Strategic Management and Business Policy - Exam 1 Study Guide (Ch. 1-3)

Flashcards for reviewing key vocabulary and concepts from chapters 1-3.

Globalization

A new competitive dimension affecting competition in multiple industries worldwide.

Global economy

One in which goods, services, people, skills, and ideas move freely across geographic borders.

Globalization

Increases the range of opportunities for companies competing in the current competitive landscape.

"Liability of foreignness"

The additional costs that firms operating outside their home countries experience above those incurred by local firms.

Technophiles

Not one of the three categories of technology-related trends and conditions affecting today's firms.

Perpetual innovation

Describes how rapidly and consistently new, information-intensive technologies replace older ones.

Disruptive technologies

Technologies that destroy the value of an existing technology and create new markets.

Knowledge

An intangible resource.

Strategic flexibility

The capacity to adapt to changes in the external environment.

The I/O (Industrial Organization) model

Explains the external environment's dominant influence on the choice of strategy and the actions associated with it.

Resources

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

Core competencies

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

Unique resources and capabilities

According to the resource-based model, differences in firms' performances across time are due primarily to what?

Valuable resources

Occurs when a firm's resources allow the firm to exploit opportunities or neutralize threats in its external environment.

They are always tangible.

Not a trait of resources.

Mission statement

Informs stakeholders of what the firm is, what it seeks to accomplish, and who it seeks to serve.

The CEO and top management team

Normally responsible for working with others to form the firm's vision.

Vision statement

A vital part of the firm's discussions to decide what it wants to become as well as who it intends to serve and how it desires to serve those individuals and groups.

Stakeholders

The individuals, groups, and organizations that can affect the firm's vision and mission, are affected by the strategic outcomes achieved, and have enforceable claims on the firm's performance.

Product market stakeholders

Comprised of the firm's primary customers, suppliers, host communities, and unions representing the workforce.

Strategic management process

A rational approach firms use to achieve strategic competitiveness and earn above-average returns.

Strategic actions

Actions taken by firms in response to new information to buffer themselves from negative environmental effects and pursue opportunities.

General environment segments

Demographic, economic, political/legal, sociocultural, technological, global, and sustainable physical.

Industry environment

The set of factors that directly influences a firm and its competitive actions and responses.

The five forces of competition model

Focuses on the factors and conditions influencing an industry's profitability potential.

Accumulating

Is Not one of the four parts of external environmental analysis.

Opportunities and threats

Opportunities help a company achieve strategic competitiveness; threats hinder it.

Scanning

Firms use this to identify early signals of potential changes in the general environment and detect changes that are already under way.

Monitoring

Requires the firm to identify important stakeholders and understand its reputation among these stakeholders as the foundation for serving their unique needs.

Demographic segment

Concerned with a population's size, age structure, geographic distribution, ethnic mix, and income distribution.

Economic segment

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

Political/legal segment

The arena in which organizations and interest groups compete for attention, resources, and a voice in overseeing the body of laws and regulations.

Sociocultural segment

Concerned with a society's attitudes and cultural values.

Global segment

Firms should recognize that globalization of business markets may create opportunities to enter new markets, as well as threats that new competitors from other economies may also enter their market.

Focused strategy

Often is used by firms with moderate levels of international operations who increase their internationalization by focusing on global niche markets.

Key objective of analyzing the general environment

To identify opportunities and threats

NOT one of the components of the five forces of competition model

Rate of market growth

Economies of scale

The cost of producing each unit declines as the quantity of a product produced during a given period increases.

Product differentiation

Companies will combat the perception of uniqueness by offering products at lower prices; this decision, however, may result in reduced profit margins.

Complementors

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

Global mindset

Recognize that their firms must possess resources and capabilities that allow understanding of and appropriate responses to competitive situations that are influenced by country-specific factors and unique cultures.

Value

By innovatively bundling and leveraging their resources to form capabilities and core competencies, firms create this.

Uncertainty

One of the conditions that affect managers as they analyze the internal organization and make decisions about resources.

Capabilities

The foundation of competitive advantage.

Tangible resources

Examples are production equipment, manufacturing facilities, distribution centers, and formal reporting structures.

Intangible resources

Examples are knowledge, trust between managers and employees, managerial capabilities, organizational routines, scientific capabilities, capacity for innovation, brand name, reputation, and culture

Intangible resources

Require nurturing to maintain their ability to help firms engage in competitive battles.

Tangible resources

Its value is constrained because they are hard to leverage-it is difficult to derive additional business or value from them?

Intangible

The more unobservable this type of resource is, the more valuable that resource is to create capabilities and their use can be leveraged.

Capabilities

Combining individual tangible and intangible resources creates something that can be used to complete the organizational tasks required to produce, distribute, and service the goods or services the firm provides to customers for the purpose of creating value for them.

Core competencies

This provides the capacity to take action, act as the "crown jewels of a company," are the activities the company performs especially well compared to competitors, and through which the firm adds unique value to the goods or services it sells to customers.

Discussing the four criteria of sustainable competitive advantage

Helps identify core competencies.

Nonsubstitutable capabilities

Capabilities that do not have strategic equivalents.

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.

Social capital

When firms have strong positive relationships with suppliers and customers, they are said to have this.

Outsourcing

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

Flexibility

This increases when engaging in effective outsourcing.

Offshoring

Deciding to outsource to a foreign supplier.

Outsource

Some firms do this when they decide they are weak in certain areas in order to improve its ability to use its remaining resources to create value.

Strategic resources

Resources are those with the potential to be formed into core competencies as the foundation for creating value for customers and developing competitive advantages because of doing so.

Environment Analysis

A process through which firms analyze and learn from the external environment.

Stakeholder Management

Understanding the needs of various stakeholder groups and building mutually beneficial relationships

Resource based view

A framework for evaluating a company's internal resources and capabilties