Chapter 1 Notes Flashcards
strategy
theory about how to gain competitive advantages
strategic management process
a sequential set of analyses and choices that can increase the likelihood that a firm will choose a good strategy
mission
long term purpose, usually written in a mission statement
visionary firms
firms whose mission is central to all they do
objectives
specific measurable targets a firm can use to evaluate the extent to which it is realizing its mission
external analysis
firm identifies the critical threats and opportunities in its competitive environment
internal analysis
helps a firm identify its organizations strengths and weaknesses
business level strategies
actions firms take to gain competitive advantages in a single market or industry
corporate level strategies
actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously
strategy implementation
occurs when a firm adopts organizational policies and practices that are consistent with its strategy
competitive advantage
a firm has this when it is able to create more economic value than rival firms
economic value
the difference between the perceived benefits gained by a customer that purchases a firm’s products or services and the full economic cost of these products or services
temporary competitive advantage
a competitive advantage that lasts for a very short period of time
sustained competitive advantage
lasts much longer than a temporary competitive advantage
competitive parity
firms that create the same economic value as their rivals experience this
competitive disadvantage
firms that generate less economic value than their rivals have this
accounting performance
measure of its competitive advantage calculated by using info from published financial statements
ratios?
pg 14 Revisit if required by teacher
accounting ratios
numbers taken from a firms financial statements that describe company performance
profitability ratios
ratios with some measure of profit in the numerator and some measure of firm size or assets in the deonominator
liquidity ratios
ratios that focus on the ability of a firm to meet its short term obligations
leverage ratios
ratios that focus on the level of a firms flexibility, including the ability to obtain more debt
activity ratios
ratios that focus on the level of activity of a firm’s business
above average accounting performance
when its performance is above the industry average