GBA 525 Exam 2 Complete Study Guide

Comprehensive vocabulary flashcards covering key strategic management terms, concepts, and definitions across Chapters 5, 6, 8, 9, 10, 11, and 12 for the GBA 525 Exam 2.

Balanced scorecard

A performance system combining financial results with customer, value-creation, and internal capability measures.

Business model innovation

Changing the logic of how the firm creates or captures value, not merely improving its product.

Consumer surplus

Customer willingness to pay minus actual price: $V - P$.

Economic value created

Total value generated per unit: $V - C$.

Producer surplus

Price minus cost: $P - C$ (simplified per-unit economic surplus).

Shared value creation framework

Competitive advantage from addressing societal needs in ways that also improve firm economics.

Shareholder capitalism

Perspective emphasizing value creation for shareholders.

Long tail

Aggregate sales of many niche products beyond the few hits in the short head.

Triple bottom line

People, planet, profits: social, ecological, economic performance.

Tragedy of the commons

Individuals overuse a shared resource because the cost is spread across everyone.

Blue ocean strategy

Create new demand through value innovation instead of fighting existing rivals on established dimensions.

Cost-leadership strategy

Compete with a lower cost structure than rivals in a broad market.

Differentiation strategy

Offer unique benefits that raise willingness to pay in a broad market.

Economies of scale

Unit cost falls as output volume increases.

Economies of scope

Cost savings from producing different products using shared resources.

Minimum efficient scale (MES)

Lowest output level at which long-run average unit cost reaches its minimum.

Strategic trade-offs

Choices about what not to do in order to support a coherent position.

Strategy canvas

Chart of competitors' offerings across multiple industry competitive factors.

Stuck in the middle

Lack of coherent cost or differentiation position, risking inferior value creation.

Value innovation

Simultaneously increase buyer value $V$ and reduce cost $C$.

Corporate strategy

Decisions about where the firm competes across value-chain stages, products, and geographies.

Backward vertical integration

Own an upstream supplier or input activity.

Forward vertical integration

Own downstream distribution, retail, or other customer-facing activities.

Taper integration

Make some inputs internally while also purchasing from outside suppliers.

Boston Consulting Group (BCG) growth–share matrix

Portfolio tool classifying units as stars, cash cows, question marks, or dogs by market growth and relative share.

Diversification discount

Combined diversified company valued less than its businesses would be separately.

Diversification premium

Combined company valued more than sum of standalone parts due to real synergies.

Hold-up problem

Partner exploits the other's sunk, relationship-specific investment to demand better terms.

Specialized assets

Investments tailored to one particular transaction or partner, difficult to redeploy.

Transaction cost economics

Choose firm versus market governance by comparing total internal and external transaction costs.

Related-constrained diversification strategy

Businesses share many operational links, resources, or competencies.

Related-linked diversification strategy

Businesses have some connections, but not all units share the same activities.

Unrelated diversification strategy

Enter businesses with little operational or competency overlap.

Build-borrow-or-buy framework

Choose internal development, alliance/contract, or acquisition to obtain capabilities.

Alliance management capability

Firm's skill at selecting, governing, learning from, and managing partners.

Co-opetition

Cooperating and competing with the same firm simultaneously.

Equity alliance

Alliance involving one partner taking an ownership stake in another.

Non-equity alliance

Contractual partnership without ownership exchange.

Horizontal integration

Combine with competitors at the same value-chain stage.

Learning races

Alliance partners compete to absorb useful knowledge faster than the other.

Managerial hubris

Executive overconfidence about ability to make an acquisition succeed.

Real-options perspective

Treat uncertain strategic investments as staged options that can be expanded, delayed, or abandoned.

Tacit knowledge

Know-how difficult to explain or codify, often learned through working together.

Explicit knowledge

Knowledge that can be written, coded, or transferred in documents.

CAGE distance framework

Compare Cultural, Administrative/political, Geographic, and Economic distance between countries.

Cost-responsiveness framework

Choose global strategy based on pressure to lower cost and pressure to adapt locally.

Liability of foreignness

Extra disadvantages/costs foreign firms face because they are outsiders.

Global-standardization strategy

High cost pressure, low local responsiveness; standardized products and centralized scale.

Multidomestic strategy

High local responsiveness, low pressure for global cost integration; adapt by country.

Transnational strategy

Pursue low costs and high local responsiveness simultaneously.

International strategy

Transfer home-country capabilities abroad with relatively low cost and adaptation pressures.

Location economies

Cost/quality benefits of placing activities in advantageous geographic locations.

Death-of-distance hypothesis

Claim that technology makes geography less important; slides stress distance still matters.

Organizational design

Coordinated choice of structure, culture, and controls to implement strategy.

Ambidextrous organization

Firm designed to support both exploitation and exploration.

Mechanistic organization

Centralized, formalized, specialized, tall structure; efficient but slow.

Organic organization

Decentralized, flexible, flatter structure with fewer formal rules.

Multidivisional structure (M-form)

Separate business units with profit/loss accountability under a corporate center.

Functional structure

Groups employees by function, such as marketing, finance, or operations.

Matrix structure

Employees report along two dimensions, such as product and geography.

Input controls

Rules, budgets, procedures, and resource decisions established before actions occur.

Output controls

Targets and results measures that allow discretion about methods.

Inertia

Organizational resistance to change despite environmental shifts.

Founder imprinting

Lasting effect of founders' values and practices on culture.

Open innovation

Use ideas and knowledge from both inside and outside the firm.

Corporate governance

Mechanisms directing and controlling a corporation.

Adverse selection

Pre-contract risk of choosing a lower-quality agent or option because information is hidden.

Moral hazard

Post-contract risk of shirking or risk-taking when someone else bears consequences.

Agency theory

Studies conflicts between principals and agents and how contracts/incentives govern them.

Fiduciary responsibility

Duty to act loyally and carefully in the interests of those represented.

Inside directors

Board members who also hold management positions in the firm.

Outside directors

Board members who are not employees of the firm, offering more independent oversight.

Market for corporate control

Pressure from takeover threats to discipline poorly managed firms.

Utilitarianism

Choose action maximizing aggregate good for the greatest number.

Deontology

Ethics of duties and moral principles, regardless of consequences.

Virtue ethics

Focus on moral character and traits such as honesty and courage.

Care ethics

Judges actions through empathy, relationships, and responsibilities to vulnerable people.