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45 terms

Principles of MGMT. Ch. 6

STUDY
PLAY
Resources
the assets, capabilities, processes, information, and knowledge that an organization uses to improve its effectiveness and efficiency, to create and sustain competitive advantage, and to fulfill a need or solve a problem
Competitive advantage
providing greater value for customers than competitors can.
WHAT are the following four conditions must be met if a firm's resources are to be used to achieve a sustainable competitive advantage?
Valuable resource,Rare resource ,Imperfectly imitable resource, and Nonsubstitutable resource
Valuable resource
a resource that allows companies to improve efficiency and effectiveness.
Rare resource
a resource that is not controlled or possessed by many competing firms.
Imperfectly imitable resource
a resource that is impossible or extremely costly or difficult for other firms to duplicate.
Nonsubstitutable resource
a resource, without equivalent substitutes or replacements, that produces value or competitive advantage
WHAT are the three steps to create strategies that produce sustainable competitive advantage?
assess the need for strategic change, conduct a situational analysis, and choose strategic alternatives.
Competitive inertia
a reluctance to change strategies or competitive practices that have been successful in the past
Strategic dissonance
a discrepancy between upper management's intended strategy and the strategy actually implemented by lower levels of management
Strategy Making for Firms Big and Small
The strategy-making process is the method by which companies create strategies that produce sustainable competitive advantage
Strategy making can improve the following for both big and small firm:
Profits,Sales Growth, and Return on Investment
Situational Analysis (SWOT)
: an assessment of the strengths and weaknesses in an organization's internal environment and the opportunities and threats in its external environment.
An analysis of an organization's internal environment begins with an assessment of WHAT?
distinctive competencies and core capabilities
Distinctive competence
what a company can make, do, or perform better than its competitors. Review the resources and the processes to see if it's valuable or not. Rare is important as well. Rare means that not everyone has equal access. It is not easy to duplicate. Regular coffee verses Starbucks coffee (example). You want to ensure the product or service cannot be substituted. (This would be a competitor advantage)
What is so important about the vision and mission statement?
reflect the personality of how the company truly is. This will assist in obtaining the final goals and objectives. You need to know where you're going/destination.
Reality Check: make assessments of the surrounding environment called ______ _______ as known as Environmental Analysis.
Situation Analysis
Strategic group
a group of companies within an industry that top managers choose to compare, evaluate, and benchmark strategic threats and opportunities.
Benchmarking
involves identifying outstanding practices, processes, and standards at other companies and adapting them to your own company
Core firms
the central companies in a strategic group.
Secondary firms
the firms in a strategic group that follow related, but somewhat different strategies than do the core firms
Transient firms
: the firms in a strategic group whose strategies are changing from one strategic position to another
Shadow-strategy task force
: a committee within a company that analyzes the company's own weaknesses to determine how competitors could exploit them for competitive advantage.
Corporate-level strategy
the overall organizational strategy that addresses the question "What business or businesses are we in or should we be in?"
Diversification
a strategy for reducing risk by buying a variety of items (stocks or, in the case of a corporation, types of businesses), so that the failure of one stock or one business does not doom the entire portfolio.
Unrelated diversification
creating or acquiring companies in completely unrelated businesses.
The matrix separates businesses into four categories which are WHAT?
Star, Question mark,Cash cow, and Dog
Star
a company with a large share of a fast-growing market
Question mark
a company with a small share of a fast-growing market
Cash cow
a company with a large share of a slow-growing market
Dog
a company with a small share of a slow-growing market.
The best type of portfolio strategy may be WHAT?
related diversification
Related diversification
creating or acquiring companies that share similar products, manufacturing, marketing, technology, or cultures
There are three types of grand strategies.
Name them.
growth, stability, and retrenchment
Growth strategy
a strategy that focuses on increasing profits, revenues, market share, or the number of places in which the company does business.
Stability strategy
a strategy that focuses on improving the way in which the company sells the same products or services to the same customers
Retrenchment strategy
strategy that focuses on turning around very poor company performance by shrinking the size or scope of the business
Direct competition
the rivalry between two companies that offer similar products and services, acknowledge each other as rivals, and act and react to each other's strategic actions
Market commonality
the degree to which two companies have overlapping products, services, or customers in multiple markets
Resource similarity
the extent to which competitors have similar amounts and kinds of resources.
Entrepreneurship
the process of entering new or established markets with new goods or services. (know characteristics for this)
Intrapreneurship
entrepreneurship within an existing organization
Risk Taking
entrepreneurial firms are willing to take risks that could result in costly failures.
Proactiveness
entrepreneurial firms anticipate future problems, needs, or changes and develop solutions to meet them, even if they are unrelated to their current business.
Competitive Aggressiveness
entrepreneurial firms must be more willing to use unconventional strategies than the firms already existing in a new market space in order to gain an advantage.