Strategic Management Flashcards

Flashcards covering key vocabulary from Strategic Management lecture notes.

Strategy

A plan intended to help firms address the demands of their stakeholders and meet their performance goals, involving decisions about what to do and what not to do.

Strategy Formulation

Involves planning, goal-setting, and plotting a firm’s direction and overall approach.

Strategy Implementation

Involves actions and behaviors that enable the execution of formulated strategies.

Firm Performance

The success (or lack thereof) achieved by the firm, measured by financial, social metrics, and other indicators like growth or survival.

Value Creation

Occurs when customers are willing to exchange money for product offerings and firms are willing to exchange such offerings for the money, benefiting both.

Value Capture

The ability to access, retain, or benefit from value that is created, often influenced by bargaining power and negotiation.

SWOT Analysis

A framework for evaluating a company's competitive position by identifying its internal strengths and weaknesses and its external opportunities and threats.

Visions and Missions

Ideal descriptions of a firm's future, broadly defining its long-term intent; should identify markets, priorities, and be distinctive and measurable.

Values

Moral standards, norms, and guidelines that specify acceptable ways to achieve the firm's goals.

Competitive Advantage

Attributes or abilities that differentiate firms from rivals, enable superior performance, and are unique to a given firm but defined relative to rivals.

I/O Economics View

A perspective suggesting that firm performance depends mostly on the external environment, requiring managers to identify attractive industries and formulate strategies accordingly.

Resource-Based View

A perspective suggesting that firm performance depends mostly on the internal environment (resources and capabilities), requiring managers to identify and develop firm resources and capabilities.

Stakeholder View

A perspective suggesting that firm performance depends primarily on stakeholder management, requiring managers to identify and satisfy the stakeholders needed to create and capture value.

Stakeholders

Individuals, organizations, or communities who can affect and are affected by firms.

Opportunities

External conditions potentially beneficial to the firm.

Threats

External conditions potentially harmful to the firm.

General Environment

Dimensions in the broader society that influence industries and the firms within it, including economic, sociocultural, global, technological, political/legal, and demographic factors.

Strategic Group

Firms using similar strategies, competition within strategic groups often greater than that among firms in different strategic groups; simplifies competitor analysis.

Porter's 5 Forces

Model of competition that analyzes the industry's profitability resulting from the interaction among buyers, entrants, suppliers, substitutes, and intensity of competitive rivalry.

Resources

Tangible and intangible assets of a firm.

Capabilities

The capacity to deploy resources in a coherent manner, often routine- and knowledge-based activities.

Value Chain

The process through which a firm converts raw materials into goods and services. Analyzing the value chain helps firms understand costs relative to customer value and identify areas for improvement.

Outsourcing

Purchasing a value chain activity from an external supplier, allowing a firm to concentrate on areas in which it is more competitive.

Core Competencies

Essential to the firms uniqueness and its potential for superior performance; ideally applicable across product markets.

Dynamic Capabilities

Essential to the firms agility or flexibility; ability to adapt resources and capabilities as conditions change.

Business-Level Strategies

Focus on competing within particular product markets.

Market Segmentation

Dividing customers into groups.

Cost Leadership

Compete based on price; small profit margins. Requires large scale and tight financial controls.

Differentiation

Allows premium pricing based on perceived quality; often based on superior technology, features, and customer service.

Focus Strategies

Producing product offerings for narrow segments or niches.

Competitive Rivalry

Competitive behavior between rivals; awareness, motivation, and ability are necessary.

Competitive Dynamics

The total competitive behavior of all firms in a product market.

First Movers

Can obtain customer loyalty, brand awareness, and profits before other firms enter; tend to have more influence over market standards.

Second Movers

Can learn about markets by observing first movers, customers, etc.; can both imitate and improve on first-movers offerings.

Slow Cycle Markets

Technology changes slowly, imitation is costly, and competitive advantages are more sustainable from imitation for long periods of time.

Fast Cycle Markets

Technology changes quickly, imitation is more common and might be less expensive and competitive advantages are shorter in duration.

Nonmarket Strategies

Competition to alter institutional environments, affecting the rules of the game firms must adhere to.

Related Diversification

Combining similar or interconnected businesses.

Unrelated Diversification

Combining dissimilar businesses.

Economies of Scale

Per unit cost savings arising from large volumes.

Economies of Scope

Revenue gains and/or cost savings from sharing resources and capabilities across businesses, often due to synergy.

Synergy

Resources and capabilities may be worth more in conjunction than any resource or capability would be separately.

Merger

Two firms agree to integrate their operations on a relatively co-equal basis.

Acquisition

One firm buys a controlling interest in another (the target firm), making it a subsidiary or otherwise absorbing it.

Restructuring

Enables firms to reduce their scale and scope, often following M&A failures.

Strategic Alliances

Cooperative relationships in which firms combine some of their resources and capabilities to pursue specific objectives, usually temporarily.

Joint Venture

Legally independent company; formed with investments from multiple firms.

Equity Alliance

Partners buy each others equity.

Non Equity Alliance

Contract-based relationship.

Cross-Border Alliance

A firm may form cross-border alliances to leverage core competencies in international markets.

Network Cooperative Strategy

A strategy wherein several firms agree to form multiple partnerships to achieve shared objectives.

