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Unformatted text preview: evidence that these beliefs are wrong ntinuing t o commit resources even when the project is failing ems, even though the analogy may not be valid utcome is t o imagine onf licting courses of action tives, deter mined whether those initiatives succeeded or failed, and evaluat e their initiat ive against them y, bargaining power of buyers/suppliers, closeness of substitutes to an industr ys process ge, switching costs, govt regulation cline t economies or brand loyalty valr y is low b/c companies can get new customers rather than steal share from other companies I nefficient companies go bankr upt. h 0. Brands have brand loyalty and cost economies, high bar r iers to entr y. , int ernational comp. r ivalr y decreases. exchange rat es, inf lation rat es.-Risk capital capital that cannot be recovered if a company fails/goes bankrupt-Maximizing shareholder value is the ultimate goal of profit generating companies-Return on invested capital net income after tax/capital, capital = stockholders equity + debt to creditors-Companies can grow profits by selling in markets that are growing rapidly, by gaining market share from rivals, increasing the amount it sells to existing customers, expanding overseas, or diversifying profitability into new lines of business-Strategic planning process: 1) select corporate mission and major goals, 2) analyze competitive environment to identify opportunities and threats, 3) identify internal strengths and weaknesses, 4) select strategies that build on strength, correct weaknesses, 5) implement-External analysis should look at industry environment, country environment, and socioeconomic or macroenvironment-SWOT analyses comparison of Strengths, Weaknesses, Opportunities, and Threats-distinct competencies arise from 2 sources: resources and capabilities (skills in coordinating resources and putting them to productive use.)-3 factors of profitability: value customers place on product, price charged, cost of creating product-utility minus cost = value created-primary activities in value chain- R&D, production, marketing and sales, customer service. -support activities in value chain- logistics, human resources, information systems, company infrastructure-4 factors of competitive advantage- efficiency (outputs/inputs), quality, innovation, and customer responsiveness-durability of competitive advantage based on 3 factors: barriers to imitation, capability of competitors (tough to respond to competition if it requires a break in prior commitment), industry dynamism (dynamic industries have high rate of innovation so advantage is likely to be transitory....
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- Spring '10