Exam 1 Flashcards
Globalization
Increasing economic interdependence among countries and their organizations as reflected in the flow of goods and services, financial capital, and knowledge across country borders
Liability of Foreignness
The risks of participating in outside of a firms domestic markets in the global economy
Perpetual Innovation
term used to describe how rapidly and consistently new, information-intensive technologies replace older ones.
disruptive technologies
tech that destroys the value of an existing tech and creates new markets
Knowledge
(information, intelligence, expertise) is the basis of technology and its application
Strategic Flexibility
set of capabilities used to respond to various demands and opportunities existing in a dynamic and uncertain competitive environment.
Study The External Environment (Step 1)
-the general environment -the industry environment -competitor environment
Locate An Attractive Industry (Step 2)
an industry whose structural characteristics suggest above average returns
Identify The Strategy (Step 3)
Selection of a strategy linked with above-avg returns in a particular industry
Develop/Acquire Assets and Skills (Step 4)
Assets and skills required to implement a chosen strategy
Strategy Implementation (Step 5)
Selection of strategic actions linked with effective implementation of the chosen strategy
Superior Returns! (Step 6)
earning ABOVE AVG RETURNS!
Resources
inputs into a firm’s production process , such as capital equipment, the skills of individual employees, patents, finances, and talented managers. (categorized into physical, human, and organizational capital)
Capability
Capacity for a set of resources to perform a task or an activity in an integrative manner.
Core Competencies
resources and capabilities that serve as a source of competitive advantage for a firm over its rivals. (ex. Apples R&D)
Resource Based Model of Above Avg Returns
assumes that each organization is a collection of unique resources and capabilities. This is the basis of a firms strategy and ability to earn above avg returns.
Valuable resources
when they allow a firm to take advantage of opportunities or neutralize threats in its external environment
Identify Resources (Step 1/ RB Model)
inputs into a firms production process; study strengths and weaknesses compared to competitors.
Determine Firms Capabilities (Step 2/RB Model)
Capacity of an integrated set of resources to integratively perform a task or activity
Determine Competitive Advantage (Step 3/RB Model)
based up the firms resources and capabilities; ability to outperform rivals
Locate Attractive Industry (Step 4/ RB Model)
an industry with opportunities that can be exploited by the firm’s resources and capabilities
Select a Strategy (Step 5/ RB Model)
a strategy that best allows a firm to utilize its resources and capabilities relative to opportunities in the external environment.
SUPERIOR RETURNS: STEP 6
Earn above avg returns
non-substitutable
when they have no structural equivalents
Vision
What the firm wants to be and, in broad terms, what it wants to ultimately achieve. (Gives shape to intended future; values and aspirations) (Foundation of firms mission)
Mission
specifies the business or businesses in which the firm intends to compete and the customers it intends to serve. (more concrete than vision)
Stakeholders
individuals, groups, and organizations who can affect the firms vision and mission, are affected by strategic outcomes achieved, and have enforceable claims on the firm’s performance
Capital Market Stakeholders
Shareholders and major suppliers of capital (e,g, banks)
Product Market Stakeholders
Primary Customers Suppliers Host Communities Unions
Organizational Stakeholders
Employees Managers Nonmanagers
Strategic Leaders
people located in different areas and levels of the firm using the strategic management process to select strategic actions that help the firm achieve its vision and fulfill its mission. **Most effective strategic leaders provide a vision as the foundation of the firms mission and strategies.**
Organizational Culture
refers to the complex set of ideologies, symbols, and core values that are shared throughout the firm and that influence how the firm conducts business.
Profit Pools
entails the total profits earned in an industry at all points along the value chain.
4 Steps to ID Profit Pools
1) Define pool’s boundaries 2) estimate the pool’s overall size 3) Estimate the size of the value-chain activity in the pool 4) reconcile the calculations
General Environment
composed of dimensions in the broader society that influence an industry and the firms within it.
7 Environmental Segments
1) Demographic 2) Economic 3) Political/Legal 4) Sociocultural 5) Technological 6) Global 7) Physical
Industry Environment
set of factors that directly influence a firm and its competitive actions and responses: threat of new entrants, supplier power, buyer power, threat of substitutes, rivalry amongst competitors
Competitor Analysis
how companies gather and interpret information about their competitors is called competitor analysis
4 Parts of External Environment Analysis
1) Scanning 2) Monitoring 3) Forecasting 4) Assessing
Opportunity
condition in the general environment that, if exploited effectively, helps a company reach strategic competitiveness.
Threat
condition in the general environment that may hinder a company’s efforts to achieve strategic competitiveness
Scanning
entails the study of all segments in the general environment and understand implications
Monitoring
analysts observe environmental changes to see if an important trend is emerging from among those spotted through scanning.
