chapter 13 Flashcards
what is a firms strategy
Actions managers take to attain the firm’s goals.
to maximize the value of a firm, managers must what do what
increase the profability of the enterprise and its rate of profit growth over time
what is profitability
A ratio or rate of return concept.
what is profit growth
The percentage increase in net profits over time.
higher profitability and higher rate of profit growth..
will increase the value of an enterprise and thus the returns garnered by its owners, the shareholders.
how to increase the profitability of the firm
by pursuing strategies that lower costs or by pursuing strtagues that add value to the firms products, which enables the firm to raise prices and or maintain an existing customer base
how do managers increase the rate at which the firms profits grow
by pursuing strategies to sell more products in existing markets pr by pursuing strategies to enter new markets
what helps boost profitability and rate of profit growth
making a decision to expand International
what is the amount of value a firm creates
generally measured by the difference between its cost of production and the quality that consumers perceive in its products
why is the price that gets charged tend to be slightly less than the value placed on the product by many customers
- consumer surplus
- cant segment the market to a degree that the firm can charge each customer a price that reflects a specific customers assesment of the value of a product which is aka customers reservation price
what is the firms value creation
Performing activities that increase the value of goods or services to consumers.
what is a low cost statregy
a strategy that focuses primarily on lowering production costs
what is a differentiation strategy
a strategy that instead focuses primarily on increasing the attractiveness of a product
what did Michael porter argue
that low cost and differentiation are two basic statregies for creating value and attaining a compeotove advantage in an industry
what does Michael porter say about superior profitability
goes to those firms that can create superior valuee and the way they create this is to drive down the cost structure of the business and to differentiate the product
in order for a firm to maximize profitability, what should a firm do
1) pick a position on the efficiency frontier that is viable in the sense that there is enough demand to support that choice
2) configure its internal operations so that they support that position
3) make sure that the firm has the right org structure in place to execute its strategy
what are operations
The various value creation activities a firm undertakes.
how can firms change the basis of competition
by pursuing innovate strategies that offer more value to its customer set, at a lower cost than its rivals can attain
the operations of a firm can be though of as what
a value chain composed of a series of distinct value creation activities
what are primary activities
have to do with the design, creation and delivery of the product
what are the four sections that primary activities are divided into
research and development, marketing and sales and customer service and production
what is research and development
concerned with the design of products and production processes
many service companies can undertake r and d
create value
what is production
creation of a good or service
for physical= manufacturing
for services= usually when a service is delivered to the customer
create value if you perform its activities efficiently so there are lower costs
how do marketing and sales functions of a firm help create value
through brand positioning and advertising
creating a favourable impression means increasing prices
discovering consumer needs and communicating them back to the r and d function of the company which can ten design products that better match those needs
