Strategic Management Flashcards

external environment
Terms Definitions
Core Competencies
Meaningful strategic objectives
measurable specificappropriaterealistic timely
service quality 
timeliness, courtesy, consistency, convenience, completness, accuracy
resources (assets/inputs)
financial, organizational, physical, technological, human, innovation, reputational
Components of the external environment
ScanningMonitoringForecastingAssessing
BS- 4 perspectives
CustomerInternal BusinessInnovation and LearningFinancial
five forces model
suppliers, buyers, rivalry, substitutes, entrants
Tangible Resources
1) Financial resource2) Organizational resources - planning and control systems and the formal organizational structure3) Physical - sophistication of the plant and distance from natural resources4) Technological resources - production and information technology, patents trademarks and copyrights
What 6 factors comprise environmental analysis?
Political
Economic
Social
Technological
Demographic
Government
COmpetitive Advantage Triangle
Comeptitive AdvantageStrategic assets and market achievementsCore CompetenciesCOmpetitive CapabilitiesCOmapny Resources
benchmarking (p. 181) 


Evaluating the sustainability of advantages against key competitors.  Comparing the way a company performs a specific activity with a competitor or other company doing the same thing.
porter's national diamond framework
factor conditions
relating and supportind industries
demand conditions
strategy, structure, and rivalry 
Product Market Stakeholders:
customers, suppliers, unions, host communities, and local, state, and federal government
costly-to-imitate capabilities
capabilities that other firms cannot easily develop
opportunity
a condition in the general environment that if exploited effectively helps a company achieve strategic competitiveness
What are some opportunities in an fragmented industry?
Consolidation
Draw the Porter Value Chain
Firm Infrastructure
HR Management
Tech. Development
Procurement
IB Log → Ops → OB Log → M&S → Service
 
Porter's Five Forces
Threat of New entrantsBargaining power of buyersBargaining power of suppliersThreat of substitutesIntensity of rivarlry within industry
Porters 5 factors
Power of suppliersPower of buyersThreat of new entrantsStrength of RivalryProduct substitutes
strength (p. 159) 
A resource advantage relative to competitors and the needs of the markets a firm serves or expects to serve
value creating activities associated with cost leadership strategy 
simplified, cost effective infrastructure
effective training and consistent policies in human resource management
easy to use and investment in technology
procedures and evaluations for procurement
efficient inbound logisitcs
efficient and economy of scale operations
low-cost carriers and schedule for outbound logistics
small sales force, high valume products
efficient and proper service to reduce recalls 
Outsourcing
occurs when a company focuses on its core competencies and contracts with outside vendors non-core activities
4. High performing organization realize that strategic competitiveness and above average returns result only when:
core competencies (Identified by analyzing the internal environment) are matched with opportunities (identified by analyzing the external environment)
strategic leaders
people located in different parts of the firm using the strategic management process to help the firm reach its vision and mission
List Porter's Five Forces.
Entrants, Suppliers, Buyers, Rivals, Substitutes (and sometimes complements).
The Means to achieve Diversification
Merger- MarriageAcquisition- one company buys a controlling interest in another firmTakeover- Target does not want to be acquired
strategy of resource-based view
discovering tangible and intangible resources and combining them to build capabilities to serve market needs
 
·         Understand how to use SWOT analysis in strategic analysis. (Pages 160-163)
 
 



o   Used as a logical framework to guide discussion and reflection about a firm’s situation and alternatives.
o   Exhibit 6.2
§  Cell 1 – Most Favorable, Cell 4 – Least Favorable


 
tangible assets (p. 171) 


The most easily identified assets, often found on a firm’s balance sheet.  They include production facilities, raw materials, financial resources, real estate, and computers.
industrial market segmentation
end user segments (sic codes), product segments, geographic segments, common buying factor, customer size segments
Where Average Returns are Found:
1)Firms without a competitive advantage2)Firms that are not in an attractive industry (current example: mortgage industry
profit pool
entails the total profits earned in an industry at all points along the value chain
How is strategy made?
As design, through planning, and is intentional.
 
As process, through the response to a multitude of internal and external forces, and is emergent.
Four key attributes to Strategic Management
Directed toward overall organizational goals and objectivesIncludes multiple stakeholders in decision makingRequires incorporating both short-term and long-term perspectivesInvolves the recognition of trade-offs between effectiveness and efficiency
Value Chain
The process that takes a product from raw material to final customer
Strategic Objectives
A set of organizational goals that are used to operationalize the mission statement and that are spacific and cover a well-defined time frame. They must be measurable, specific, appropriate, realistic and timely
resource-based view (p. 170)
A method of analyzing and identifying a firm’s strategic advantages based on examining its distinct combination of assets, skills, capabilities, and intangibles as an organization.
how to create value with strategic alliances
improve operations
shape competitive environment
facilitate entry and exit
 
Insight of Competitive Environment Analysis
1. Future Objectives: what drives the competition?2. Current Strategy: 3. Assumptions: what the competitor believes exist in the industry4. Strengths and Weaknesses
What is the paradox of value?
Successful companies are those that:
 
Have a mission and set goals other than profitability and shareholder return
 
Have strong, consistent, ethical values
Focus Strategy
A firm selects a segment or group to target its product
3 things that successful strategy requires
1. attractive market opportunity (external)2. resources/capabilities to serve that market better than competitors can (internal)3. execution/implementation
types of corporate level strategy
value creating - economies of scope, market power, financial economics
value-neutral - incentives, resources
value-reducing - managerial motives 
Resource Based Model of Above Average Returns
suggest firms unique resources, capabilities, and core competencies have more of an influence on selecting strategy than does the external environment
What is Schumpeterian competition (aka hypercompetition)?
A perennial gale of creative destruction that continually transforms industry structure and overthrows established market leaders
Zero sum or Symbiosis (Stakeholer managment)
zero sum- no winnersSymbiosis- growth in interpersonal relationships
Mission/vision statements purpose is to:
A: Describe a Company's vision and purpose in terms of what its trying to achieve. B: Define the business domain in which it tries to achieve these goals
What are the five market segments?
1) High End2) Low End3) Performance4) Size5) Traditional
List some characteristics of the role of analysis in strategic planning.
Identifies and understands the main issues
Manages complexity
Enhances flexibility and innovation by supporting learning
Describe a line with low automation.
a line with more workers and higher labor costs
How is the maximum value of the firm measured?
Through the NPV of FCF
What are the three outside sources of money for the Finance Dept.?
1) Stock issues2) Current Debt (Theser are one year bank notes)3) Bonds (These are 10 year notes)
Explain the basics of the RBV model.
Resource Based View - The assets a firm has determines their capabilities. The capabilities enable a firm to take full advantage of its resources which determines competitive advantage.
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