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MHR454 Midterm 1

Terms in this set (113)

strategy
complex concept that involves many different processes and activities
what does strategic management answer
why do some companies outperform others?
what characteristic is important in strategic management
creativity
what are mitnzberg's 5 p's of strategy?
plan, ploy, strategy as pattern, position, perspective
what do business models do?
describe the process to earn profits
what is economies of scale
A cost advantage created when a firm can produce a good or service at a lower per unit price due to producing the good or service in large quantities
what is a plan
a carefully crafted step
what is a ploy
a specific move designated to outwit or trick competitors
what are strategies as a pattern?
focuses on the extent to which a companies' actions over time are consistent
what is a business position
company's place in industry relative to its competitors
what is strategic perspective
how executives interpret company competitive landscape around them
Intended Strategy
Strategy that an organization hopes to execute
emergent strategy
consists of reactive strategy elements that emerge as changing conditions warrant
Realized Strategy
the strategy that actually takes place
nonrealized strategy
the abandoned parts of the intended strategy
examples of ancient strategies (3)
trojan horse
exodus
american civil war
Machiavellism
the ends justify the means
vision
what the organization hopes to become in the future
What does vision do?
- Links the present to the future
- Energizes people and focuses attention
- Gives meaning to work
- Establishes a standard of excellence and integrity
requirement of a vision
must be a common vision with a "to be" mantra
what is a mission
the reason for an organization's existence that captures key elements of the organization's past and present
what is a mission statement
explains to stakeholders why they support the organization by making clear what important role or purpose the organization plays in society
difference between mission and vision
vision: to be, broad
mission: we do, more specific
what are some examples of stakeholders?
customers/vendors, investors/creditors, stockholders, taxpayers
definition of goal
narrower aims that should provide clear and tangible guidance to employees as they perform their work on a daily basis
SMART goals
Specific, Measurable, Attainable, Realistic, Timely
organizational performance
How well an organization is doing at reaching its vision, mission, and goals
two important considerations in organizational performance
1. performance measure
2.performance referent
Performance Measures
a metric along which organizations can be gauged
performance referent
benchmark used to make sense of an organization's standing along a performance measure
why use variety of KPI's
to provide different info about an org's functioning
Balanced Scorecard (BSC)
recommends that management gains an overview of the organization's performance by tracking a small number of KPIs that collectively reflect four dimensions
four dimensions of the balanced scorecard
1. financial measures
2. customer measures
3. internal business processes
4. learning and growth
Triple Bottom Line
A business strategy that includes social, economic, and environmental criteria.
benefits of celebrity ceo
increased opportunities, increased stock price, increased image/morale
consequences of celebrity ceo
gaps in performance, decreased image/morale
entrepreneurial orientation
(1) autonomy, (2) competitive aggressiveness, (3) innovativeness, (4) proactiveness, (5) and risk taking.
environment
set of external conditions and forces that have the potential to influence the organization
Two types of environments
general and industry
general environment
Overall trends and events in society such as social trends, technological trends, demographics, and economic conditions.
Industry Environment
organizations that collectively compete with one another by providing similar goods and/or services
general environment is associated with which analysis?
pestel
industrial environment is associated with which analysis?
porter's
what does the environment provide?
resources that an organization needs to produce goods/services
what does the environment shape?
the various strategic decisions that executives make
what do opportunities create
chance to improve performance levels
what do threats do?
undermine performance
what does the pestel analysis do?
organizes factors within macro/general environment and identifies how these factors influence industries and the companies within
What does PESTEL analysis stand for?
political (role of gov shaping business)
economic (economic conditions
social (segment, trends, in demographic/culture)
technological (improvements in products/services due to science)
environmental (physical conditions)
legal (courts influencing activity)
what does the porter analysis do?
for the industrial environment, identifies how much profit potential exists in the industry as a planning analysis
Porter's Five Forces
threat of entry, threat of substitute, supplier power, buyer power, and competitive rivalry
if none of the 5 forces hurt profits, then
profit potential is strong
if one or more of the forces hurts profits, then
profit potential is weak
competitors are
All firms making the same product or class of products
All firms making products that supply the same service
All firms competing for the same consumer dollars
Rivalry is high when:
demand is low
fixed costs are high
competitors not differentiated
exit barriers in industry are high
new entrants
do not currently compete but may in the future
new entrants can be (4)
1.start ups (by entrepeneurs)
2. foreign (move in)
3. suppliers (entering business)
4. buyers (entering business)
barriers to entry can be
economies of scale
capital requirements
switching costs (for customer)
expected retaliation
what are substitutes
other offerigs that fill consumer needs
less substitutes means...