Forecasting
analysts develop feasible projections of what might happen, and how quickly, as a result of scanning and monitoring
assessing
objective is to determine the timing and significance of the environmental change that has been discovered.
Demographic Segment
concerned with a populations size, age structure, geographic distribution, ethnic mix, and income distribution
Economic Environment
Refers to the nature and direction of the economy in which a firm competes or may compete
Economic Uncertainty
an environment in which relatively little and perhaps nothing at all is known about the future state of an economy
Political/Legal Segment
Arena in which organizations and interest groups compete for attention, resources, and a voice overseeing the body of laws and regulations guiding interactions among nations as well as between firms and various local governmental agencies
Sociocultural Segment
concerned with a society’s attitudes and cultural values.
Technological Segment
includes the institutions and activities involved in creating new knowledge and translating that knowledge into new outputs, products, processes, and materials.
Global Segment
Includes relevant new global markets, existing markets that are changing, important international political events, and critical cultural and institutional characteristics of global markets
Globalfocusing
allows firms to build on and use their core competencies while limiting their risks within the niche market.
Guanxi
“personal connections”- ideology of China
Wa
Japan–> group harmony and social Cohesion
informal economy
commercial activities that occur at least partly outside a governing body’s observation, taxation, and regulation.
Industry
group or firms producing products that are close substitutes.
5 Forces of Competition
Threat of New Entrants Supplier Power Buyer Power Threat of Substitutes Rivalry amongst Existing Competitors
7 Barriers to Entry
1- Economies of Scale 2- Product Differentiation 3-Capital Requirements 4-Switching Costs 5- Access to Distribution Channels 6- Cost Disadvantages Independent of Scale 7-Government Policy
Supplier Power is Powerful When
1- dominated by a few large companies and is more concentrated that the industry to which it sells 2- Satisfactory substitutes are not available to industry firms 3- Industry firms are not a significant customer for the supplier group 4-Suppliers’ goods are critical to buyers’ marketplace success 5-effectiveness of suppliers products has created high switching costs for the industry firms 6- It poses a credible threat to integrate forward into the buyers’ industry
Buyer Power is Powerful When
-They purchase a large portion of an industry’s total output - sales of the product account for a large portion of the seller’s annual revenues -They could switch to another product at little cost - The industry’s products are undifferentiated or standardized, and buyers pose credible threat if they were to integrate backward into sellers industry
Intensity of Rivalry Among Competitors
-Numerous or Equally balanced competitors -Slow industry growth -Lack of differentiation or Low Switching costs -High Strategic Stakes -High Exit Barriers
Strategic Groups
Set of firms emphasizing similar strategic dimensions and using a similar strategy. (Ex;Audi, BMW, Mercedes) *Rivalry within a strategic group is more intense**
Competitor Analysis
-Final part of the external environment requiring study. –What drive the competitor (as shown by future objectives) –What the competitor is doing and can do (as revealed by its current strategy) –What the competitor believes about the industry(shown by assumptions) –What the competitors capabilities are (shown by strengths and weaknesses)
Competitor Intelligence
The set of data and information the firm gathers to better understand and anticipate competitor’s objectives, strategies, assumptions, and capabilities
Future Objectives (Comp. Analysis)
-How do our goals compare with our competitors’ goals? -Where will emphasis be placed in the future? -What is the attitude toward risk?
Current Strategy (Comp. Analysis)
How are we currently competing? Does their strategy support changes in the competitive structure?
Assumptions (Comp Analysis)
Do we assume the future will be volatile? Are we operating under a status quo? What assumptions do our competitors hold about the industry and themselves?
Capabilities (Comp Analysis)
What are our strengths and weaknesses? How do we rate compared to our competitors?
Response (Comp Analysis)
What will our competitors do in the future> Where do we hold an advantage over our competitors? How will this change our relationship with our competitors?
Complementors
Companies or networks of companies that sell goods or services that are compatible with the local firm’s goods or service. It in turn creates additional value from that firm.
Legal and Ethical Practices
-obtaining publicly available information -attending trade fairs and shows to obtain competitors’ brochures, view exhibits, listen to discussion about their products, etc.
Global Mind-Set
the ability to analyze, understand, and manage an internal organization in ways that are not dependent on the assumptions of a single country, culture, or context.
value
measured by a products performance characteristics and by its attributes for which customers are willing to pay.
Tangible Resources
assets that can be observed and quantified -financial resources -organizational resources -physical resources -Technological Resources
Intangible Resources
assets that are rooted deeply in the firms history, accumulate over time, and are relatively difficult for competitors to analyze and imitate. -HR -Innovation Resources -Reputational Resources
Valuable Capabilities
allow the firm to exploit opportunities or neutralize threats in its external environment
Rare Capabilities
are capabilities that few, if any, competitors possess.
