the considerations that might make a proposal unacceptable
dialectic inquiry
the generation of a plan (a thesis) and a counterplan (an antithesis) that reflect plausible but conflicting courses of action
outside view
identification of past successful or failed strategic initiatives to determine whether those initiatives will work for the project at hand
decentralized planning
“ivory tower” concept of planning
erroneously treat planning exclusively as a top-management responsibility
resulting in strategic plans formulated in a vacuum by top managers who may be disconnected from current operating realities
GE case study…
1. designs small appliances
2. ignores the expertise of lower-level managers
The Astute Use of Power
classic leadership article by Edward Wrapp
