Business Policy midterm (LC)
Terms in this set (90)
Non-profit business organization that researches, compiles, and produces leading economic indicators for Australia, France, Germany, Japan, Korea, Mexico, Spain, and the USA.
Interest Coverage ratio
Cash flow to debt ratio
Operating cash flow
Net Profit Margin
Gross Profit Margin
Fixed asset turnover
Sales/Revenue per employee
Capability that sets a firm apart from others;
Something that a firm can do which competitors cannot.
A firm's ability to create value in a way that its rivals cannot.
Relatively stable arrangement of responsibilities, tasks, and people within an organization.
Practice of tying rewards to narrowly defined financial criteria.
Bases on which employees are compensated and promoted.
A firm's ability to modify, reconfigure, and upgrade resources and capabilities in order to strategically respond to or generate environmental changes.
Condition whereby the difficulty of identifying or understanding a resource or capability makes it valuable, rare, and inimitable.
Analytical framework suggesting that a firm with resources and capabilities which are Valuable, Rare, Inimitable, Non-substitutable, and Exploitable will gain a competitive advantage.
A firm's skill at using its resources to create goods and services;
Combination of procedures and expertise on which a firm relies to produce goods and services.
Capability which is central to a firm's main business operations.
Activity performed for a company by people other than its full-time employees.
Total of primary and support value-adding activities by which a firm produces, distributes, and markets a product.
Inputs used by firms to create products and services.
Codes of Governance
Ideal governance standards formulated by regulatory, market, and government institutions.
Industry Life Cycle
Pattern of evolution followed by an industry inception to current and future states.
Subset of firms which, because of similar strategies, resources, and capabilities, compete against each other more intensely than with other firms in an industry.
Firm in one industry that provides products or services which tend to increase sales in another industry.
Intensity of competition within an industry
Key Success Factors (KSF)
Key asset or requisite skill that all firms in an industry must possess in order to be a viable competitor.
The system by which owners of a firm direct and control the affairs of the firm.
Suggests that a firm's current market position or competitive advantage is not an accurate predictor of future performance or sustainable competitive advantage.
Resource Based View (RBV)
Suggests that no two firms are identical because they possess resources and capabilities of different qualities.
Suggests that firms should:
1. Position themselves to compete in attractive industries;
2. Adopt strategies that will make their current industries more attractive.
Deciding on one course of action may necessarily eliminate other options.
Escalation of Commitment
Decision-making bias under which people are willing to commit additional resources to a failing course of action.
Non-financial Performance Metrics
Customer retention, customer satisfaction, customer complaints, employee turnover, product returns, product quality, patents, new products released, product development speed, reputation, web traffic.
Financial Performance Metrics
ROS, ROA, ROE, ROIC, Sales per employee, sales growth, inventory turn, accounts receivable turn, debt ratio, current ratio, cost reduction.
Individual or group with an interest in an organization's ability to deliver intended results and maintain the viability of its products and services.
Symmetric coalignment of the five elements of the firm's strategy, the congruence of functional-arena policies with these elements, and the overarching fir of various businesses under the corporate umbrella.
Simplified, widely shared mental model of the organization and its future, including anticipated changes in its environment.
Goals & Objectives
Combination of a broad indication of organizational intentions (goals) and specific, measurable steps (objectives) for reaching them.
Declaration of what a firm is and what it stands for- its fundamental values and purpose.
Simple statement of understanding of what the firm will be in the future.
Process of managing a well-planned and well-executed transition from one CEO to the next with positive outcomes for all key stakeholders.
The advantage created through the characteristics of a person's network.
The collection of ties between people and the strength of those ties.
Task of managing an overall enterprise and influencing key organizational outcomes. It is responsible for:
1. Lever-and resource-allocation decisions.
2. Developing support among stakeholders.
1. Organization structure
2. Systems and processes
3. People and rewards
Process by which a firm manages the formulation and implementation of a strategy.
The coordinated means by which an organization pursues its goals and objectives.
Strategy for competing against rivals within a particular industry or industry segment.
Strategy for guiding a firm's entry and exit from different businesses, for determining how a parent company adds value to and manages its portfolio of businesses, and for creating value through diversification.
Process of developing a strategy
Process of executing a strategy
Strategy that a firm hopes to execute
Unplanned strategy that arises in response to unexpected opportunities and challenges.
Strategy that an organization actually follows.
The abandoned parts of the intended strategy
Vision towards strategy formation that emphasizes the benefits of acting intentionally.
Tool for assessing the political, economic, sociocultural, technological, environmental, and legal contexts in which a firm operates.
Practice of tying rewards to criteria other than simply financial performance, such as those broadly identified in the balance scorecard.
Core organizational values widely held and shared by an organization's members.
Means by which managers situate a firm relative to its rivals.
Tolerance for ambiguity means that one tends to perceive situations as promising rather than threatening. It arises from novelty, complexity, and insolubility.
Has the advantage of a division of labor, and in any case, no single person, regardless of talent and ability, can single-handedly attend to all the details encountered at the top of complex organizations.
Triple Bottom Line
The firm, as a function of its governance, has the responsibility to benefit other stakeholders beyond shareholders.
A firm's strategies and related investments have financial performance objectives and social and environmental objectives.
Governance Metrics International
Rates the quality of a firm's governance practices.
Response to corporate scandals. Components: Accounting oversight, auditor independence, disclosure, analyst's conflicts of interests, accountability for fraud, and attorney's responsibilities.
California Public Employee's Retirement System
Refers to the larger political, economic, social, technical, environmental, and legal issues that confront the firm
Firm or group of firms that produce or sell the same or similar products to the same market.
The market is dominated by only one firm.
Represents the combined revenues of the largest industry participants as a ratio of total industry share.
The market is dominated by two firms.
The market is dominated by a few large firms
More competitive than concentrated markets
Barriers that impose a high cost on the abandonment of a market or product.
Barrier to entry
Condition under which it is more difficult to join or compete in an industry
Degree to which firms in the buying industry are able to dictate terms on purchase agreements that extract some of the profit that would otherwise go to competitors in the focal industry
Threat of Substitute
Degree to which products of one industry can satisfy the same demand as those of another
Degree to which firms in the industry are able to dictate terms to contracts and thereby extract some of the profit that would otherwise be available to competitors in the focal industry.
Threat of New Entry
Degree to which new competitors can enter an industry and intensify rivalry.
Framework for evaluating industry structure according to the effects of rivalry, threat of entry, supplier power, buyer power, and the threat of substitute.
The degree to which individual firms compete against each other to gain higher market shares, earn higher profits, etc.
Scarcity relative to demand
Enables a firm to take advantage of opportunities or fend off threats in its environment.
If competitors cannot acquire the valuable and rare resource quickly or if they face a cost disadvantage in doing so.
If a competitor cannot achieve the same benefit using different combinations of resources and capabilities.
The firm must be able to nurture and take advantage of the resources and capabilities that it possesses.
Non-physical attributes like knowledge, organizational culture, location, patents, trademarks, reputation, etc.
Physical attributes like managerial judgement, intellectual property, trade secrets, brand equity, etc.
Generic process management philosophy derived mostly from the Toyota Production System that understands customer value and focuses its key processes to continuously increase it.
The skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country.