MGMT 478 Exam #1 Flashcards
A stakeholder’s claim is ___ when it is perceived to be legally valid or appropriate.
legitimate
___ is best described as an integrative management field that explores the initiatives taken by executives on behalf of owners involving utilization of resources to enhance performance of firms in their external environment.
strategic management
the executives’ use of power and influence to direct the activities of others when pursuing an organization’s goals
strategic managment
Even though many valuable, rare, and inimitable resources were generated at Xerox’s Palo Alto Research Center (PARC), the management at Xerox’s headquarters failed to gain a competitive advantage by exploiting the breakthroughs in computing software and hardware. What is the most likely implication of this example?
A firm must be effectively organized to capture value.
Bargaining power of suppliers is high when…
Incumbent firms face supplier switching costs
A company is best described as a _____ to an existing company if customers value the existing company’s product or service offering more when they are able to combine it with the other company’s product or service.
complementor
___ refers to the process in which current options are limited by past decisions.
Path dependence
___ refer to unique strengths embedded deep within a firm that allow it to differentiate
its products and services from those of its rivals.
Core competencies
A SWOT analysis can be an effective management tool because it
Analyzes both a firm’s internal and external environments.
The management of Wong Industries showed a commitment to ______ by increasing the salary of many female employees to meet its goal of having equal pay for women and men who perform comparable work.
organizational values
Which of the following summarizes the difference between a firm’s vision and mission?
a vision states what a firm wants to accomplish, a mission states how a firm plans to accomplish this vision
Limitations of resource based view and why they are a limitation
Unclear what a resource is exactly – unclear which resources firms should focus on
Static in Nature – doesn’t suggest that firms need to upgrade their resources
Unclear how to get VRIO resources – hard to give executives practical suggestions
What are the five components of the Five Forces Analysis? How does conducting a Five Forces Analysis help us to understand the profit potential of an industry?
Threat of New Entrants
Bargaining Power of Buyers
Threat of Substitute Products or Services
Bargaining Power of Suppliers
Rivalry Among Existing Competitors
The higher the level of the forces, the lower the profit potential of an industry
What is strategic leadership? Provide two reasons why strategic leadership is important.
Strategic leadership = Executive use of power and influence to direct the activities of others when pursuing organizational goals
Why care about strategic leadership:
1) Significant compensation given to executives
2) Determine vision, mission, values
3) Carry out strategic management process
4) Impact firm-level outcomes, strategies
list 5 entry barriers
Economies of scale
Network effects
Customer switching costs
Capital requirement
Advantages independent of size Government policy
Credible threat of retaliation
High existing competition
The set of goal-directed and integrated actions a firm takes to gain and sustain superior performance relative to competitors.
strategy
Enables a firm to achieve superior performance and sustainable competitive advantage relative to its competitors. It is the outcome of a strategic management process that consists of three elements: (1) a diagnosis of the competitive challenge; (2) a guiding policy to address the competitive challenge; and (3) a set of coherent actions to implement a firm’s guiding policy.
good strategy
Superior performance relative to other competitors in the same industry or the industry average.
competitive advantage
Outperforming competitors or the industry average over a prolonged period of time.
sustainable competitive advantage
Underperformance relative to other competitors in the same industry or the industry average.
competitive disadvantage
Performance of two or more firms at the same level.
competitive parity
Occurs when 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, thus making a profit at the same time. Both parties benefit from this trade as each captures a part of the value created.
value creation
Organizations, groups, and individuals that can affect or are affected by a firm’s actions.
stakeholder
An approach to strategy formulation that considers all of the company’s stakeholders, not just its shareholders. A core tenet of stakeholder strategy is that a single-minded focus on shareholders exposes a firm to undue risks.
stakeholder strategy
A decision tool with which managers can recognize, prioritize, and address the needs of different stakeholders, enabling the firm to achieve competitive advantage while acting as a good corporate citizen.
stakeholder impact analysis
A framework that helps firms recognize and address the economic, legal, social, and philanthropic expectations that society has of the business enterprise at a given point in time.
corporate social responsibility
AFI Strategy framework
getting started >
external & internal analysis >
formulation: business strategy >
formulation: corporate strategy > Implementation
attributes of stakeholders
power, legitimacy, urgency
why focus on stakeholders and stakeholder management?
Important stakeholders can provide constraints or requirements based on information from their industry
stakeholder impact analysis steps
- Who are the stakeholders?
- What are the stakeholder’s interests and claims?
- What opportunities and threats do our stakeholders present?
- What economic, legal, ethical, and philanthropic responsibilities do we have to our stakeholders?
- What should we do to effectively address the stakeholder concerns?