External Analysis

The process of scanning and evaluating the external environment to identify opportunities and threats.

Internal Analysis

The process of evaluating a firm's resources and capabilities to identify strengths and weaknesses.

Casual Ambiguity

A situation where the causes of a company's success are obscure, making it difficult for rivals to imitate.

Tangible Resources

Assets that can be observed and quantified; easily bought, sold and imitated.

Intangible Resources

Assets rooted deeply in the firm's history that have accumulated over time; hard to imitate.

Organizational capabilities.

Skills that firms employ to transfer inputs into outputs.

Cost imitation.

Duplicating another company's product offering but accomplishing this at a lower cost.

Product differentiation.

Creating differences in a company's product or service offering by creating something that is perceived industrywide as unique.

Integrated cost leadership/differentiation strategy.

Involves engaging in primary value-chain activities and support functions that allow a firm to simultaneously pursue low cost and differentiation.

Corporate-Level Strategies

Specifies actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in several industries and product markets.

Product Diversification

A primary form of corporate-level strategy; concerns the scope of the markets and industries in which the firm competes.

Operational Relatedness

Created by sharing either a primary activity such as inventory delivery systems or a support activity such as purchasing.

Corporate Relatedness

Using complex sets of resources and capabilities to link different businesses through managerial and technological knowledge, experience, and expertise.

Strategy

A plan intended to help firms address the demands of their stakeholders and meet their performance goals, involving decisions about what to do and what not to do.

Strategy Formulation

Involves planning, goal-setting, and plotting a firm’s direction and overall approach.

Strategy Implementation

Involves actions and behaviors that enable the execution of formulated strategies.

Firm Performance

The success (or lack thereof) achieved by the firm, measured by financial, social metrics, and other indicators like growth or survival.

Value Creation

Occurs when customers are willing to exchange money for product offerings and firms are willing to exchange such offerings for the money, benefiting both.

Value Capture

The ability to access, retain, or benefit from value that is created, often influenced by bargaining power and negotiation.

SWOT Analysis

A framework for evaluating a company's competitive position by identifying its internal strengths and weaknesses and its external opportunities and threats.

Visions and Missions

Ideal descriptions of a firm's future, broadly defining its long-term intent; should identify markets, priorities, and be distinctive and measurable.

Values

Moral standards, norms, and guidelines that specify acceptable ways to achieve the firm's goals.

Competitive Advantage

Attributes or abilities that differentiate firms from rivals, enable superior performance, and are unique to a given firm but defined relative to rivals.

I/O Economics View

A perspective suggesting that firm performance depends mostly on the external environment, requiring managers to identify attractive industries and formulate strategies accordingly.

Resource-Based View

A perspective suggesting that firm performance depends mostly on the internal environment (resources and capabilities), requiring managers to identify and develop firm resources and capabilities.

Stakeholder View

A perspective suggesting that firm performance depends primarily on stakeholder management, requiring managers to identify and satisfy the stakeholders needed to create and capture value.

Stakeholders

Individuals, organizations, or communities who can affect and are affected by firms.

Opportunities

External conditions potentially beneficial to the firm.

Threats

External conditions potentially harmful to the firm.

General Environment

Dimensions in the broader society that influence industries and the firms within it, including economic, sociocultural, global, technological, political/legal, and demographic factors.

Strategic Group

Firms using similar strategies, competition within strategic groups often greater than that among firms in different strategic groups; simplifies competitor analysis.

Porter's 5 Forces

Model of competition that analyzes the industry's profitability resulting from the interaction among buyers, entrants, suppliers, substitutes, and intensity of competitive rivalry.

Resources

Tangible and intangible assets of a firm.

Capabilities

The capacity to deploy resources in a coherent manner, often routine- and knowledge-based activities.

Value Chain

The process through which a firm converts raw materials into goods and services. Analyzing the value chain helps firms understand costs relative to customer value and identify areas for improvement.

Outsourcing

Purchasing a value chain activity from an external supplier, allowing a firm to concentrate on areas in which it is more competitive.

Core Competencies

Essential to the firms uniqueness and its potential for superior performance; ideally applicable across product markets.

Dynamic Capabilities

Essential to the firms agility or flexibility; ability to adapt resources and capabilities as conditions change.

Business-Level Strategies

Focus on competing within particular product markets.

Market Segmentation

Dividing customers into groups.

Cost Leadership

Compete based on price; small profit margins. Requires large scale and tight financial controls.

Differentiation

Allows premium pricing based on perceived quality; often based on superior technology, features, and customer service.

Focus Strategies

Producing product offerings for narrow segments or niches.

Competitive Rivalry

Competitive behavior between rivals; awareness, motivation, and ability are necessary.

Competitive Dynamics

The total competitive behavior of all firms in a product market.

First Movers

Can obtain customer loyalty, brand awareness, and profits before other firms enter; tend to have more influence over market standards.

Second Movers

Can learn about markets by observing first movers, customers, etc.; can both imitate and improve on first-movers offerings.

Slow Cycle Markets

Technology changes slowly, imitation is costly, and competitive advantages are more sustainable from imitation for long periods of time.

Fast Cycle Markets

Technology changes quickly, imitation is more common and might be less expensive and competitive advantages are shorter in duration.