Strategic MGMT Exam1

Strategic MGMT Exam1 - Strategic Management (Exam 1)...

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Strategic Management (Exam 1) Definitions Strategic competiveness : achieved by successfully formulating + implementing a value creating strategy Strategy : an integrated + coordinated set of commitments and actions designed to exploit core competencies Competitive advantage : achieved when a firm implements a strategy competitors are unable to duplicate or find too costly to imitate Value : cost paid + benefits received by customers Above average returns : returns in excess of what an investor expects to earn from other investments w/similar risk Risks : an investor’s uncertainty about economic gains or losses that will result from an investment 5 ways returns can be measured: 1) return on assets 2) return on equity 3) return on sales 4) stock market returns 5) amount or speed of growth Average returns : returns equal to those an investor expects to earn from investors w/similar risk Areas where average returns are found: 1) in firms without a competitive advantage 2) in firms that are not in an attractive industry 2 factors impacting competitive landscape: 1) globalization : MNCs (multinational corporation)- gets at least 25% of total sales revenue from outside the parents home country a. one of 3 forms: i. ethnocentric : focuses primarily on the home country’s market ii. polycentric : oriented toward the markets of individual host countries iii. geocentric : truly world oriented + favors no single country’s market 2) technological change : change in both information + production a. perceptual innovation : a concept that describes how rapidly and consistently new info and intensive technologies replace older ones Competitive Advantage I. 2 Models Firms use to Build Competitive Advantage a. I/O Model of Above Average Returns : (Industrial Organization Model) External Envir. i. model suggests that the industry in which a company competes has a stronger influence on performance than decisions and choices managers make inside the company ii. investor perspective : allows us to see attractive industries iii. 4 Assumptions of I/O Model 1. external environment imposes constraints + pressures that determine strategies and above average returns 2. firms in same industry control similar resources + pursue similar strategies 3. resource different between firms are short lived 4. decision makers are rational + committed b. Resource Based Model of Above Average Returns Internal Envir. i. suggest that the firms unique resources, capabilities, and core competencies have more of
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an influence on selecting strategies than does the external environment ii. Major Components of Internal Environment 1. resources : inputs into the firm’s production process; anything we do to make and sell stuff 2. capabilities : capacity for a set of resources to perform a task or activity in an integrated manner 3. core competencies : capabilities that serve as a source of competitive advantage iii. 3 Assumptions of Resource Based Model 1. firms acquire different resources + develop unique capabilities based on how they
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Strategic MGMT Exam1 - Strategic Management (Exam 1)...

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