Strategic Management Dr. Pauli Mississippi College Test 1

Strategic Competitiveness

achieved when a firm successfully formulates and implements a value-creating strategy

Strategy

is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage

Competitive Advantage

When a company implements a strategy that creates superior value for customers and that competitors are unable to duplicate or find it too costly to try to imitate

Above Average Returns

are returns in excess of what an investor expects to earn from other investments with a similar amount of risk

Risk

is an investors uncertainty about the economic gains or losses that will result from a particular investment

Average Returns

are returns equal to those an investor expects to earn from other investments with a similar amount of risk

Strategic Management Process

The full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns.

Hypercompetition

describes competition that is excessive such that it creates inherent instability and necessitates constant disruptive change for firms in the competitive landscape

Global Economy

one is which goods, services, people, skills, and ideas move freely across geographic borders

Globalization

the increasing economic interdependence among countries and their organizations as reflected in the flow of good and services, financial capital, and knowledge across country borders

Strategic Flexibility

is a set of capabilities used to respond to various demands and opportunities existing in a dynamic and uncertain competitive environment

Resources

inputs into a firm's production process, such as capital equipment, the skills of individual employees, patents, finances, and talented managers

Capability

the capacity for a set of resources to perform a task or an activity in an integrative manner

Core Competencies

capabilities that serve as a source of competitive advantage for a firm over its rivals

Vision

a picture of what the firm wants to be and, in broad terms, what it wants to ultimately achieve

Mission

specifies the businesses in which the firm intends to compete and the customers it intends to serve

Stakeholders

the individuals or groups that have an interest, stake, or claim in the actions and overall performance of a company

Strategic Leaders

people located in different areas and levels of the firm using the strategic management process to select strategic actions that help the firm achieve its vision and fulfill its mission

Organizational Culture

the complex set of ideologies, symbols, and core values that are shared throughout the firm and that influence how the firm conducts business

General Environment

composed of dimensions in the broader society that influence an industry and the firms within it

Industry Environment

the set of factors that directly influences a firm and its competitive actions and responses: the threat of new entrants, the power of suppliers, the power of buyers, the threat of product substitutes, and the intensity of rivalry among competing firms

Competitor Analysis

how companies gather and interpret information about their competitors

Opportunity

a condition in the general environment that, if exploited effectively, helps a company reach strategic competitiveness

Threat

A condition in the general environment that may hinder a firm's efforts to achieve strategic competitiveness

Socio/Demographic

concerned with a populations size, age structure, geographic distribution, ethnic mix, and income distribution. Also Attitudes and cultural values

Political/Legal

is the arena in which organizations and interest groups compete for attention, resources, and a voice in overseeing the body of laws and regulations guiding interactions among nations as well as between firms and various local governmental agencies.

Technological

includes the institutions and activities involved in creating new knowledge and translating that knowledge into new outputs, products, processes, and materials

Economic Environment

refers to the nature and direction of the economy in which a firm competes or may compete

Industry

a group of firms producing products that are close substitutes

Factors in the Industry Environment

Threat of New Entrants

Threat of Substitutes

Bargaining power of suppliers

Bargaining power of buyers

Rivalry

Factors in the General Environment

Socio/Demo

Tech

Economic

Political/Legal

Economies of Scale

Derived from incremental efficiency improvement through experience as a firm grows larger.

Strategic Group

a set of firms emphasizing similar strategic dimensions and using a similar strategy

competitor intelligence

the set of data and information the firm gathers to better understand and anticipate competitors' objectives, strategies, assumptions, and capabilities

Complementors

companies or networks of companies that sell complementary goods or services that are compatible with the focal firm's good or service

Global Mindset

the ability to analyze, understand, and manage an internal organization in ways that are not dependent on the assumptions of a single country, culture, or context

Components of Internal Analysis

Resources

Capabilities

Core Competencies

Discovering Core Competencies

Competitive Advantage

Strategic Competitiveness

Criteria of Sustainable Competitive Advantage

Valuable

Rare

Costly to Imitate

Nonsubstitutable

Value

measured by a product's performance characteristics and by its attributes for which customers are willing to pay

