Combo with MGMT 480 test part 2 and 1 other
Terms in this set (76)
cost leadership, differentiation, speed, and market focus
prominent sources of competitive advantage
skills and resources for cost leadership
sustained capital investment and access to capital; process engineering; intense supervision of labor, products or services designed for easy manufacture; low cost distribution
organizational requirements for cost leadership
tight cost control, frequent, detailed control reports, continuous improvement, structured organization, incentives based on meeting strict, usually quanititative targets
advantages of cost leadership
reduce likelihood of pricing pressure from buyers, push rivals into other areas, new entrants face an entrenched cost leader without experience to replicate cost advantages, should lessen their attractiveness of substitutes, and higher margins allow them to withstand supplier cost increases
risks of cost leadership
cost saving activities are duplicated, it can become a trap, it can shrink other competitive advantages, differences decline over time
skills and resources for differentiation
strong marketing abilities; product engineering; creative talent and flair; strong capabilities in basic research; corporate reputation for quality or technological leadership; long tradition in industry; strong cooperation from channels and suppliers of major components
organizational requirements for differentiation
strong coordination among functions in R&D, product development, and marketing; subjective measurement and incentives instead of quantitative measures; amenities to attract highly skilled people
advantages of differentiation
rivalry is reduced when a business successfully differentiates itself; buyers are less sensitive to prices; brand loyalty is hard for new entrants to overcome
risks of differentiation
imitation narrows perceived differentiation; technological changes nullify past investments or learning; cost difference becomes too great for it to hold brand loyalty
skills and resources for speed
process engineering skills; excellent inbound and outbound logistics; technical people in sales and customer service; high levels of automation
organizational requirements for speed
strong coordination among functions in R&D, product development, and marketing; major emphasis on customers satisfaction; strong delegation to operating personnel; tradition of closeness to key customers
advantages of speed
creates a way to lessen rivalry because firm has something a rival may not; allows firm to charge buyers more; generates cooperation and concessions from suppliers; substitutes and new entrants are trying to keep up with changes rather than introducing them
risks of speed
speeding up activities that have not been conducted in a way that prioritizes rapid response should only be done after attention to training, reorganization, and reengineering; some industries may not offer much advantage to a firm introducing some forms of rapid response
involves building cost, differentiation, and speed competitive advantages targeted to a narrow, market niche. allows a firm to learn its target customers and build up organizational knowledge to satisfy its target market better than larger rivals.
corporate level planning
the planning in which you ask: where do we compete? are there other business opportunities? will we be entering or exiting industries? should we diversify?
corporations with many businesses, generally referred to as having a portfolio of businesses
strategic business unit
a grouping of products and services that have similar industries
corporate review capability
this establishes an office of strategic planning. there are no operational duties but they make sure the plan is implemented
the company that helped GE plan reorganize their companies into SBUs. they worked with GE for 4 or 5 years on innovations in the 1970s.
the degree to which an industry is appealing is not the same for all industry participants or potential entrants; the opportunities an industry presents depend partly on a company's ability to capture them
resource-based view of the firm
the view that firms differ in fundamental ways because each firm possesses a unique bundle of resources - tangible and intangible assets and organizational capabilities to make use of those assets. the firm that is successful in the long run can turn resources into competitive advantage.
industrial/organizational economic view of the firm
the view that assumes that resources are transferable/mobile across company boundaries. it is a more free-agent mentality where you choose your industry wisely and set about to develop resource proficiency.
easiest resource to identify and often found on a firm's balance sheet.
physical and financial assets
what do tangible assets include?
the resource which is very critical in creating competitive advantage that cannot be seen or touched.
brand names, company reputation, and company morale
what are some examples of intangible assets?
the resource that involve skills and the ability to combine assets, people, and processes and is used to transform inputs into outputs.
competitive superiority, resource scarcity, inimitability, appropriability, durability, substitutability
what makes a resource valuable?
the resource valuation that asks, does the resource help fulfill a customer's need better than those of the firm's competitors?
the resource valuation that asks, is the resource in short supply?
the resource valuation that asks, is the resource easily copied or acquired?
the resource valuation that asks, who actually gets the profit created by the resource?
the resource valuation that asks, how rapidly will the resource depreciate?
the resource valuation that asks, are other alternatives available?
the type of analysis through which managers create a quick overview of a company's strategic situation
the resource advantage relative to competitors and the needs of markets a firm serves
a limitation or deficiency in one or more resources or competencies relative to competitors
a major favorable situation in a firm's environment
a major unfavorable situation in a firm's environment
the analysis that is the process of examining an organization's strengths and weaknesses.
