Strategic Management Concepts and Frameworks

Vocabulary flashcards covering core strategic management topics including strategy levels, corporate governance, vision/mission, external scanning, Porter's Five Forces, the Resource-Based View (RBV), human/social/intellectual capital, and dynamic capabilities.

Business-level strategy

Strategy addressing the issue of how to compete in a given business to attain competitive advantage.

Corporate-level strategy

Strategy focusing on two main issues: what businesses to compete in and how businesses can be managed to achieve synergy.

Corporate governance

The relationship among various participants—primarily shareholders, management (led by the CEO), and the board of directors—in determining the direction and performance of corporations.

Vision

A goal that is massively inspiring, overarching, and long term, representing a destination driven by and evoking passion.

Mission statement

A company statement encompassing both the purpose of the organization and the basis of competition and competitive advantage.

Strategic objectives

Specific and time-framed goals used to operationalize a mission statement and provide guidance toward higher organizational goals.

Environmental monitoring

A process that tracks the evolution of environmental trends, sequences of events, or streams of activities.

General environment

External factors divided into six segments—demographic, sociocultural, political/legal, technological, economic, and global—that can dramatically affect firm strategy.

Five forces model

An analytical tool for examining the competitive environment, consisting of threat of new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitute products and services, and intensity of competitive rivalry.

Threat of new entrants

The possibility that the profits of established firms in an industry may be eroded by new competitors.

Economies of scale

Spreading the costs of production over the number of units produced, where the unit cost of a product declines as absolute volume per period increases.

Product differentiation

A barrier to entry created when existing products have customer loyalties, forcing new entrants to spend heavily to overcome them.

Substitutes

Products that limit the potential returns of an industry by placing a ceiling on the prices firms in that industry can profitably charge.

Resource-based view (RBV)

A perspective combining internal analysis of phenomena within a company with external analysis of the industry and its competitive environment.

Tangible resources

Physical and financial assets that are relatively easy to identify and used by an organization to create value for its customers.

Intangible resources

Assets embedded in unique routines and practices that evolve over time, including human resources, innovation resources, and reputation resources.

Organizational capabilities

The competencies or skills a firm employs to deploy tangible and intangible resources over time to transform inputs into outputs.

Resource and Capability Competitive Implications Framework

A matrix assessing whether a resource/capability is valuable, rare, difficult to imitate, and without substitutes to determine competitive outcome (disadvantage, parity, temporary advantage, or sustainable advantage).

Intellectual capital

The difference between a firm's market value and book value, measuring the value of a firm's intangible assets.

Explicit knowledge

Knowledge that is codified, documented, easily reproduced, and widely distributed (such as engineering drawings, software code, and patents).

Tacit knowledge

Knowledge residing in the minds of employees, based on their individual experiences and backgrounds.

Social capital

The network of friendships and working relationships between talented people both inside and outside the organization.

Dynamic capabilities

A firm's ability to innovate, adapt, and foster change that is favorable to customers and unfavorable to competitors, helping explain competitive advantage in volatile industries.

Intellectual property rights

Intangible property owned by a firm in the forms of patents, copyrights, trademarks, or trade secrets.