Tangible Resources

assets that can be observed and quantified

intangible resources

assets that are rooted deeply in the firm's history, accumulate over time, and are relatively difficult for competitors to analyze and imitate

core competencies

capabilities that serve as a source of competitive advantage for a firm over its rivals

Value Chain Activities

activities or tasks the firm completes in order to produce products and then sell, distribute, and service those products in ways that create value for customers

Order of Value Chain Activities

Supply Chain Management

Operations

Distribution

Marketing

Follow Up Service

Support Functions

Includes the activities or tasks the firm completes in order to support the work being done to produce, sell, distribute, and service the products the firm is producing

Types of Support Functions

Finance

Human Resources

MIS

Outsourcing

the purchase of a value-creating activity or a support function activity from an external supplier

Business Level Strategy

an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets

When selecting a business level strategy, the firm determines

WHO, WHAT, HOW

Market Segmentation

a process used to cluster people with similar needs into individual and identifiable groups

Five Business Level Strategies

1. cost leadership

2. differentiation

3. focused cost leadership

4. focused differentiation

5. integrated cost leadership/differentiation

Cost Leadership Strategy

integrated set of actions taken to produce goods or services with features that are acceptable to customers at the lowest cost, relative to that of competitors

differentiation strategy

integrated set of actions taken to produce goods or services (at an acceptable cost) that customers perceive as being different in ways that are important to them

Focus Strategy

integrated set of actions taken to produce goods or services that serve the needs of a particular competitive segment

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

Total Quality Management

a managerial process that emphasizes an organization's commitment to the customer and to continuous improvement of all processes through problem-solving approaches based on empowerment of employees

Corporate Level Strategy

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

Economies of Scope

cost savings that the firm creates by successfully sharing some of its resources and capabilities or transferring one or more corporate-level core competencies that were developed in one of its businesses to another of its businesses

Vertical Integration

when a company produces its own inputs or owns its own source of output distribution

Synergy

exists when the value created by business units working together exceeds the value that those same units create working independently

Competitive Advantage is..

Unique

Hard to Copy

And generates above normal profit

Profit

Price-Cost

Gross Profit

Revenue - COGS

Net Profit

The amount left after operating expenses are subtracted from the gross profit

What Industry is Sturm and Ruger in?

Manufacture and Retail Seller of domestic firearms and parts

Threat of New Entrants for S&R

LOW

high initial investment cost, considerable R&D cost, and high machine operation costs, brand name loyalty

Threat of Substitutes for S&R

Moderate: for hunters: bow and arrow, gun enthusiast: none; law enforcement: tasers and stun guns, dogs, batons, pepper spray

Bargaining Power of Suppliers for S&R

Low: comes in form of raw materials, similar to commodity goods

Bargaining power of Buyers for S&R

Moderate/High: Limited number of buyers and several other options for guns, 65% of buyers are wholesalers, Ruger only has 16 distributors/wholesalers in total

Rivalry for S&R

American Outdoor brands Corp, Remington, Colt Defense, Vista Outdoor Operations.

Competition is intense due to the fact that patents are in play and AOBC has made additional revenue due to acquisitions and constant fight for shelf space in retail stores, hard to enter the markt.

Technology for S&R

Threat of fingerprint technology may increase prices and there may be leaner operations from distribution technology

Political/Legal for S&R

Gun restriction possibilities due to the potential of gun violence, Election years can cause a big shift and the NRA can have big impact

Economic

Used gun sales are increasing, overproduction which mean everything is sold at a discount which means decreased sales, and in times of uncertainty people buy more guns and ammunition which drives up sales

Socio/Demo for S&R

fear of gun violence effects could go either way. Geography. Baby Boomers purchased guns for collection while millennials buy one for functionality and for looks

Does S&R have a competitive advantage?

Yes, they have high quality products at a low cost, because they were able to develop casting at low cost.

Is S&R CA sustainable?

They have proven sustainability since 1946, they have had the firearms manufacturer of the year award by the NASGW for eleven straight years.

What are S&R's Core Competencies?

Advocates for gun safety

high quality, low price

R&D is increasing sales on new models

manufacturing facility locations

strong emphasis on corporate social responsibility

Which Strategy is S&R pursuing? Cost leadership, differentiation, or niche?

Cost Leadership, their production costs are lower but they still sell for the same price, so they earn more revenue.