Strategic Management of the Firm

These flashcards cover essential vocabulary related to the strategic management of a firm, focusing on resources and capabilities.

Resources and Capabilities

Distinct assets, specialized skills, and core abilities an organization uses for competitive advantage.

Sustainable Competitive Advantage

A difficult-to-imitate superior position held by a firm, allowing it to generate above-average returns long-term.

Value Chain

A framework that breaks down a firm into activities, from raw materials to customer service, each adding value.

VRIO Framework

An analytical tool to assess resources and capabilities based on their Value, Rarity, Inimitability, and Organization for competitive potential.

Internal Environment

All factors within an organization (culture, structure, resources, capabilities) influencing its strategy and performance.

Appraising Resources

Systematic evaluation of an organization's resources and capabilities to determine their strategic importance and potential for competitive advantage.

Support Activities

Activities in the value chain that enable primary activities, such as HR, technology, procurement, and infrastructure.

Competitive Advantage

A favorable position achieved by offering greater value or lower cost than rivals, leading to market outperformance.

Strategic Importance

The degree to which resources, capabilities, or activities are crucial for a firm's long-term success and strategic objectives.

Organizational Capabilities

Complex skills, knowledge, routines, and processes enabling a firm to deploy resources, coordinate activities, and deliver value effectively.

External Market Focus

A strategy prioritizing understanding and adapting to external market conditions, customer needs, and competition.

Procurement

The process of acquiring goods, services, or works from external sources, involving sourcing, selection, and supplier management.

Key Success Factors

Essential product attributes, resources, capabilities, or initiatives needed for business success and profitability in an industry.

Ethical Sourcing

Obtaining products and services from suppliers who adhere to social responsibility, environmental sustainability, and fair labor practices.

Market-to-Book Ratio

A financial metric: stock market price per share divided by book value per share, indicating investor valuation relative to accounting value.

Training Programs

Structured initiatives to impart new knowledge, skills, or behaviors to employees, enhancing their competency.

Technological Capabilities

Collective knowledge, skills, equipment, and processes enabling a firm to innovate, develop, and use technology effectively.

Tangible Resources

Physical and financial assets that are easily observed, measured, and quantified (e.g., land, equipment, capital).

Intangible Resources

Non-physical assets crucial for competitive advantage (e.g., brand, patents, culture, employee knowledge).

Primary Activities (Value Chain)

Core operational processes directly involved in product/service creation, delivery, sale, and servicing, including: 1. Inbound Logistics, 2. Operations, 3. Outbound Logistics, 4. Marketing and Sales, 5. Service.

Causal Ambiguity

When the link between a firm's resources/capabilities and its superior performance is complex or unknown, making imitation difficult for competitors.

Path Dependence

A historical condition where a firm's current advantage or disadvantage stems from unique past decisions or events that are hard to replicate.

Social Complexity

Competitive advantages arising from intricate interpersonal relationships, teamwork, culture, and trust, difficult for competitors to imitate.