Strategic Management and the I/O Model of Above-Average Returns

These flashcards cover fundamental concepts from strategic management, particularly focusing on the I/O model and its implications for firm strategy and profitability.

Industrial Organization (I/O) Model

A framework explaining how external environmental factors influence the choice of strategy and profitability of firms.

Above-Average Returns

Profits that exceed the average for comparable companies in the industry.

Competitive Rivalry

The intensity of competition between existing firms in an industry.

Five Forces Model

An analytical tool that assesses the competitive forces within an industry to determine its attractiveness and profitability.

Cost Leadership Strategy

A strategy where a firm aims to produce standardized products at lower costs than competitors.

Differentiation Strategy

A strategy in which a firm offers unique products that command a premium price.

Strategic Alliances

Formal agreements between two or more firms to pursue a set of agreed-upon objectives while remaining independent organizations.

Resource-Based Model

A strategic management approach that emphasizes the role of a firm's internal resources and capabilities in determining its strategy.

External Environment

The external factors, including industry conditions and competitors, that influence an organization's strategic choices.

Profitability Potential

The potential for a firm or industry to earn above-average returns.