Chapter 1 Notes Flashcards

1
Q

strategy

A

theory about how to gain competitive advantages

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2
Q

strategic management process

A

a sequential set of analyses and choices that can increase the likelihood that a firm will choose a good strategy

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3
Q

mission

A

long term purpose, usually written in a mission statement

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4
Q

visionary firms

A

firms whose mission is central to all they do

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5
Q

objectives

A

specific measurable targets a firm can use to evaluate the extent to which it is realizing its mission

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6
Q

external analysis

A

firm identifies the critical threats and opportunities in its competitive environment

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7
Q

internal analysis

A

helps a firm identify its organizations strengths and weaknesses

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8
Q

business level strategies

A

actions firms take to gain competitive advantages in a single market or industry

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9
Q

corporate level strategies

A

actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously

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10
Q

strategy implementation

A

occurs when a firm adopts organizational policies and practices that are consistent with its strategy

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11
Q

competitive advantage

A

a firm has this when it is able to create more economic value than rival firms

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12
Q

economic value

A

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

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13
Q

temporary competitive advantage

A

a competitive advantage that lasts for a very short period of time

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14
Q

sustained competitive advantage

A

lasts much longer than a temporary competitive advantage

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15
Q

competitive parity

A

firms that create the same economic value as their rivals experience this

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16
Q

competitive disadvantage

A

firms that generate less economic value than their rivals have this

17
Q

accounting performance

A

measure of its competitive advantage calculated by using info from published financial statements

18
Q

ratios?

A

pg 14 Revisit if required by teacher

19
Q

accounting ratios

A

numbers taken from a firms financial statements that describe company performance

20
Q

profitability ratios

A

ratios with some measure of profit in the numerator and some measure of firm size or assets in the deonominator

21
Q

liquidity ratios

A

ratios that focus on the ability of a firm to meet its short term obligations

22
Q

leverage ratios

A

ratios that focus on the level of a firms flexibility, including the ability to obtain more debt

23
Q

activity ratios

A

ratios that focus on the level of activity of a firm’s business

24
Q

above average accounting performance

A

when its performance is above the industry average

25
average accounting performance
when a firm operates at the industry average
26
below average accounting performance
when a firm operates at below the industry average
27
cost of capital
rate of return that a firm promises to pay it suppliers of capital
28
economic measures of competitive advantage
compares a firm's level of return to its cost of capital
29
two types of capital
debt and equity
30
cost of debt
interest that a firm pays its creditors
31
cost of equity
interest that a firm promises its equity holders
32
weighted average cost of capital(WACC)
the percentage of a firm's total capital
33
above normal economic performance
when a firm earns more than its cost of capital
34
normal economic performance
when a firm earns its cost of capital
35
below normal economic performance
when a firm earns less than its cost of capital
36
emergent strategies
theories of how to gain competitive advantage in an industry