Sevi Exam 1 Flashcards
Understand what is meant by strategy and strategic management.
i. Strategy: A set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors.
ii. An integrative management field that combines analysis, formulation, and implementation for competitive advantage.
What are the three elements that provide the basis of a good strategy?
i. Analysis of internal and external environment.
ii. Formulation of corporate business and functional strategies.
iii. Strategy implementation and a set of coherent actions to guide policy.
What are the elements of Tesla’s strategy? Competitive Challenge? Guiding policy? Coherent actions?
i. Competitive Challenge:
1. Manufacture attractive and affordable vehicles with new technology and build the required tools and facilities to help.
ii. A guiding policy:
1. Building cost-competitive mass-market vehicles and making significant investments in lithium-ion batteries,
iii. Coherent Actions:
1. Ramping up productions to help economies of scale.
2. Outsource production in different countries like Shanghai.
3. Make technology available to the public.
What is meant by competitive advantage? Competitive parity? Competitive disadvantage?
i. Competitive Advantage: When a firm’s performance exceeds the other competitors or industry average.
ii. Competitive Parity: When two or more firms perform at the same level.
iii. Competitive disadvantage: When a firm underperforms its rivals or the industry average.
- Understand sustainable competitive advantage.
i. Sustainable competitive advantage means a firm can outperform its competitors or the industry average over a long time.
- What actions can a firm take to gain competitive advantage?
i. Provide goods or services that consumers value more highly than competitors.
ii. Provide value at a lower price.
iii. Have rewards for that are superior in value creation.
1. Example: Profitability and Market share.
- Why is it important for a firm to establish a unique strategic positioning?
i. This allows firms to provide value to customers while effectively managing costs. The better value creation, the greater the economic contribution and likelihood of competitive advantage.
- Who are the stakeholders of a firm? What are the interests/claims of different stakeholder groups? What role do stakeholders play in strategic decision-making?
i. Stakeholders are organizations, groups, or individuals who can affect or are affected by a firm’s actions.
- Understand the difference between internal and external stakeholders. What are the three characteristics of stakeholders that need to be assessed in developing a stakeholder strategy?
i. Internal Stakeholders: Employees, Stockholders, Board Members.
ii. External Stakeholders: Customers, suppliers, creditors, anyone outside the business.
iii. Power, Legitimacy, Urgency. (Do something it might not want to do, must be legally valid, and must require immediate attention.
- Be able to articulate the steps in a stakeholder impact analysis, and how this analysis is used by strategic decision-makers.
The stakeholder analysis analyzes just how important each of our stakeholders are and helps us assess the needs and risks that they each pose.
5 total steps. (Who are stakeholders, What interest they have, What opportunities, What responsibilities? What should we do?)
- Understand the pyramid of social responsibility, and the expectations for firms at each level in the pyramid.
i. 5 LEVELS, From bottom to top, Economic Legal Ethical Philanthropic.
- What is meant by vision? Mission? Values? What should each of these statements convey to employees, managers, and other stakeholders of the firm?
i. Vision: Captures an organization’s purpose and aspirations. Conveys a sense of purpose and motivates / inspires managers and employees. Captures the hearts and minds of key stakeholders.
ii. Mission: Describes what the organization does: Communicates how the firm will achieve its objectives, the products it will provide, markets it will compete in, and customers they want to serve.
iii. Values: Principal guidelines of behavior as employees work to achieve a firm’s vision and fulfill the mission. Helps employees understand company culture and provides ethical standards.
- What is the role of vision, mission, and values for strategic management? Why are they important?
i. They lay the groundwork and foundation for a firm’s direction and goals. This is important because they determine how a firm will achieve it’s goals and helps create a groundwork to employ a winning strategic process.
- What is the difference between a vision statement and a mission statement?
i. Vision = What a firm wants to achieve.
ii. Mission = How the vision will be achieved. The steps that need to be taken.
- Be able to distinguish between a customer-oriented vision statement and a product-oriented vision statement.
i. Customer-Orientated focuses on solving problems for customers.
ii. Product-Orientated focuses on the firm, and its products and services given.