Strategy and the Strategic Management Process

These flashcards cover key concepts related to strategy and the strategic management process, including definitions, processes, advantages, and measures of performance.

What is the generic definition of strategy?

A course of action (or a plan) for achieving a goal.

What is a business's central goal?

Profit maximization or creating value for shareholders.

What constitutes a firm's theory about how to gain competitive advantage?

Strategy.

What is the 'holy grail' for businesses according to the lecture?

Sustainable competitive advantage.

What characterizes a good strategy?

It actually generates a competitive advantage for the firm.

What does the strategic management process involve?

A sequential set of analyses and choices to increase the likelihood of choosing a good strategy.

What is the mission of an organization?

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

What are high-quality objectives?

They are tightly connected to key elements of the mission, easy to measure, and easy to track over time.

What is involved in external analysis?

Identification of critical threats and opportunities in the environment.

What is internal analysis focused on?

Identification of strengths and weaknesses within the organization.

What are the two basic areas of strategic choice?

Business-level strategy and corporate-level strategy.

What is business-level strategy?

Actions a firm takes to achieve competitive advantage in a single industry/market.

What is corporate-level strategy?

Actions taken to succeed in multiple markets or industries simultaneously.

What does strategy implementation involve?

Adoption of organizational policies and practices consistent with the organization’s strategy.

What is competitive advantage?

The ability to create more economic value than rival firms.

What is the economic value?

The difference between perceived benefits a product provides and the cost of delivering it.

What is competitive parity?

When economic value created by a firm is the same as the average firm.

What are the two approaches to measuring competitive advantage?

Accounting performance and economic performance.

What is a downside of accounting-based measures of competitive advantage?

They don’t take into account the cost of capital.

What does economic competitive advantage exist to the extent that?

Level of returns exceeds cost of capital.

What distinguishes temporary advantage from sustained advantage?

Temporary advantage lasts only a short time, while sustained advantage lasts longer.

What is realized strategy?

The strategy a firm is actually pursuing.

What is emergent strategy?

Actions that didn’t originate from top executives’ intentions.

What is the main implication of the correlation between economic and accounting-based measures?

We can rely on accounting-based measures of performance.

What might happen to the firm's mission based on its economic priorities?

Missions can sometimes mesh poorly with economic realities.

What element is crucial for strategic choice?

Linking choices directly to mission/objectives and analyses.

What characterizes weak objectives?

Not connected to key elements of the mission and hard to measure.

What is often difficult in measuring economic value and competitive advantage?

Hard to measure the dollar value of perceptions of benefits created by products.

How do visionary firms benefit from their mission statement?

They can earn higher returns due to broad influence from their missions.

What critical aspect must be emphasized in a firm's strategy?

Consistency with organizational policies and practices.

What type of strategies often need to address emergent trends?

Emergent strategies.

What are some organizations' missions discussed as examples that may have conflicting economic priorities?

Ben & Jerry's.

What are the key components of competitive advantage?

Greater perceived benefits or lower economic costs of delivering products.

What role does objective measurement play in achieving a firm’s mission?

It helps evaluate to what extent the firm is realizing its mission.

Why is it challenging to sustain competitive advantage?

Because advantages can easily be imitated or become obsolete.

How does the strategic management process relate to competitive advantage?

It ideally leads to a competitive advantage.

What is one significant question posed by Shark Tank panelists?

Questions about the potential for imitation of business concepts.

What impacts can a mission statement have on a firm's performance?

Missions can have positive, indifferent, or negative effects.