Strategic Management Process

These flashcards encompass key vocabulary and concepts from the lecture on strategy and the strategic management process.

Strategy

A course of action (or a plan) for achieving a goal, often related to profit maximization in businesses.

Competitive Advantage

A firm’s theory about how to gain an advantage over rivals that allows it to create more economic value.

Sustainable Competitive Advantage

An advantage that is maintained over a long period and is difficult for competitors to duplicate.

Mission

An organization’s long-term purpose that defines what it aspires to be.

Objectives

Specific measurable targets a firm uses to evaluate its progress toward fulfilling its mission.

External Analysis

The identification of critical threats and opportunities in the environment impacting the firm.

Internal Analysis

The identification of an organization's strengths and weaknesses.

Strategic Choice

The selection of strategic actions that an organization takes to achieve competitive advantage.

Business-level Strategy

Actions taken by a firm to achieve competitive advantage in a single industry or market.

Corporate-level Strategy

Actions taken by a firm to succeed in multiple markets or industries simultaneously.

Emergent Strategy

A strategy that develops spontaneously in response to unexpected challenges and opportunities.

Realized Strategy

The actual strategy that a firm pursues, which may differ from the intended strategy.

Economic Value

The perceived benefits of a product or service minus the economic costs of delivering that product or service.

Competitive Parity

A situation where a firm creates an economic value equal to the average firm.

Temporary Advantage

An advantage that lasts only for a short period.

Accounting Measures of Competitive Advantage

Performance metrics derived from a firm’s published financial statements using accepted accounting rules.

Economic Measures of Competitive Advantage

Assessments that incorporate the cost of capital and reflect the true financial health of a firm.

Cost of Capital

The rate of return that a firm must pay to its capital providers.