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Chapter 1-7
Strategy and Organization
| Term | Definition |
|---|---|
| Resources | are inputs into a firm’s production process, such as capital equipment, the skills of individual employees, patents, finances and talented managers |
| Capability | is the capacity for a set of resources to perform a task or an activity in an integrative manner |
| Core competencies | are capabilities that serve as a source of competitive advantage for a firm over its competitors |
| Risk | an investor’s uncertainty about the economic gains or losses that will result from a particular investment. |
| Average returns | are returns equal to those an investor expects to earn from other investments with a similar amount of risk. |
| Strategic management process | is the full set of commitments, decisions and actions required for a firm to achieve strategic competitiveness and above-average returns. |
| Hyper competition | a term often used to capture the realities of the competitive landscape. |
| Global economy | an economy in which goods, services, people, skills and ideas move freely across geographic borders. |
| Gross Domestic Product (GDP) | the total value of goods and services produced within a country’s borders in the time span of one year. |
| Globalization | is the increasing economic interdependence among countries and their organizations as reflected in the flow of goods and services, financial capital and knowledge across country borders. |
| Technology diffusion | is the rate at which new technologies become available and are used. |
| Perpetual innovation | describes how rapidly and consistently new information-intensive technologies replace older ones. |
| Disruptive technologies | technologies that can destroy the value of an existing technology and create new markets. |
| Knowledge | information, intelligence and expertise is gained through experience, observation and interference. |
| Strategic flexibility | is a set of capabilities used to respond to various demands and opportunities existing in a dynamic and uncertain competitive environment. |
| Vision | is a picture of what the firm wants to be and, in broad terms, what it wants to ultimately achieve. (The big picture of what the firm is all about) |
| Mission | specifies the business or businesses in which the firm intends to compete and the customers it intends to serve. |
| Stakeholders | are the individuals and groups who can affect the firm’s vision and mission, are affected by the strategic outcomes the firm achieves through its operations, and who have enforceable claims on the firm’s performance. |
| Strategic leaders | are people located in different parts of the firm using the strategic management process to help the firm reach its vision and mission. |
| Organizational culture | refers to the complex set of ideologies, symbols and core values that are shared throughout the firm and that influence how the firm conducts business. |
| Profit pool | entails the total profits earned in an industry at all points along the value chain |
| Competitive Advantage | is achieved when a firm implements a strategy that competitors are unable to duplicate or find very difficult to imitate. |
| Above average returns | returns more than what investors expect to earn from other investments with similar risk. |
| Capital Market Stakeholders | shareholders and the major suppliers of a firm’s capital |
| Product market stakeholders | primary customers, suppliers, host communities and unions |
| Organization stakeholders | all of firm’s employees (managerial and non-managerial) |
| Strategy | an integrated and coordinated set of commitments and actions designed to exploit core competencies and give the firm a competitive advantage over others. |
| Strategic competitiveness | is achieved when a firm successfully formulates and implements a valuecreating strategy. |
| The general environment | elements in the broader society that affect industries and their firms |
| Opportunity | is a condition in the general environment that, if exploited, helps a company achieve strategic competitiveness. |
| Threat | is a condition in the general environment that may hinder a company’s efforts to achieve strategic competitiveness. |
| Industry | is a group of firms producing products that are close substitutes. |
| Complementors | are the network of companies that sell complementary goods or services or are compatible with the major firm’s own product or service. |
| Expected Retaliation | expectation of swift and vigorous competitive responses reduces the likelihood of entry |
| Global Mindset | ability to analyze, understand and manage (if in managerial position) an internal organization in ways that are not dependent on the assumptions of a single country, culture, or context |
| Value | measured by products performance characteristics and by its attributes for which customers are willing to pay |
| Tangible resources | resources that can be observed and quantified |
| Intangible Resource | assets that are rooted deeply in the firms history, accumulating over time, and are relatively hard for a competitor to analyze and imitate. |
| Stable Integration | when companies select and internalize resources without trying to change the new combination |
| Modular Integration | purposeful selection of resources that are better sourced externally to substitute specific elements of the original value chain |
| Dynamic Integration | compared to stable and modular integration that result in more structural solutions, this type of integration resembles a process. It benefits from internalizing different resources over time with the intention to continuously refresh. |
| Business Level Strategy | integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets |
| Market Segmentation | used to cluster people with similar needs into individual/ identifiable groups |
| Cost Leadership Strategy | integrated set of actions taken to produce goods or services with features that are acceptable to customers at the lowest cost, relative to that of competitors |
| Differentiation Strategy | integrated set of actions taken to produce goods or services (at an acceptable costs) that customers perceive as being important in ways that important to them |
| Focus Strategy | integrated set of actions taken to produce goods or services that serve the needs of a particular competitive segment. |
| Integrated cost leadership/differentiation Strategy | involves engaging in primary and support activities that allow a firm to simaltenously pursue low cost and differentiation |
| Competitors | firms operating in the same market, offering similar products and targeting similar customers |
| Competitive Rivalry | is the ongoing set of competitive actions and competitive responses that occur among firms as they operate for an advantageous market position. |
| Corporate Level Strategy | specifies actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets |
| Single Business Diversification Strategy | a Corporate Level Strategy that generates 95% or more of a firm’s sales revenue from its core business area |
| Dominant Business Diversification Strategy | a Corporate Level Strategy that generates between 70% and 95% of a firm’s total revenue within a single business area. |
| Related Diversification Strategy | a Corporate Level Strategy where the firm generating more than 30 percent of its revenue outside a dominant business and whose businesses are related in some manner |
| Related Constrained Diversification Strategy | related diversification strategy characterized by direct links between the firm’s businesses |
| Related Linked Diversification Strategy | (mixed related and unrelated) related diversification strategy characterized by linked firms that share fewer resources and assets among their businesses, concentrating on the transfer of knowledge and competencies among the businesses. |
| Unrelated Diversification Strategy | a Corporate Level Strategy for highly diversified firms in which there are no well-defined relationships between its businesses. (Conglomerates) |
| Economies of Scope | cost savings that the firm creates by successfully sharing some of its resources and capabilities or transferring one or more corporate level core competencies that were developed in one of its businesses to another of its businesses |
| Vertical integration | when a company produces its own inputs or owns its own source of output distribution |
| Backward integration | a firm produces its own inputs. (becomes its own supplier) |
| Forward integration | a firm operates its own distribution system for delivering its outputs. (becomes the firm that it would typically sell its goods to. In other words sells the goods it produces itself.) |
| Industry environment | factors that influance a firm, its competitive actions and responses, and the industry's profit potential (5 forces) |
| Competitor environment | in which the firm alanyses each major competitor's future objectives, current strategies, assumptions, and capabilities |
| Competitor analysis / Competitive intelligence | how companies gather and interpret information about their competitors |
| Outsourcing | the purchase of a value creating activity from an external supplier |
| Core rigidities | Flip side of core competencies, and caused by overreliance on any advantage(s) for too long. |
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grumpyspyguy
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