MGMT Final

Strategic Management Process

Mission

Objectives

Internal & External Analysis

Strategic Choice

Strategy Implementation

Competitive Advantage

How is Competitive Advantage Measured

Accounting measures

Economic Measures

Technological Software

Quality of relations between labor and management, organizations culture, and quality of managerial controls

Technological Hardware

Machines and robots

Skunk Works

Concentrated pockets of intense creative efforts

Single Business Firm

95%-100% revenue from a single market

Dominant Business Firm

< 70% Revenue from a single market and diversified businesses are related

Unrelated Business Firm

< 70% revenue from a single market and diversified businesses are unrelated

Economies of Scope: Exploiting Shared Activities

Different businesses share 1 or more value chain activity

Economies of Scope: Core Competencies

Complex set of Rs and Cs that link different businesses through knowledge, experience, and wisdom

Economies of Scope: Financial

Internal capital allocation, Tax advantages, and Risk Reduction

Economies of Scope: Anti-Competitive

Multipoint competition and Market power

Economies of Scope: Management Compensation

Giving something of monetary value as incentive for employees to make sure things run well

Mutual Forebearance

Form of tacit collusion where firms both agree NOT to compete in one industry to avoid competition in another

Predatory Pricing

Selling at below cost of production of subsidized business. May lead to power in 2nd industry

Deep Pockets Diversification

A firm that takes advantage of monopoly in one business to subsidize several different businesses