value chain analysis
the approach to an internal analysis that focuses on how a business creates customer value by examining contributions of different internal activities to that value. it allows better identification of a firm's strengths and weaknesses since the business is viewed as a process.
inbound logistics, operations, outbound logistics, marketing and sales, and service
primary activities of the value chain analysis
the functional approach to internal analysis
the approach to an internal analysis that uses a functional perspective in disaggregating tangible and intangible assets and organizational capabilities
a perspective in which business is seen as a chain of activities that transforms inputs into outputs that customers value.
the activities in a firm of those involved in the physical creation of the product, marketing and transfer to the buyer, and after-sale support
secondary (support) activities
the activities in a firm that assist the firm as a whole by providing infrastructure or inputs that allow the primary activities to take place on an ongoing basis
three circles analysis
an internal analysis technique wherein strategists examine customers' needs, company offerings, and competitor's offerings to more clearly articulate what their company's competitive advantage is and how it differs from those of competitors.
product life cycle
a concept that describes a product's sales, profitability, and competencies that are key drivers of the success of that product as it moves through a sequence of stages from development, introduction, to growth, maturity, decline, and eventual removal from a market.
the stage of market growth that accelerates rapidly with the firm seeking to build brand awareness and establish or increase market share
the stage of market growth that sees growth in sales slowing significantly, along with increased competition and similar product offerings leading the firm to need competencies that allow it to defend its market share while maximizing profit.
the stage of market growth in which the product and its competitors start to experience declining sales and increased pressure on margins.
the stage of market growth in which the firm needs competence in building product awareness and market development along with the resources to support initial losses.
long term objectives
Performance goals of an organization, intended to be achieved over a period of five years or more.
acceptable, achievable, flexible, understandable, measurable, suitable, and motivating
qualities of long term objectives
a long-term business level strategy that is based on a core idea about how the firm can best compete in the marketplace
low-cost leadership, differentiation, and focus
the three generic (business level) strategies
low cost leadership
the type of generic strategy where firms excel at cost reductions and efficiency, and can maximize economies of scale, implement cost-cutting technology, reduce overhead, and use volume sales techniques to propel themselves up the earning curve.
the type of generic strategy that is designed to appeal to customers and build loyalty with a special sensitivity for a particular product attribute, which translates into the firm's ability to charge a premium price for their product.
the type of generic strategy whether anchored in a low cost base or a differentiated based, attempts to attend to the needs of a particular segment, and the firm profits from their willingness to serve otherwise ignored or underappreciated customer segments
A broad corporate level strategic plan used to achieve strategic goals and guide the strategic alternatives that managers of individual businesses or subunits may use.
a type of grand strategy that directs its resources to the profitable growth of a single product in a single market with a single dominant technology
a type of grand strategy that consists of marketing present products, often with only cosmetic modifications, to customers in related market areas by adding channels of distribution or by changing the content of advertising or promotion
a type of grand strategy that involves the substantial modification of existing products or the creation of new but related products that can be marketed to current customers through established channels
a type of grand strategy in which a company seeks to reap the initially high profits associate with customer acceptance of a new or greatly improved product, then rather than face stiffening competition as the basis of profitability shifts to production or marketing competence, they search for other original or novel ideas.
a type of grand strategy that is based on growth through the acquisition of one or more similar firms operating at the same stage of the production marketing chain
a type of grand strategy when a firm acquires suppliers or are customers for its outputs, with a goal of increasing the dependability of the supply or quality of the raw materials
a type of grand strategy that involves the acquisition of business that are related to the acquiring of firms in terms of technology, markets, or products. The new businesses possess a high degree of compatibility with the firm's current businesses.
a type of grand strategy when a firm, particularly a large on, plans to acquire a business because it represents the most promising investment opportunity available. This strategy gives little concern to creating product-market synergy with existing businesses
a type of grand strategy when a firm finds itself with declining profits, and the strategic managers believe the firm can survive and recover if a concerted effort is made over a period of time to fortify its distinctive competencies
a type of grand strategy that involves the sale of a firm or major component of the firm.
a type of grand strategy in which the firm is typically being sold in parts, only occasionally as a whole, but for its tangible asset value and not as a going concern.
a type of grand strategy that includes the financial failure caused by an inability to pay one's debts you can file for liquidation (chapter 7) or reorganization (chapter 11).
liquidation bankruptcy, which is agreeing to complete distribution of firm assets to creditors, most of whom receive a small fraction of the amount they are owed
reorganization bankruptcy, when the mangers believe the firm can remain viable through reorganization
a type of grand strategy where two or more capable firms lack a necessary component for success in a particular competitive environment, and create a commercial company operated for the benefit of the co-owners
a type of grand strategy that is distinguished from joint ventures because the companies involved to not take an equity position in one another