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STRAT 5700 > Chapter 2 Notes > Flashcards

Chapter 2 Notes Flashcards

1
Q

general environment

A 
consists of broad trends in the context within which a firm operates that can have an impact on a firm's strategic choices 
Technological Change
Demographic Trends
Cultural Trends
Economic Climate
Legal and Political Conditions
Specific International Events
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2
Q

Technological Change

A

creates both opportunity and threats as a firm expands

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3
Q

Demographics

A

the distribution of individuals in a society in terms of age, sex, marital status, etc

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4
Q

Culture

A

the values, beliefs, and norms that guide a society

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5
Q

recession

A

when activity in an economy is relatively low

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6
Q

depression

A

a severe recession that lasts for several years

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7
Q

business cycle

A

alternating pattern of prosperity followed by recession, followed by prosperity

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8
Q

legal and political conditions

A

laws and the legal systems impact on business

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9
Q

specific international events

A

events such as civil wars, political coups, terrorism, etc

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10
Q

Five Force Model of Environmental Threats

A 
Threat of entry
threat of rivalry
threat of buyers
threat of substitutes
threat of suppliers
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11
Q

environmental threat

A

any thing that seeks to reduce the performance of an organization

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12
Q

threat of new entrants

A

firms that have recently started or that threaten to begin in an industry

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13
Q

perfectly competitive

A

when there are large numbers of competing firms

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14
Q

monopolistically competitive industries

A

when there are large numbers of competing firms and low cost entry into and exit from the industry

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15
Q

oligopolies

A

characterized by a small number of competing firms, by homogeneous products, and by high entry and exit costs

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16
Q

monopolistic industries

A

consist of only one firm

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17
Q

barriers to entry

A

attributes of an industry’s structure that increase the cost of entry

  1. economies of scale
  2. product differentiation
  3. cost advantages independent of scale
  4. government regulation of entry
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18
Q

economies of scale

A

exist in an industry when a firm’s costs fall as a function of its volume of production

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19
Q

diseconomies of scale

A

exist when a firm’s cost rise as a function of its volume of production

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20
Q

product differentiation

A

means that incumbent firms possess brand identification and customer loyalty that potential entrants do not

21
Q

sources of cost advantage

A

proprietary technology
managerial know how
favorable access to raw materials
learning curve cost advantages

22
Q

proprietary technology

A

secret or patented tech

23
Q

managerial know how

A

knowledge needed to compete in an industry

24
Q

favorable access to raw materials

A

firms already have favorable access to materials

25
Q

learning curve cost advantages

A

firms who have more experience have an advantage

26
Q

rivalry

A

the intensity of competition among a firm’s direct competitors

27
Q

substitutes

A

meet approximately the same customer needs

28
Q

threat of suppliers

A

they can raise the cost of materials

29
Q

forward vertical integration

A

when suppliers cease to be suppliers and become suppliers and rivals

30
Q

threat of buyers

A

people can threaten not to buy your product if they are large enough

31
Q

backward vertical integration

A

when the buyer wants to get into the suppliers market and take some business

32
Q

five forces model and average industry performance

A 
threat of entry 
threat of rivalry 
threat of substitutes
threat of powerful suppliers
threat of powerful buyers
33
Q

competitor

A

if your customers value your product less when others firms have your product

34
Q

complementor

A

a firm is this if your customers value your firm more when another firm is in business

35
Q

fragmented industries

A

industries in which a large number of small or medium sized firms operate and no small set of firms has dominant market share or creates dominant technologies
ex: service industries, retailing, fabrics, and commercial printing

36
Q

emerging industry

A

newly created or newly re-created industries formed by technological innovation, changes in demand, the emergence of new customer needs, and so forth

37
Q

first mover advantages

A

advantages that come to firms that make important strategic and technological decisions early in the development of an industry

38
Q

technological leadership strategy

A

firms that make early investments in particular technologies in an industry are implementing this

39
Q

strategically valuable assets

A

resources required to successfully compete in an industry

40
Q

customer switching costs

A

exist when customers make investments in order to use a firm’s particular products or services

41
Q

mature industries

A

characteristics include:

  1. slowing growth in total industry demand
  2. the development of experienced repeat customers
  3. slowdown in increased in production capacity
  4. slowdown in the intro of new products or services
  5. an increase in the amount of international competition
  6. an overall reduction in the profitability of firms in the industry
42
Q

processes

A

the activities it engages in to design, produce, and sell its products or services

43
Q

process innovation

A

a firm’s effort to refine and improve its current processes

44
Q

declining industry

A

an industry that has experienced an absolute decline in unit sales over a sustained period of time

45
Q

market leader

A

firm with largest market share

46
Q

niche strategy

A

reducing your scope and focus on narrow segments of the declining industry

47
Q

harvest strategy

A

engaging in long, systematic, phased withdrawal, extracting as much value as possible during the withdrawal period

48
Q

divestment

A

extracting a firm from a declining industry

STRAT 5700 (30 decks)

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