Chapter 3 Flashcards
What are the 7 possible variances in firm performance?
- Macro Enviro PEST
- Industry Structure
- Strategies
- Resources and capabilities
- Chance
- others (identifiable?)
- Leadership
What is created by an enterprise in the course of providing a good or service thats the difference between the perceived benefits gained by the purchasers of the good and the economic cost to the enterprise?
Economic Value
Define consumer surplus
Utility minuse price
Define profit margin
Price minus cost
Define consumer surplus
Utility minus cost
What is the resource based view?
that a firms resources and capabilities determine its performance
- tangible resources
- intangible (info) etc
- organizational capabilities
What are PEST analysis
Macroenvironment analysis of
Political
Economic
Social
technological
Porters view of strategy, two things cause economic performance?
- Industry structure
- relative position within the industry
- main source of competitive eadvantage
Your margin =
your margin = industry margin + competitive advantage
What are porters 5 forces?
- Risk of new entrants
- power of buyers
- power of suppliers
- threat of substitutes
- rivalry among existing comopetitiors
5 stages of industry life cycle
embryonic growing shakeout mature decline
What are 5 main facets of a strategy?
- Performance
- Competition
- Creating value
- Creating sustained competitive advantage
What are 5 main cognitive biases?
- Prior hypothesis bias
- making decisions and disregarding evidence - Escalating commitment
- When you don’t get out because you spent a lot - Reasoning by analogy
- Making sense of complicated issue with simple analogy - Representativeness
- generarlizing from small sample or single anecdote - Illusion of control
- overestimate ones ability to control events
