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strategy
Actions managers take to attain the firm’s goals.
profitability
A ration or rate of return concept.
profit growth
The percentage increase in net profits over time.
What is the main goal of most firms?
To maximize the value of the firm for its owners and its shareholders.
How can managers increase the profitability of their firm.
By pursuing strategies that lower costs or by pursuing strategies that add value to the firm’s products.
value creation
Performing activities that increase the value of goods or services to consumers.
A strategy that focuses on lowering production costs is a….
low cost strategy
A strategy that focuses primarily on increasing the attractiveness of a product as a…
Differentiation strategy.
To Max its profitability a firm must do three things?
Pick a position on the efficiency frontier that is viable in the sense that there is enough demand to support that choice.
Configure its internal operations, such as manufacturing, marketing, logistics, information systems, human resources, and so on, so that they support that position.
Make sure that the firm has the right to organization structure in place to execute its strategy.
operations
The various value creation activities a firm undertakes.
including production, marketing and sales, materials management, research
and development, human resources, information systems, and the firm infrastructure.
___________ have to do with the design, creation, and delivery of the product; its marketing; and its support and after-sale service.
Primary Activities.
Primary activities are divided into these functions ….
Research and Development
Production
Marketing and sales
Customer service
This is Concerned with the design of products and production processes.
Research and development.
_________ is concerned with the creation of a good or service.
production
When a bank originates a loan for a customer, it is engaged in _______ if the loan.
Production.
___________ Can help to create value in several ways. through brand positioning and advertising.
Marketing.
Caterpillar,
the U.S.-based manufacturer of heavy earthmoving equipment, can get spare parts to any point
in the world within 24 hours, thereby minimizing the amount of downtime its customers have to
suffer if their Caterpillar equipment malfunctions.
This is an example of …
How a company can raise its product value (V) with after-sale service and support.
T or F “In terms of attaining a competitive advantage, support activities can be as
important as, if not more important than, the primary activities of the firm.”
True
These systems refer to the electronic systems for managing inventory, tracking sales, pricing products, selling products, dealing with customer service inquiries, and so on.
Information systems
_________Function can help create more value in a number of ways. it ensures that the company has the right mix of skilled people to perform its value creation activities effectively and ensures that people are adequately trained, motivated, and compensated to perform their value creation tasks.
Human recourses
encompasses the foundational systems, structures, and resources that support a company's operations, enabling it to function efficiently and effectively. This infrastructure includes both tangible and intangible elements
Company Infrastructure
organization architecture
The totality of a firm’s organization, including formal organizational structure, control systems and incentives, organizational culture, processes, and people.
organizational structure
The three-part structure of an organization, including
its formal division into subunits such as product divi-
sions, its location of decision-making responsibilities
within that structure, and the establishment of integrating mechanisms to coordinate the
activities of all subunits.
controls
The metrics used to measure the performance of
subunits and make judgments about how well managers are running those subunits.
incentives
The devices used to reward appropriate managerial behavior.
processes
The manner in which decisions are made and work is performed within any organization.
organizational culture
The values and norms shared among an organization’s employees.
people
The employees of the organization, the strategy used
to recruit, compensate, and retain those individuals, and
the type of people that they are in terms of their skills, values, and orientation.
Expand the market for their domestic product offerings by selling those products in
international markets.
2. Realize location economies by dispersing individual value creation activities to those
locations around the globe where they can be performed most efficiently and effectively.
3. Realize greater cost economies from experience effects by serving an expanded global
market from a central location, thereby reducing the costs of value creation.
4. Earn a greater return by leveraging any valuable skills developed in foreign operations and
transferring them to other entities within the firm’s global network of operations.
This describes things that ___________ can do
International Firms.
core competence
Firm skills that competitors cannot easily match or imitate.
location economies
Cost advantages from performing a value creation
activity at the optimal location for that activity.
Locating a value creation activity in the optimal location for that activity can have one
of two effects.
It can lower the costs of value creation and help the firm to achieve a low-cost position
it can enable a firm to differentiate its product offering from those of competitors.
global web
When different stages of value chain are dispersed to
those locations around the globe where value added is
maximized or where costs of value creation are minimized.
The case, keyboard, and hard drive are made in Thailand; the display screen and memory in South Korea;
the built-in wireless card in Malaysia; and the microprocessor in the United States.
This is an example of
Global Web
experience curve
Systematic production cost reductions that occur over the life of a product.
learning effects
Cost savings from learning by doing.
Labor, for example, learns by repetition how to carry out a task, such as assembling airframes, most efficiently.
This is an example of Learning effects
economies of scale
Cost advantages associated with large-scale production.
universal needs
Needs that are the same all over the world, such as
steel, bulk chemicals, and industrial electronics.
Pressures for __________ arise from national or regional differences in consumer tastes and preferences, infrastructure, accepted business practices, and distribution channels and from host-government demands.
local responsiveness
global standardization strategy
A firm focuses on increasing profitability and profit
growth by reaping the cost reductions that come from
economies of scale, learning effects, and location economies.
localization strategy
Increasing profitability by customizing the firm’s goods and services so that
they provide a good match to tastes and preferences in different national markets.
transnational strategy
Attempt to simultaneously achieve low costs through
location economies, economies of scale, and
learning effects while also differentiating product
offerings across geographic markets to account for local
differences and fostering multidirectional flows of
skills between different subsidiaries in the firm’s global network of operations.
______________ strategy makes most sense when cost pressures are intense and demands for local responsiveness are limited.
global standardization
a ___________ makes most sense when demands for local responsiveness are high, but
cost pressures are moderate or low.
localization strategy
when the firm simultaneously faces both strong
cost pressures and strong pressures for local
responsiveness? How can managers balance
the competing and inconsistent demands such
divergent pressures place on the firm?
Pursue a Transnational Strategy
international strategy
Trying to create value by transferring core
competencies to foreign markets where
indigenous competitors lack those competencies.
___________ refer to cooperative agreements between potential or actual competitors.
Strategic alliances
Note 
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