12 terms

Ch. 2: Strategy and Technology


Terms in this set (...)

operational effectiveness
performing the same tasks better than rivals perform them (lower costs)
strategic positioning
performing different tasks than your rivals, or performing the same tasks in a different way (higher value/revenue)
competitve advantage
the ability of a firm to outperform its competitors in financial measures
• Measures include: accounting profits or stock price
• Achieving it through: operational effectiveness and strategic positioning
sustainable competitive advantage
when a company affects firm value in a positive way (advantage); not too many competitors can imitate it (competitive); can keep it up (sustainable)
• Ex. Amazon, eBay
resource based view
the strategic thinking approach suggesting exploitable resource that is VIRS (valuable, rare, imperfectly imitable, and non substitutable)
Can help firms avoid the trap of carelessly entering markets just because there's growth
imitation resistant value chain
A way of doing business that competitors struggle to replicate and that frequently involves technology in a key enabling role
resources of competitive advantage
scale advantage
switching cost
network effects
distribution channels
switching cost
The cost a customer incurs when moving from one product to another (can involve: actual money spent, investments in time/inconvenience, data loss, etc.; can strengthen the value of network effects as a strategic asset)
sources: learning costs, info and data, financial commitments, contractual commitments, search costs, loyalty programs
Vertical: build a better product; products differ in quality
Horizontal: position yourself in "product space" away from your competitors; used to appeal to distinct group of customers
primary activities involved in Value Chain analysis
Inbound logistics: obtain raw materials
Operations: transformation of inputs to finished goods
Outbound logistics: storing products and delivering them
Marketing/sales: establishing a customer need
Service activities: after sale service and maintenance
support activities involved in value chain analysis
Procurement: purchasing of raw materials, machines, supplies
Technology Development: R&D, products and process improvement
Human Resources Management: recruiting, training, development
Firm Infrastructure: general management, accounting, finance, strategic planning
Five forces model
level of rivalry
barriers to entry
suppliers' power
buyers' power
threat of substitute products and services