Chapter 1 What is a Strategy? Flashcards
An integrative management field that combines analysis, formulation, and implementation in the quest for competitive
advantage.
Strategic Management
The set of goal-directed and
integrated actions a
firm takes to gain and
sustain superior
performance relative
to competitors.
strategy
Enables a firm to achieve supe-
rior performance and sustainable competi-
tive advantage relative to its competitors.
good strategy
A good strategy needs to start with a
precise and critical diagnosis of the ________
Diagnosis of The Competitive Challenge
After diagnosing the competitive challenge, strategic leaders must formulate an effective ________ in response
Guiding Policy
Strategic leaders implement a guiding policy through __________. Tesla’s strategic leaders implement the formulated strategy with activities consistent
with their diagnosis of the competitive challenge.
Coherent Actions
Superior performance relative to other competitors in the same industry or the industry average.
Competitive Advantage
Outperforming competitors or the industry average over a pro-longed period of time.
Sustainable competitive Advantage
Underperformance relative to other
competitors in the same industry or the
industry average.
Competitive Disadvantage
Performance of two or
more firms at the same
level.
Competitive Parity
A situation in which everyone runs faster
but there are no changes in relative
strategic positions.
Red Queen Effect
Occurs
when companies with a
good strategy are able
to provide products or
services to consumers
at a price point that
they can afford while
keeping their costs in
check,
Value Creation
Organi-
zations, groups, and
individuals that can
affect or are affected
by a firm’s actions.
Stakeholders
An approach to strategy formulation that considers all of the company’s stakeholders, not just its share-
holders.
Stakeholder Strategy
A decision tool with which managers can recognize, prioritize, and address
the needs of different stakeholders, enabling
the firm to achieve competitive advantage
while acting as a good
corporate citizen.
Stakeholder Impact Analysis
A framework that helps firms recognize and address the economic, legal, social, and phil-
anthropic expectations that society has of the business enterprise at a given point in time.
Corporate Social Responsibility (CSR)
According to the CSR perspective, a business enterprise is first and foremost an economic institution. Investors expect an adequate return for the risks they take. Creditors expect the firm to repay its debts with interest.
Economic Responsibilities
Laws and regulations embody a society’s notions of right and wrong. They also establish the rules of the game. For example, businesses can function because property rights exist and contracts can be enforced in courts of law.
Legal Responsibilities
Legal responsibilities often define only the minimum acceptable standards for firm behavior. Frequently, strategic leaders are called upon to go beyond minimum legal requirements. The letter of the law cannot address or anticipate all possible business situations and newly emerging concerns, such as internet privacy or advances in
artificial intelligence,
Ethical Responsibilities
are often subsumed under
the idea of corporate citizenship, the idea that companies should voluntarily give back to society.
Philantropic Responsibilities
A model that links
three interdependent
strategic management tasks—analyze, formulate, and implement that, together, help managers plan and implement a strategy that can improve performance and result in competitive advantage.
Analysis, Formulation,
Implementation (AFI)
Strategy Framework
