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4490 Capstone > Exam 2 > Flashcards

Exam 2 Flashcards

1
Q

Business level strategy

A

Goal directed actions managers take in their quest for competitive advantage when competing in a single product market

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2
Q

Strategic tradeoffs

A

Choices between a cost or value position; necessary because higher value tends to generate higher cost

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3
Q

Differentiation strategy

A

Generic business strategy that seeks to create higher value for customers than the value that competitors create

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4
Q

Cost leadership strategy

A

Generic business strategy that seeks to create the same or similar value for customers at a lower cost

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5
Q

Scope of competition

A

The size (narrow or broad) of the market in which the firm chooses to compete

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6
Q

Focused strategy

A

Narrow competitive scope

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7
Q

Economies of scope

A

Savings that come form producing 2 or more outputs at less cost than producing each output individually despite using same resources/technology

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8
Q

Economies of scale

A

Decreases in cost per unit as output increases

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9
Q

Minimum efficient scale (MES)

A

Output range needed to bring down the cost per unit as much as possible, allowing a firm to stake out the lowest cost position that is achievable through economies of scale

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10
Q

Diseconomies of scale

A

Increases in cost per unit when output increases

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11
Q

Blue ocean strategy

A

Business level strategy that successfully combines differentiation and cost leadership activities using value innovation to reconcile the inherent tradeoffs

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12
Q

Value innovation

A

Simultaneous pursuit of differentiation and low cost in a way that creates a leap in value for both the firm and the consumers; considered a cornerstone of blue ocean strategy

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13
Q

Value curve

A

Horizontal connection of the points of each value on the strategy canvas that helps strategists diagnose and determine courses of action

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14
Q

Strategy canvas

A

Graphical depiction of a company’s relative performance vis a vis its competitors across the industry’s key success factors

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15
Q

Invention

A

Transformation of an idea into a new product/process or the modification and recombination of existing ones

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16
Q

Patent

A

A form of intellectual property that gives the inventor exclusive rights to benefit from commercializing a technology for a specified time period in exchange for public disclosure of the underlying idea

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17
Q

Trade secret

A

Valuable proprietary information that is not in the public domain and where the firm makes every effort to maintain its secrecy

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18
Q

Innovation

A

Commercialization of any new product/process or recombination/modification of existing ones

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19
Q

First mover advantage

A

Competitive benefits that accrue to the successful innovator

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20
Q

Entrepreneurship

A

Process by which people undertake economic risk to innovate

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21
Q

Industry life cycle

A 
Introduction
Growth
Shakeout
Maturity
Decline
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22
Q

Network effects

A

Positive effect (externality) that one user of a product provides for the value of the service to another user

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23
Q

Standard

A

Agreed upon solution about a common set of engineering features and design choices

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24
Q

Product innovation

A

New or recombined knowledge embodied in new products

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25
Q

Process innovation

A

New ways to produce existing products or deliver existing services

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26
Q

Crossing the chasm framework

A

Model that shows how each stage of the industry life cycle is dominated by a different customer group

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27
Q

Markets and technology framework

A

Model to categorize innovations along the market (existing/new) and technology (existing/new) dimensions

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28
Q

Incremental innovation

A

Existing tech

Existing market

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29
Q

Radical innovation

A

New tech

New mkt

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30
Q

Architectural innovation

A

New market

Existing tech

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31
Q

Disruptive innovation

A

New tech

Existing market

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32
Q

Winner take all markets

A

Markets where the leader captures almost all market share and is able to extract much of the value created

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33
Q

Innovation ecosystem

A

Firm embedded in a complex network of suppliers, buyers and complementers; requires interdependent strategic decision making that can lead to incremental innovations

34
Q

Reverse innovation

A

Innovation developed for emerging economies before being introduced in developed economies

35
Q

Open innovation

A

Framework for R&D that proposes permeable firm boundaries to allow a firm to benefit from both internal and external ideas and inventions; sharing goes both ways

36
Q

Absorptive capacity

A

Firm’s ability to understand external technology developments, evaluate them, and integrate them into current products or create new ones

37
Q

Corporate strategy

A

Decisions that senior management make and the goal-directed actions it takes to gain and sustain competing advantage in several industries and markets simultaneously

38
Q

Transaction costs

A

All internal and external costs associated with an economic exchange, whether within a firm or in markets

39
Q

Transaction cost economies

A

Framework to predict boundaries of the firm, which is important to forming a corporate strategy that leads to competitive advantages

40
Q

External transaction costs

A

Costs of searching for a firm/individual to contract, and then negotiating, monitoring and enforcing the contract

