Strategic Management, Chapter 1-2 Frank T. Rothaermel

Strategic Management

an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage

strategy

the set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors

competitive advantage

superior performance relative to other competitors in the same industry or the industry average

sustainable competitive advantage

outperforming competitors or the industry average over a prolonged period of time

competitive disadvantage

under performance relative to other competitors in the same industry or the industry average

competitive parity

performance of two or more firms at the same level

Industry Effects

firm performance attributed to the structure of the industry in which the firm competes

Firm Effects

firm performance attributed to the actions managers take

Stakeholders

organizations, groups, and individuals that can affect or are affected by a firm's actions

Stakeholder Strategy

an integrative approach to managing a diverse set of stakeholders effectively in order to gain and sustain competitive advantage

Stakeholder Impact Analysis

a decision tool with which managers can recognize, prioritize, and address the needs of different stakeholders, enabling the firm to achieve competitive advantage while acting as a good corporate citizen

Corporate Social Responsibility

a framework that helps firms recognize and address the economic, legal, social, and philanthropic expectations that society has of the business enterprise at a given point in time

AFI strategy framework

A model that links three interdependent strategic management tasks—analyze, formulate, and implement—that, together, help managers plan and implement a strategy that can improve performance and result in competitive advantage.

Strategic Management Process

method put in place by strategic leaders to formulate and implement a strategy, which can lay the foundation for a sustainable competitive advantage

Strategic Leadership

executives' use of power and influence to direct the activities of others when pursuing an organization's goals

vision

a statement about what an organization ultimately wants to accomplish; it captures the company's aspiration

mission

Description of what an organization actually does—the products and services it plans to provide, and the markets in which it will compete.

strategic commitments

actions to achieve the mission that are costly, long-term oriented, and difficult to reverse

core values statement

statement of principles to guide an organization as it works to achieve its vision and fulfill its mission, for both internal conduct and external interactions; it often includes explicit ethical considerations

organizational core values

ethical standards and norms that govern the behavior of individuals within a firm or organization

upper-echelons theory

A conceptual framework that views organizational outcomes—strategic choices and performance levels—as reflections of the values of the members of the top management team.

Level-5 leadership pyramid

A conceptual framework of leadership progression with five distinct, sequential levels.

strategy formulation

the process of choosing among different strategies and altering them to best fit the organization's needs

strategy implementation

putting strategic plans into effect

Top-down strategic planning

A rational, data-driven strategy process through which top management attempts to program future success.

dominant strategic plan

the strategic option that top managers decide most closely matches the current reality and which is then executed

illusion of control

people over-estimate the amount of influence they have on events and outcomes

Intended Strategy

the outcome of a rational and structured top-down strategic plan

Realized Strategy

combination of intended and emergent strategy

Emergent Strategy

any unplanned strategic initiative bubbling up from the bottom of the organization

strategic initiative

any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures

autonomous actions

strategic initiatives undertaken by lower-level employees on their own volition and often in response to unexpected situations

serendipity

luck, finding good things without looking for them

resource-allocation process (RAP)

the way a firm allocates its resources based on a predetermined policies, which can be critical in shaping its realized strategy

planned emergence

strategy process in which organizational structure and systems allow bottom-up strategic initiatives to emerge and be evaluated and coordinated by top management

scenario planning

Strategy-planning activity in which managers envision different what-if scenarios to anticipate plausible futures.

Strategic Business Unit (SBU)

a subgroup of a single business or collection of related businesses within the larger organization