chapter 6 Flashcards
Porter’s Five Forces
in this model, the attractiveness of an industry and firm’s opportunities and threats are identified by analysing five forces in a firm’s specific environment: (1) degree of existing rivalry, (2) threat of potential entrants, (3) bargaining power of suppliers, (4) bargaining power of buyers, and (5) threat of substitutes.
exit barriers
costs or other commitments that make it difficult for firms to abandon an industry, eg. large fixed-asset investments, emotional commitment.
entry barriers
conditions that make it difficult or expensive for new firms to enter an industry, eg. government regulation, large start-up costs.
switching costs
factors that make it difficult or expensive to change suppliers or buyers, such as investments in specialised assets to work with a particular buyer or supplier.
vertical integration
getting into business of one’s suppliers (backward integration) or one’s buyers (forward integration). eg. a firm that begins producing its own supplies or that buys its own distributor.
oligopolistic industries
highly consolidated industries with a few large competitors.
stakeholder
any entity that has an interest (“a stake”) in the organisation.
stakeholder models
used to analyse the management issues from stakeholders that are likely to impact the firm’s financial performance.
Porter’s model of a value chain
used to identify the firm’s strengths and weaknesses.
inbound logistics
all activities required to receive, store, and disseminate inputs.
operations
activities involved in the transformation of outputs.
outbound logistics
activities required to collect, store, and distribute outputs.
marketing and sales
activities to inform buyers about products and services and to induce their purchase.
service
after-sales activities to keep the product or service working efficiently.
primary activities
(1) inbound logistics, (2) operations, (3) outbound logistics, (4) marketing and sales, (5) service.
support activities
(1) procurement, (2) human resource management, (3) technology development, (4) infrastructure.
procurement
the acquisition of inputs, but not their physical transfer.
human resource management
activities such as recruitment, training, hiring, and compensating personnel.
technology development
activities involved in developing and managing equipment, hardware, software, procedures, and knowledge necessary to transform inputs into outputs.
infrastructure
functions such as accounting, legal counsel, finance, planning, public affairs, government relations, quality assurance, and general management necessary to ensure smooth functioning of the firm.
competitive advantage
must be rare, valuable, durable, and inimitable.
tacit resources
resources on an intangible nature that can’t be readily codified.
path dependent
when end results depend greatly on the events that took place leading up to the outcome.
socially complex resources
resources or activities that emerge through the interaction of multiple individuals.
causal ambiguity
the relationship between a resource and the outcome it produces is poorly understood.
core competency
typically considered to be those that differentiate a company strategically. it arises from a firm’s ability to combine and harmonise multiple primary abilities in which the firm excels into a few key building blocks of specialised expertise. this makes it difficult to imitate. it also depends on building high-quality relationships across different functions and business units.
Prahalad & Hamal’s tests
used to identify firms’ core competencies.
core rigidities
firms that have well-developed knowledge sets along a particular trajectory may find it very hard to assimilate or utilise knowledge that appears unrelated to the trajectory they are following, potentially limiting the firm’s flexibility.
dynamic capabilities
a set of abilities that make a firm more agile and responsive to change.
strategic intent
a company’s long-term goal that is ambitious, builds upon and stretches the firm’s existing core competencies, and draws from all levels of the organisation. it guides the development of new businesses and markets and leverages corporate resources.
firm’s purpose
is to create value, which entails improving operations and cutting costs but also leveraging corporate resources to create more performance for customers, more well-being for employees, and more returns for stakeholders. it is important for firms to have a forward orientation.
