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Strategic Management: Theory and Practice, Chapter 1

Terms in this set (53)

Blockholders
Large shareholders who monitor firm strategies to ensure effective
management.
Business Model
The economic mechanism by which a business hopes to sell its goods
or services and generate a profit.
CEO Duality
A situation in which the CEO also serves as the chair of the board.
Comparative Advantage
The idea that certain products may be produced more cheaply
or at a higher quality in particular countries due to advantages in labor costs or
technology.
Competitive Advantage
A state whereby a business unit's successful strategies cannot
be easily duplicated by its competitors.
Contingency Theory
A view that states the most profitable firms are likely to be the ones
that develop the best fit with their environment.
Corporate Governance
The board of directors, institutional investors, and blockholders who monitor firm strategies to ensure managerial responsiveness.
Distinctive Competence
Unique resources, skills, and capabilities that enable a firm to
distinguish itself from its competitors and create competitive advantage.
Hedge Fund
An investment fund open to only a small number of investors but permitted
by regulators to undertake riskier and more speculative investments.
Industrial Organization (IO)
A view based in microeconomic theory that states firm profitability is most closely associated with industry structure.
Intended Strategy
The original strategy top management plans and intends to implement.
mission
The reason for an organization's existence.
Realized Strategy
The strategy top management actually implements.
Resource-Based Theory
The perspective that views performance primarily as a function
of a firm's ability to utilize its resources.
Sarbanes-Oxley Act
Legislation passed in 2002 that created more detailed reporting requirements for boards and executives in public U.S. companies and accounting firms.
Strategic Management
The continuous process of determining the mission and goals of an organization within the context of its external environment and its internal strengths
and weaknesses, formulating and implementing strategies, and exerting strategic control to ensure that the organization's strategies are successful in attaining its goals.
Strategy
Top management's plans to attain outcomes consistent with the organization's mission and goals.
Sustained Competitive Advantage
A firm's ability to enjoy strategic benefits over an
extended period of time.
top management teams
A team of top-level executives—headed by the CEO—all of whom play instrumental roles in the strategic management process.
External Analysis
:Analyze the opportunities and threats, or constraints, that exist in the organization's external environment, including industry and forces in the external environment.
Internal Analysis
Analyze the organization's strengths and weaknesses in its internal environment. Consider the context of managerial ethics and corporate social responsibility.
Strategy Formulation
Formulate strategies that build and sustain competitive advantage by matching the organization's strengths and weaknesses with the environment's opportunities and threats.
Strategy Execution
Implement the strategies that have been developed.
Strategic Control
Measure success and make corrections when the strategies are not producing the desired outcomes.
business model
the mechanism whereby the organization seeks to earn a profit by selling its goods or services
intended strategy
(i.e., what management originally planned) may be realized just as it was planned, in a modified form, or even in an entirely different form
realized strategy
strategy that management actually implements
scientific perspective
whereby strategic managers are encouraged to systematically assess the firm's external environment and evaluate the pros and cons of myriad alternatives before formulating
strategy
artistic perspective
the thought that the lack of environmental predictability and the fast pace of change render elaborate strategy planning as suspect at best.
Industrial organization (IO)
a branch of microeconomics, emphasizes the influence of the industry environment upon the firm.
resource-based theory
views performance primarily as a function of a firm's ability to utilize its resources
distinctive competence
this enables the firm to distinguish itself from
its rivals and create competitive advantage. Resources include all of a firm's tangible and
intangible assets, such as capital, equipment, employees, knowledge, and information
sustained competitive advantage
a firm's ability to enjoy strategic benefits over an extended period of time—those resources must be valuable, rare, not subject to perfect imitation, and without strategically relevant substitutes
contingency theory
The most profitable firms develop beneficial fits with their environments.
Strategic Decisions
They are based on a systematic, comprehensive analysis of internal attributes and factors external to the organization
Strategic Decisions
They are long-term and future-oriented but are built on knowledge about the past and
present.
Strategic Decisions
They seek to capitalize on favorable situations outside the organization.
Strategic Decisions
They involve choices and trade offs.
Strategic Management Process
Contains External Analysis, Internal Analysis, Strategy Formulation, Strategy Implementation & Strategic Control
Characteristics of a Successful Strategy
Understand Competitive Environment is a apart of this
Characteristics of a Successful Strategy
Understand how Resources = strength/weakness is a apart of this
Characteristics of a Successful Strategy
Strategy Matches mission & goals is a apart of this
Characteristics of a Successful Strategy
Design plan before implementation is a apart of this
Characteristics of a Successful Strategy
Future changes evaluated before adopted is a apart of this
top management teams
have few managers in centralized organizations
top management teams
usually include top level managers
top management teams
may include non-managers (board members)
top management teams
may include middle managers
top management teams
make better decisions as a group
contingency theory
Represents a middle ground perspective that views organizational performance as the joint outcome of environmental forces and the firm's
strategic actions.
Industrial organization (IO)
The central tenet of this theory is the notion that a firm must adapt to influences in its industry to survive and prosper; thus, its financial performance is primarily determined by the success of the industry in which it competes
artistic perspective
the thought that strategists should incorporate large doses of creativity and
intuition in order to design a comprehensive strategy for the firm
mission
This is a broadly defined but enduring statement of purpose that identifies the scope of an organization's operations and its offerings to affected groups.
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