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Entpr thinking > Final > Flashcards

Final Flashcards

1
Q

Strategy

A

a comprehensive, goal-oriented plan a firm takes to gain and sustain superior performance relative to competitors

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2
Q

Purpose of strategy

A

sustainable competitive advantage - a firm that is able to outperform competitors or the industry average over a prolonged period has a sustainable competitive advantage

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3
Q

Why Strategy?

A

Entrepreneur - how can you develop a valuable competitive position within an industry dominated by other firms?
Executive - how can you leverage the firms unique resources and capabilities?
Analyst - how can you understand how some firms generate greater economic profit than others?
Consultant - how can you help clients develop low-costs?

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4
Q

strategic management

A

the integrative field that combines analysis, formulation and implementation in the quest for competitive advantage

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5
Q

competitive disadvantage

A

a firm that underperforms its rivals or the industry average

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6
Q

competitive parity

A

when two or more firms perform at the same level

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7
Q

strategic positioning

A

steak out a unique position within an industry that allows the firm to provide value to customers, while controlling cost

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8
Q

value creation

A

occurs because companies with a good strategy are able to provide products or services to consumers at a price point that they can afford while keeping their costs in check
- both producer and consumer capture part of value created leaving society better off

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9
Q

stakeholder

A

organizations, groups and individuals that can affect or be affected by a firm’s actions

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10
Q

stakeholder strategy

A

an integrative approach to managing a diverse set of stakeholders effectively to gain and sustain competitive advantage
- stakeholders have a vested claim or interest in the performance and continued survival of the firm

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11
Q

Step 1: Identify stakeholders

A
  • public companies’ key stakeholders: shareholders and other providers of capital
  • second group: customers, suppliers and unions
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12
Q

Step 2: Identify Stakeholder Interests

A
  • specify and assess the interest and claims of pertinent stakeholders using power, legitimacy, and urgency criteria
  • significant variation in the power a stakeholder may exert on firm
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13
Q

Step 3: Identify Opportunities and Threats

A

stakeholders have claim on the company, opportunities and threats are two sides of the same coin
- consumer boycotts

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14
Q

Step 4: Identify social responsibilities

A

corporate social responsibilities. helps form recognize and address the economic, legal, ethical and philanthropic expectations that society has of the business enterprise at a given point in time

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15
Q

Step 5: stakeholder impact analysis

A

strategic leaders need to decide the appropriate course of action for the firm given the preceding factors

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16
Q

AFI Framework

A

Analysis
Formulation
Implementation

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17
Q

Analysis

A

diagnosis of competitive challenge
- vision, mission, values
- external analysis
- internal analysis

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18
Q

Formulation

A

a guiding policy
- corporate strategy
- business strategy
- functional strategy

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19
Q

Implementation

A

coherent actions
- structure, culture, control
- corporate governance and business ethics

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20
Q

vision

A

captures an organizations aspirations and spells out what it ultimately wants to accomplish
- effective vision pervades the organization with a sense of winning and motivates employees at all levels to aim for the same target, while leaving room for individual and team contributions

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21
Q

consumer-oriented vision

A

defines a business in terms of providing solutions to customer needs

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22
Q

product-oriented vision

A

defines a business in terms of a good or services provided

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23
Q

mission

A

describes what an organization actually does – that is, the products and services it plans to provide, and the markets in which it will compete
- what organization does to accomplish vision

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24
Q

values

A

Core values statement: provides touchstones for employees to understand the company culture, provides moral compass for employees, values support firm ethics
Organization core values: ethical standards and norms that govern the behavior of individuals within a firm or organization, outline vision
- how do we accomplish our goals?

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25
Q

Strategic management process

A
  • lays the foundation for sustainable competitive advantage
  • strategic leaders design a process to formulate and implement strategy
  • rational and structured
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26
Q

Top-down strategic planning

A

derived from military strategy, is a rational process through which executives attempt to program future success
- all intel and decision making is concentrated in office of CEO
- three steps are AFI process
- info flows one way, top down
- unforeseen events can make significantly developed and formalized plans obsolete

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27
Q

scenario planning

A

managers ask what-if questions
- similar to top-down, planning starts with top management envisioning possible scenarios to anticipate plausible futures to derive strategic response

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28
Q

Strategy as planned emergence: top-down and bottom-up

A

managers engage in a more formalized approach to the strategy process may also fall prey to an illusion of control
- managers overestimate ability to control events
- strategy should be based on an inspiring vision and not hard data alone

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29
Q

firms realized strategy

A

generally formulated through a combination of its top-down strategic intentions and bottom-up emergent strategy

