Chapter 3 Flashcards

1
Q

What are the 7 possible variances in firm performance?

A
  1. Macro Enviro PEST
  2. Industry Structure
  3. Strategies
  4. Resources and capabilities
  5. Chance
  6. others (identifiable?)
  7. Leadership
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2
Q

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?

A

Economic Value

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3
Q

Define consumer surplus

A

Utility minuse price

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4
Q

Define profit margin

A

Price minus cost

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5
Q

Define consumer surplus

A

Utility minus cost

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6
Q

What is the resource based view?

A

that a firms resources and capabilities determine its performance

  • tangible resources
  • intangible (info) etc
  • organizational capabilities
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7
Q

What are PEST analysis

A

Macroenvironment analysis of

Political
Economic
Social
technological

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8
Q

Porters view of strategy, two things cause economic performance?

A
  1. Industry structure
  2. relative position within the industry
    - main source of competitive eadvantage
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9
Q

Your margin =

A

your margin = industry margin + competitive advantage

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10
Q

What are porters 5 forces?

A
  1. Risk of new entrants
  2. power of buyers
  3. power of suppliers
  4. threat of substitutes
  5. rivalry among existing comopetitiors
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11
Q

5 stages of industry life cycle

A
embryonic
growing
shakeout
mature
decline
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12
Q

What are 5 main facets of a strategy?

A
  1. Performance
  2. Competition
  3. Creating value
  4. Creating sustained competitive advantage
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13
Q

What are 5 main cognitive biases?

A
  1. Prior hypothesis bias
    - making decisions and disregarding evidence
  2. Escalating commitment
    - When you don’t get out because you spent a lot
  3. Reasoning by analogy
    - Making sense of complicated issue with simple analogy
  4. Representativeness
    - generarlizing from small sample or single anecdote
  5. Illusion of control
    - overestimate ones ability to control events
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