competitor prices increase
many substitutes...
force competition to lower prices
Supplier Power
The suppliers' ability to influence the prices they charge for supplies
Supplier power increases when
supplies costs are high
buyer power is low when
price is high
buyer power is high when
prices are low
resource based theory
the possession of strategic resources provides an organization with a golden opportunity to develop competitive advantages over its rivals that in turn make strong profits
what are strategic resources
assets that are valuable, rare, difficult to imitate, and nonsubstitutable
what do strategic resources give you
sustainable competitive advantage
tangible assets vs. intangible assets
tangible can be seen/touched/quantified while intangible is difficult to do that
capabilities
what an organization can do based on the resources it possesses
what do capabilities do
arise over time as companies take action to build strategic resources
what do dynamic capabilities do
keep up with changes in environment by continuously updating array of capabilities
what does resource based theory build on?
past ideas about resources with an evidence-based theorem
what is distinct competence
set of activities an organization performs especially well
What is intellectual property?
Any creation of the mind that is expressed in a fixed medium
four main types of intellectual property
patents, trademarks, copyrights, trade secrets
value chain
charts path by which products/services are created and eventually sold
value chain's two parts
primary and support activities
primary activities
directly involved in creation/distribution of product/service
1. inbound logistics
2. operations
3. outbound logistics
4. marketing/sales
5. service
support activities
provide help for primary activities
1. general administration
2. human resource management
3. research and development in technology
4. procurement (purchasing)
supply chain
a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer
best value chain
refers to the total value added to customer
strategic supply chain management
the use of supply chains as a means to create competitive advantages and enhance firm performance
what are the four measures of strategic supply chain management
speed, quality, managing costs, flexibility
speed refers to
duration from initiation to completion of production and distribution process
quality refers to
relative reliability of supply chain activities
managing costs refers to
enhancing value by reducing expnses or increasing consumer benefits for the same cost level
flexibility refers to
responsiveness in customer's needs
agility
relative capacity to act rapidly in response to dramatic changes in supply and demand
agility can be achieved through...
buffers
adaptability refers to
willingness or capacity to reshape supply chain
enactment
the belief that an organization can create an environment for itself
environmental determinism
the belief that organizations are very limited in their ability to adapt
transaction cost economics
centers on whether it is cheaper for a firm to make or to buy the products that it needs
backward integration strategy
occurs when a firm enters the business of one of its suppliers
SWOT analysis
a technique for unerstanding a company's current situation that considers strengths and weaknesses along with opportunities and threats
What is the goal of SWOT?
leverage strengths, resolve weaknesses, capitalize opportunities, and protect against threats
Three hurdles of SWOT
1. Is it current? Or is it a dream?
2. Is it external or internal?
3. Is it positive or negative?
what is generic strategy
a general way of positioning companies within an industry
two dimension competition are...
key to business level strategy
what are the two dimensions of business-level strategy?
1. source of competitive advantage (keeping costs down or differentiating product)
2. source of operations
what are the four key business-level strategies
1. cost leadership
2. differentiation
3. focused cost leadership
4. focused differentiation
what is cost leadership
the positioning strategy of producing a product or service of acceptable quality at consistently low price
advantages of cost leadership (3)
- withstanding price competition
- discouraging new entrants
- attracting a large market share
disadvantages of cost leadership (2)
-need to maintain high sales volume
-minimizing time for advertising, market research, and R&D
differentiation strategy
attempts to convince customers to pay a premium price for a product or service by providing unique and describable features
advantages of differentiation (3)
-ability to obtain premium prices from customers
-strong margins
-buyer loyalty
disadvantages of differentiation (2)
-customers unwilling to pay for brands' unique features
-customers may find cheaper alternative or find competitors' imitating features
focused cost leadership
A generic business strategy that requires competing based on price to target a narrow market.
Focused Differentiation
requires offering unique features that fulfill the demands of a narrow market
best-cost provider strategy
charge relatively low prices AND offer substantial differentiation
Why is a best cost strategy difficult to execute?
difficult to execute creating unique features AND communicating t customers why these features are useful generally raises a companie's cost of doing business
a company is stuck in the middle when
it does not have unique enough features AND prices are too high
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