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30
Q

emergent strategy

A

describes any unplanned strategic initiative bubbling up from deep within the organization
- if successful, emergent strategy has potential to influence and shape firms overall strategy

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31
Q

autonomous actions

A

strategic initiatives undertaken by lower-level employees on their volition and often in response to unexpected situations

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32
Q

serendipity

A

describes random events, pleasant surprises, and accidental happenstance that can have a profound impact on a firms strategic initiatives

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33
Q

Resource allocation process

A

determines the way a firm allocates its resources and can be critical in shaping allocation process
- combination of top-down strategic intent and bottom-up strategic emergence

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34
Q

theory of bounded rationality

A

core tenet of which posits that rather than to optimize when faced with decisions, we tend to satisfice

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35
Q

cognitive limitations

A

lead us to choose the good enough option that satisfies immediate needs, rather than searching for an optimal solution

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36
Q

Two distinct modes of decision making

A

System 1: the brains default mode, gut reaction and confidence
System 2: logical, analytical and deliberate

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37
Q

cognitive bias

A

cognitive limitations that lead to systematic errors in our decision-making and interfere with our rational thinking

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38
Q

illusion of control

A

tendency to overestimate our ability to control events

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39
Q

escalating commitment

A

when decision-makers continue to support and invest in a project dispute having received feedback that is likely not going to succeed

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40
Q

confirmation bias

A

tendency of individuals to search for information that confirms their existing beliefs, and ignore contradictory evidence

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41
Q

reason by analogy

A

tendency to use simple analogies to make sense out of complex problems

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42
Q

representativeness

A

drawing conclusions based on small samples or even one memorable case or anecdote

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43
Q

groupthink

A

situation in which opinions coalesce around the leader without individuals critically evaluating and challenging that leader’s opinions and assumptions

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44
Q

devils advocacy

A

framework team or group or person questioning leaders decisions or ideas

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45
Q

dialect inquiry

A

two teams generate a detailed course of action, second team alters course of action
- thesis and antithesis are discussed

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46
Q

Pestel Framework

A

Political
Economic
Sociocultural
Technological
Ecological
Legal
- analyze firms external environment

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47
Q

general environment

A

external factors strategic leaders have little direct influence over, such as macroeconomic factors

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48
Q

task environment

A

external factors strategic leaders do have some influence over, such as the composition of their strategic groups

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49
Q

Political factors

A

result from process and actions of government bodies that can influence the decisions and behaviors of firms

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50
Q

Economic factors

A

factors in firms external environment that are largely macroeconomic, affecting economy-wide phenomena

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51
Q

Economic factors

A

growth rates, levels of employment, interest rates, price stability, currency exchange rates

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52
Q

sociocultural factors

A

capture society’s cultures, norms and values
- constantly in flux but differ across groups
demographic trends capture population characteristics

53
Q

technological factors

A

capture the application of knowledge to create new processes and products
- major innovations: lean manufacturing, six sigma quality

54
Q

ecological factors

A

involve broad environmental issues such as natural environment, global warming and sustainable economic growth
- sustainability (manage business and environment)

55
Q

legal factors

A

include the official outcomes of political processes as manifested in laws, mandates, regulations and court decisions
- have direct bearing on firms profit potential
- affect entire industries at once

56
Q

industry effects

A

the underlying industry in which the firm competes
- structure of industry determined by elements common to all industries

57
Q

firm effects

A

attribute firm performance directly to actions strategic leaders take

58
Q

Industry

A

a group of incumbent firms facing more or less the same set of suppliers and buyers

59
Q

industry analysis

A

provides a more rigorous bias not only to identify an industry’s profit potential but also derive implications for one firm’s strategic position within an industry

60
Q

strategic position

A

relates to firms ability to create value for customers while containing cost to do so

61
Q

porters five forces model

A

developed to help strategic leaders understand the profit potential of different industries and how they can position their respective firms to gain and sustain competitive advantage
- threat of entry, power of suppliers, power of buyers, threat of substitutes, rivalry among existing competitors

62
Q

threat of entry

A

risk of potential competitors entering the industry depresses industry profit potential:
1. reduces profit potential (lower current prices)
2. increases in spending among incumbent firms

63
Q

barriers to new entrants

A

economies of scale, brand loyalty, absolute cost advantages, customer switching for buyers, government regulations

64
Q

competitive rivalry

A

the competitive struggle between companies in the same industry to gain market share from each other

65
Q

intensity of rivalry

A

is a function of:
industry competitive stricture (number and size of companies/consolidated vs fragmented), demand conditions (growing or declining-encourages demand), cost conditions, height of exit barriers (prevent companies from leaving)

