exam 1 vocab Flashcards
Sarbanes-Oxley Act
Also known as Sarbox or SOX; U.S. legislation enacted in the wake of the accounting scandals of the early 2000s. The act raises executive and board responsibility and ties criminal penalties to certain accounting and financial violations. Although often criticized, SOX is also seen as raising stakes for mismanagement and misdeeds related to a firm’s accounting practices.
Operational Effectiveness
Performing the same tasks better than rivals perform them.
Dense Wave Division Multiplexing (DWDM)
A technology that increases the transmission capacity (and hence speed) of fiber-optic cable. Transmissions using fiber are accomplished by transmitting light inside “glass” cables. In DWDM, the light inside fiber is split into different wavelengths in a way similar to how a prism splits light into different colors.
Fast Follower Problem
Exists when savvy rivals watch a pioneer’s efforts, learn from their successes and missteps, then enter the market quickly with a comparable or superior product at a lower cost before the first mover can dominate.
Inventory Turns
Sometimes referred to as inventory turnover, stock turns, or stock turnover. It is the number of times inventory is sold or used during a given period. A higher figure means that a firm is selling products quickly.
Resource-Based View Of Competitive Advantage
The strategic thinking approach suggesting that if a firm is to maintain sustainable competitive advantage, it must control an exploitable resource, or set of resources, that have four critical characteristics. These resources must be (1) valuable, (2) rare, (3) imperfectly imitable, and (4) nonsubstitutable.
Straddling
Attempts to occupy more than one position, while failing to match the benefits of a more efficient, singularly focused rival.
Strategic Positioning
Performing different tasks than rivals, or the same tasks in a different way.
Sustainable Competitive Advantage
Financial performance that consistently outperforms industry averages.
Switching Costs
The cost a consumer incurs when moving from one product to another. It can involve actual money spent (e.g., buying a new product) as well as investments in time, any data loss, and so forth.
Affiliates
Third parties that promote a product or service, typically in exchange for a cut of any sales.
Brand
The symbolic embodiment of all the information connected with a product or service
Distribution Channels
The path through which products or services get to customers.
Economies Of Scale
When costs can be spread across increasing units of production or in serving multiple customers. Businesses that have favorable economies of scale (like many Internet firms) are sometimes referred to as being highly scalable.
Imitation-Resistant Value Chain
A way of doing business that competitors struggle to replicate and that frequently involves technology in a key enabling role.
Network Effects
Also known as Metcalfe’s Law, or network externalities. When the value of a product or service increases as its number of users expands.
Private
As in “to go private” or “take a firm private.” Buying up a publicly traded firm’s shares. Usually done when a firm has suffered financially and when a turn-around strategy will first yield losses that would further erode share price. Firms (often called private equity, buyout, LBO, or leveraged buyout firms) that take another company private hope to improve results so that the company can be sold to another firm or they can reissue shares on public markets.
Scale Advantages
Advantages related to size.
Value Chain
The set of activities through which a product or service is created and delivered to customers.
Viral Marketing
Leveraging consumers to promote a product or service
Porter’s Five Forces
Also known as Industry and Competitive Analysis. A framework considering the interplay between (1) the intensity of rivalry among existing competitors, (2) the threat of new entrants, (3) the threat of substitute goods or services, (4) the bargaining power of buyers, and (5) the bargaining power of suppliers.
Information Asymmetry
A decision situation where one party has more or better information than its counterparty.
Price Transparency
The degree to which complete information is available.
Contract Manufacturing
Outsourcing production to third-party firms. Firms that use contract manufacturers don’t own the plants or directly employ the workers who produce the requested goods.