Executives’ use of power and influence to direct the activities of others when pursuing an organization’s goals.
strategic leadership
A conceptual framework that views organizational outcomes—strategic choices and performance levels—as reflections of the values of the members of the top management team.
upper-echolons theory
The part of the strategic management process that concerns the choice of strategy in terms of where and how to compete.
strategy formulation
The part of the strategic management process that concerns the organization, coordination, and integration of how work gets done, or strategy execution.
strategy implementation
Standalone divisions of a larger conglomerate, each with their own profit-and-loss responsibility.
strategic business units
A statement that captures an organization’s purpose and aspiration. It spells out what the organization ultimately wants to accomplish.
vision
A stretch goal that pervades the entire organization with a sense of purpose.
strategic intent
Description of what an organization actually does—the products and services it plans to provide, and the markets in which it will compete.
mission
Statement of principles to guide an organization as it works to achieve its vision and fulfill its mission, for both internal conduct and external interactions; it often includes explicit ethical considerations.
core values statement
Ethical standards and norms that govern the behavior of individuals within a firm or organization.
organizational core values
Method put in place by strategic leaders to formulate and implement a strategy, which can lay the foundation for a sustainable competitive advantage.
strategic management process
A rational, data-driven strategy process through which top management attempts to program future success.
top-down strategic planning
Strategy planning activity in which top management envisions different what-if scenarios to anticipate plausible futures in order to derive strategic responses.
scenario planning
Incidents that describe highly improbable but high-impact events.
black swan events
The strategic option that top managers decide most closely matches the current reality and which is then executed.
dominant strategic plan
Strategy process in which organizational structure and systems allow bottom-up strategic initiatives to emerge and be evaluated and coordinated by top management. Strategic initiatives can bubble up from deep within the organization through autonomous actions, serendipity, and resource allocation process.
strategy as planned emergence
combination of intended and emergent strategy
realized strategy
Any unplanned strategic initiative bubbling up from the bottom of the organization.
emergent strategy
Any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures.
strategic initiative
Strategic initiatives undertaken by lower-level employees on their own volition and often in response to unexpected situations.
autonomous actions
The way a firm allocates its resources based on predetermined policies, which can be critical in shaping its realized strategy.
resource allocation process
overall plan or direction of an organization in pursuit of its long-term objectives. It includes defining the company’s mission, vision, values, and goals, identifying the markets and products it will focus on, the competitive advantages, and the resources and capabilities it needs to achieve its objectives
corporate strategy
sum of the strategic planning and implementation activities that set and steer the direction of an individual business unit
business level strategy
put in place at the operational level of an organization and will facilitate the corporate (or business) level strategy implementation.
functional strategy
a person or group of people who direct and control an organization from its highest level.
TMT (top management team)
Constraints such as time or the brain’s inability to process large amounts of data that prevent us from appropriately processing and evaluating each piece of information we encounter.
cognitive limitations
Obstacles in thinking that lead to systematic errors in our decision making and interfere with our rational thinking.
cognitive biases
A cognitive bias that highlights people’s tendency to overestimate their ability to control events.
illusion of control
A cognitive bias in which an individual or a group faces increasingly negative feedback regarding the likely outcome from a decision, but nevertheless continues to invest resources and time in that decision, often exceeding the earlier commitments.
escalating commitment
A cognitive bias in which individuals tend to search for and interpret information in a way that supports their prior beliefs. Regardless of facts and data presented, individuals will stick with their prior hypothesis.
confirmation bias
A cognitive bias in which conclusions are based on small samples, or even from one memorable case or anecdote.
representativeness bias
A situation in which opinions coalesce around a leader without individuals critically evaluating and challenging that leader’s opinions and assumptions.
groupthink
PESTEL
political, economic, sociocultural, technology, environmental, legal
Occurs when the production or consumption of goods and services imposes costs on or provides benefits to others, but the prices of the goods and services do not capture these costs and benefits.
externalities
Firm performance attributed to the structure of the industry in which the firm competes.
industry effects
A firm’s strategic profile based on the difference between value creation and cost (V − C).
strategic positioning
framework that identifies five forces that determine the profit potential of an industry and shape a firm’s competitive strategy.
five forces model
five forces
threat of entry
power of suppliers
power of buyers
threat of substitutes
rivalry among existing competitors
The risk that potential competitors will enter an industry.
threat of entry
The positive impacts that one user of a product or service has on other users of that product or service.
network effects
Obstacles that discourage or prevent entry into an industry.
entry barriers
The obstacles that interfere with a firm’s ability to leave an industry.
exit barriers
Decisions that are costly, have a long-term impact, and are difficult to reverse. Contrast with tactical decisions, which are short-term and can be easily reversed.
strategic commitments
A product, service, or competency that adds value to the original product offering when the two are used in tandem.
complements
many small firms, a commodity product, ease of entry, little or no ability for each firm to raise its prices. companies in similar size and resources
perfect competitions
many firms,
some pricing power, differentiated product,
medium entry barriers
monopolistic competition
few (large) firms
some pricing power
differentiated products
high entry barriers
oligopoly
one firm
considerable pricing power
unique product
very high entry barriers
monopoly
A process whereby formerly unrelated industries begin to satisfy the same customer need.
convergence
horizonatl mergers and acquisitions make more profitable than fragmented industries
consolidation
The set of companies that pursue a similar strategy within a specific industry.
strategic groups
Valuable, rare or costly to imitate, firm itself must be organized to capture the value of the resources
VRIO criteria
Barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy.
isolating mechanisms
A firm’s ability to create, deploy, modify, reconfigure, upgrade, or leverage its resources in its quest for competitive advantage.
dynamic capabilities
The internal activities a firm engages in when transforming inputs into outputs; each activity adds incremental value.
value chain analysis
The conceptualization of a firm as a network of interconnected activities.
strategic activity systems
A framework that explains differences in firm performance within the same industry
strategic group model
