Week 1 Flashcards
What is Business Strategy?
Strategy is how an organization can “win” in its environment.
Involves broad goals and objectives that a firm needs to achieve to be successful.
What is Strategic Management?
Process through which firms can use their resources and capabilities to achieve superior firm performance.
Emphasis on understanding why some firms outperform others.
What are the components of the Strategic Management Process?
- Understanding Strategy & Performance
- External and Internal Scanning
- Strategy Formulation
- Strategy Implementation
Chapters cover various aspects of strategic management.
What are Mintzberg’s 5Ps of Strategy?
- Plan: A deliberate and structured course of action designed to achieve a specific goal.
- Ploy: A specific maneuver intended to outwit a competitor or gain a tactical advantage.
- Pattern: A consistent and repeated behavior or approach that emerges over time
- Position: How a company positions itself within a competitive environment or market.
- Perspective: The company’s ingrained way of thinking or organizational culture
Each P represents a different approach to strategy.
What is competitive advantage?
When a strategy creates superior value for customers
It occurs when competitors cannot imitate the value created by a firm’s products.
What are the two models of decision-making mentioned?
Industrial Organization (I/O) Model and Resource-Based Model
These models provide different perspectives on how firms can gain competitive advantages.
What does the Industrial Organization (I/O) Model emphasize?
The external environment – industry characteristics
It suggests that these characteristics are the primary determinant of a firm’s strategic actions.
What are the key industry characteristics in the I/O Model?
- Economies of scale
- Barriers to entry
- Diversification
- Degree of concentration
These factors determine the profit potential within an industry.
What tools are used to gauge industry attractiveness in the I/O Model?
- Porter’s Five Forces
- PEST analysis
- Value-chain analysis
These tools help identify the most attractive industries for strategic action.
What is the main assumption of the I/O Model?
Competitors have similar resources and pursue similar strategies
This assumption influences how firms strategize in competitive environments.
What does the Resource-Based Model focus on?
A firm’s unique resources and capabilities
These are critical for establishing competitiveness.
What are the types of resources in the Resource-Based Model?
- Physical capital
- Human capital
- Organizational capital
These inputs are essential for a firm’s production process.
What are capabilities in the context of the Resource-Based Model?
Capacity for a set of resources to perform a task
This indicates how effectively resources can be utilized.
What are core competencies?
Capabilities that serve as a competitive advantage
These competencies are vital for differentiating a firm in the market.
How can resources become a source of competitive advantage?
When integrated to form a capability
This integration enhances a firm’s ability to perform effectively.