41
Q

Internal transaction costs

A

Costs pertaining to organizing an economic exchange within a hierarchy (administrative costs)

42
Q

Principal agent problem

A

KNOW THIS ONE

43
Q

Information asymmetry

A

KNOW THIS ONE

44
Q

Strategic alliances

A

Voluntary arrangements between firms that involve the sharing of knowledge, resources, and capabilities with the intent of developing processes, products or services

45
Q

Licensing

A

Form of long-term contracting in the manufacturing sector that enables firms to commercialize intellectual property

46
Q

Franchising

A

A long term contract in which a franchisor grants a franchisee the rights to use the franchisor’s trademark and business processes to offer goods and services that carry the franchisor’s brand name

47
Q

Credible commitment

A

Long term strategic decision that is both difficult and costly to reverse

48
Q

Joint venture

A

Stand alone organization created and jointly owned 2 or more parent companies

49
Q

Vertical integration

A

Firm’s ownership of its production/distribution (inputs/outputs)

50
Q

Industry value chain

A

Describes transformation of raw materials into finished goods and services along distinct vertical stages

51
Q

Specialized assets

A

Unique assets with high opportunity cost

Site specificity, physical-asset specificity, human-asset specificity

52
Q

Vertical market failure

A

When markets along the industry value chain are too risky, and alternatives are too costly in time or money

53
Q

Taper integration

A

Vertically integrated but also relies on outside-market firms

54
Q

Strategic outsourcing

A

Moving one or more internal value chain activities outside the firm’s boundaries to other firms in the industry value chain

55
Q

Diversification

A

Increase in the variety of products and services a firm offers or markets and the geographic regions in which it competes

56
Q

Product diversification strategy

A

Corporate setting in which a firm is active in several different product markets

57
Q

Geographic diversification strategy

A

Corporate strategy in which a firm is active in several different countries

58
Q

Product market diversification strategy

A

Corporate strategy in which a firm is active in several different product markets and several different communities

59
Q

Related diversification strategy

A

Corporate strategy in which a firm derives less than 70% of its revenues from a single business activity and obtains revenues from other lines of businesses that are linked to the primary business activity

60
Q

Related-constrained diversification

A

Related diversification where executives only pursue businesses where they can apply the resources and core competencies already available in the primary business

61
Q

Related-linked diversification strategy

A

Kind of related diversification strategy in which executives pursue business opportunities that share only a limited number of linkages

62
Q

Unrelated diversification strategy

A

Corporate strategy in which firm derives less than 70 percent of revenues from a single business and there are few if any linkages between businesses

63
Q

Conglomerate

A

Follows unrelated diversification strategy

64
Q

Core competence market matrix

A

Framework to guid corporate diversification strategy by analyzing combos of new/existing core competencies and markets

65
Q

Diversification discount

A

Situation in which the price of highly diversified firms is valued at less than the sum of individual business units

66
Q

Diversification premium

A

Stock price is valued at greater than sum of business unit parts

67
Q

Growth share matrix

A

Question mark
Dog
Star
Cash cow

68
Q

Build borrow or buy framework

A

Model that aids firms in deciding how to obtain new resources (internal development, alliance, acquisition)

69
Q

Relational view of competitive advantage

A

Strategic management framework that proposes that critical resources and capabilities frequently are embedded in strategic alliances that span firm boundaries

70
Q

Real options perspective

A

Approach to strategic decision making that breaks down a larger investment decision into a set of smaller decisions that are staged sequentially over time

71
Q

Co-opetition

A

Cooperation by competitors to active a strategic objective

72
Q

Learning races

A

Situations in which both partners in a strategic alliance are motivated to form an alliance for learning , but the rate at which the firms learn may vary

73
Q

Non equity alliance

A

Partnership based upon contracts between firms

74
Q

Equity alliance

A

Partnership in which at least one partner has partial ownership stake in the other

75
Q

CVC corporate venture capital

A

Equity investments by established firms in entrepreneurial ventures (an equity alliance)

76
Q

Alliance management capabilities

A

Firm’s ability to effectively mange 3 alliance related tasks concurrently:
Partner selection and alliance formation
Alliance design and governance
Post formation alliance management

77
Q

Merger

A

Joining of two independent companies into a combined entity

78
Q

Acquisition

A

Purchase/takeover of one company by another

79
Q

Horizontal integration

A

Process of merging with competitors, leading to industry consolidation

80
Q

Managerial hubris

A

Form of self delusion in which managers convince themselves of their superior skills in the face of clear evidence to the contrary

4490 Capstone (2 decks)

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