66
Q

bargaining power of buyers

A

may be consumers or end-users who ultimately use the product or intermediate that distribute or retail the products

67
Q

buyers are most powerful when:

A

buyers are dominant (large buyers in few numbers), buyers purchase in large quantities, industry dependent on buyers, switching costs are low, buyers can purchase from several supplying companies at once, buyers threaten to enter industry

68
Q

bargaining power of suppliers

A

organizations that provide inputs as material and labor into the industry

69
Q

suppliers most powerful when:

A

product supplied is vital to industry and has few substitutes, industry is not important customer to suppliers, switching costs are significant, suppliers threaten to enter industry themselves, companies in industry cannot make own inputs therefore rely on suppliers

70
Q

Resources

A

assets owned or controlled by a firm, which the firm can draw on to achieve its goals

71
Q

tangible resource

A

visible, physical attributes
value: the cost of the tangible resources can usually serve as a point of reference for their actual value
ex: firms borrowing capacity, firms planning, controlling and coordinating systems, plant and equipment and raw materials

72
Q

intangible resources

A

invisible, no physical attributes
value: have a theoretical asset value, cost of intangible resource usually isn’t a good point of reference for their actual value
ex: HR, ideas, scientific capabilities, reputation with customers, brand name, patents

73
Q

capabilities

A

firms capacity to deploy tangible resources that have been purposely integrated to achieve a desired end state
ex: marketing, R&D, distribution, HR

74
Q

core competencies

A

activities that a firm performs especially well compared to competitors, adds unique value to its goods or services over a long period of time
ex:
amazon - superior it, customer service, diversification and distribution

75
Q

VRIO Framework

A

used to build sustainable competitive advantages using firms resources
Valuable
Rare
Inimitable
Organized to capture value

76
Q

Valuable

A

increase economic value (v - c)

77
Q

Rare

A

only one or few firms possess

78
Q

inimitable

A

deterrence against direct imitation and substitute

79
Q

organized to capture value

A

effective organization structure and coordinating system

80
Q

Isolating Mechanisms for imitation

A

path dependence, legally protected, causal ambiguity, social complexity

81
Q

path dependence

A

what a firm does in the past determines what they can do in the future

82
Q

legally protected: exclusive rights

A

patents
trademarks
copyrights
trade secrets

83
Q

causal ambiguity

A

the causes or theories of superior performance are unclear

84
Q

social complexity

A

reputation and trust among suppliers and customers
friendships and collaboration between employees

85
Q

dynamic capability

A

a firms ability to create, deploy, modify, reconfigure, upgrade or leverage its resources over time

86
Q

business-level strategy

A

details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market

87
Q

strategic trade-offs

A

choices between cost or value position

88
Q

generic business strategies

A

two strategies that can be used by an organization–manufacturing or service, large or small, for-profit or nonprofit, public or private domestic or foreign

89
Q

differentiation strategy goal

A

add unique features that will increase the perceived value of goods and services in the minds of consumers so they are willing to pay a higher price

90
Q

economies of scope

A

the savings that come from producing more outputs at less cost than producing each output individually, even though using the same resources and technology

91
Q

value drivers

A

product features: adjust features to increase perceived value
customer service: increase perceived value of firm’s products or service offerings by focusing on customer service
complements: add value to product or service when they are consumed in tandem

92
Q

cost-leadership strategy goal

A

reduce firm’s costs below that of its competitors while offering adequate value

93
Q

cost leader

A

focuses its attention and resources on reducing the cost to manufacture a product or on lowering the operational cost to deliver a service in order to offer lower prices

94
Q

cost input factors

A

a firm can have an advantage over its competitors by having access to lower cost input factors such as raw materials, capital, labor, IT services

95
Q

economies of scale

A

firms with greater market share might be able to reap this, decrease in cost per unit as output increases

96
Q

learning curve

A

goes down as it takes less and less time to produce the same output as we learn how to be more efficient
- steeper the curve, more has been learned

97
Q

experience curve

A

we change the underlying technology while holding cumulative output constant
process innovation: new method or technology to produce an existing product can initiate new steeper curve

98
Q

blue ocean strategy

A

business-level strategy that successfully combines differentiation and cost-leadership activities using value innovation to reconcile the inherent trade-offs in those two distinct strategy positions

99
Q

red ocean

A

known market space for existing industries, rivalry among existing firms is cut-throat because of crowded market space

