Quiz 1 Flashcards
Strategy
A firms theory about how to gain competitive advantages
Strategic Management Process
Identify and exploit differences that may lead to competitive advantage
Strategic Management Process
1) objectives
2) External analysis
Internal analysis. Mission is guiding process
3) strategic choice
4) competitive advantage
Strategic choice lands in either:
Corporate level (internal) - multiple markets
And
Business level (external) - single business or industry
Strategy Implementation
How strategies are carried out, who will do what, and organizational structure
(A strategy is only as good as it’s almost as good as it’s reputation)
Competitive advantage
Ability to create more economic value than competitors
All other elements are aimed toward this
Competitive advantage characteristics and types
1) preference for firms output
2) cost advantage
Sustainable
Parity
Disadvantage
Sustainable competitive advantage
When a competitor is not able to imitate the source of advantage
Competitive Parity
When firm’s offerings are average
Competitive Disadvantage
Aversion to firms offering based on tech, equipment, negative reputation, cost disadvantage
Two measures of competitive advantage
Accounting: ROE, ROA, RS
Economic: return in excess of cost of capital
Intended Strategies
The strategic Management Process leads managers to INTENDED STRATEGIES
Emergent strategies
What managers respond and adopt to
Market cap
Number of shares X Share price
Visionary Firms
Mission is Central to all they do