100
Q

innovation

A

the successful introduction of a new product, process or business model

101
Q

entrepreneurship

A

the process by which entrepreneurs undertake economic risk to innovate

102
Q

Industry Lifecycle

A

introduction - slow growth, high price, limited competition, large investments required and high risk
growth - rapid growth, falling prices, limited competition, increasing profitability
shakeout - slowing growth, falling prices, intense competition, focus on survivability, increase failures
mature - slow/no growth, stable prices, consolidated competition, high barriers to entry and superior firms gain market share
decline - negative growth, falling prices, intense competition, further consolidation possible

103
Q

Archetectural Innovation

A

New Market, Existing Product
a new product in which known components, based on existing technologies are reconfigured in a novel way to create new markets

104
Q

Incremental Innovation

A

Existing Market, Existing Product
Builds on established knowledge base and steadily improves an existing product or service offering

105
Q

Disruptive Innovation

A

Existing Market, New Product
leverages new technologies to attack existing markets, invades market bottom-up

106
Q

Radical Innovation

A

New Market, New technology
draws on novel methods or materials, is derived either from and entirely different knowledge basis with a new stream of knowledge

107
Q

Innovation process

A

idea, invention, innovation, imitation

108
Q

crossing the chasm

A

geoffrey moore: many innovators unable to successfully transition from one stake of the industry lifecycle to the next
- each stage dominated by different consumer group

109
Q

technology enthusiasts

A

customer segment in the introductory stage of the industry life cycle
- smaller market segment 2.65%
- first to try and want to try before product out for everyone, offer feed back

110
Q

Early adopters

A

customers entering the market in the growth stage
- makeup 13.5% of market potential
- eager to buy into new technology

111
Q

Early Majority

A

customers entering market int he shakeout stage
- main consideration in deciding whether or not to adopt new tech innovation is strong sense of practicality

112
Q

Late majority

A

enter market in the maturity stage
- make up 35% of market potential
- prefer to wait until standards have emerged and become entrenched to ensure reduction of uncertainty

113
Q

laggards

A

enter market in decline stage of life cycle
- make up 16% of market potential
- adopt new product only of it is absolutely necessary

114
Q

platform business

A

enterprise that creates value by matching external products in a way that creates value for all participants, and that depends on the infrastructure or platform and that the enterprise manages

115
Q

digital platform

A

a digital product or service provided by the platform owner to connect together two or more groups of participants: complementors and customers

116
Q

direct network effect

A

the value of a product increases simply because the number of users increases

117
Q

indirect network effect

A

platform or service depends on two or more user groups such as producers and consumers, buyers and sellers, or developers and users

118
Q

Intellectual Property

A

an intangible asset that arises out of mental labor, encompasses inventions, designs and artistic work
- federal and state laws give certain rights and protections to those who developed creative works to control intangible assets in the form of exclusively:
patents
trademarks
copyrights
trade secrets

119
Q

Patent

A

contract between government and inventor granting inventor exclusive rights for invention
- prevents others from making, using or selling similar idea
- issued by patent and trademark office
- USPTO, EUIPO
- rights only applicable in country/region patent has been granted

120
Q

utility patent

A

new, useful, and unobvious processes such as film processing, machines such as photocopiers, compositions of matter such as chemical compounds, or mixtures of ingredients, and articles of manufacture
- most common
- duration of 20 years

121
Q

design patent

A

new, original, ornamental, and unobvious designs for articles of manufacture
- reflects appearance of object
- duration of 14 years

122
Q

plant patent

A

for new varieties of plants
- duration of 20 years

123
Q

Apply for patent

A
  • complete history and description of the invention
  • list claims for the product’s usefulness
  • patent required: Novel, Useful, Non-obvious
    ◦ novel: features don’t appear in any one patent
    ◦ non-obvious: features that don’t appear in any combination of patents
  • disclosure: technical information about the invention that must be disclosed in the patent application, and will be published after 18 months
124
Q

provisional application

A

allows inventors to file without a firmal patent claim, oath or declaration or any information disclosure statement
- 12 month pendency
- help protect new innovation from being copied during 12 month period before formal patent application filed

125
Q

Trademarks

A

a sign, capable of distinguishing the goods or services of one enterprise from those of other enterprises
- distinguishing word, phrase, name or symbol
- can last indefinitely, but needs to be renewed every 10 years
- can be filed based off intent of use
- must be filed in each country protection is sought

126
Q

Copyrights

A

the rights that creators have to their own literary and artistic works
- automatic, but need to register with library of congress in order to enforce and prevent infringement
- duration is life of author plus 70 years for works after 1978

127
Q

trade secrets

A

information that is either actual or potential independent economic value by virtue of not being generally known
- applicable as long as ideas or process remains secret

128
Q

non-compete agreement

A

contract between the employers and their employees where employee agrees not to starting a competing business or go to work for a competitor for a stated period of time after the employment relationship ends

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