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Business Strategy
Test #1
37
Business
Undergraduate 4
09/24/2014

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Cards

Term
Why Study Strategy?
Definition
  • You can generalize it: organizations of any type and any size need strategic thinkers
  • It is where everything comes together
  • It makes you a better leader: the ability to influence others is based on competence and confidence as well as character.
Term
Why is strategy a dynamic process?
Definition
  • The pace of technological change
  • We live in a global environment (Globalization)
Term
Two aspects of technological change
Definition
  1. Nature of change
  2. Speed of change
Term
Contrasting perspectives on strategy
Definition
  • Collection of market activities perspective (Michael Porter) - The industrial/organizational model
  • Collection of resources perspective - the resource based view
Term
Successful companies are six times more likely to have ________ leaders
Definition
"Home Grown" or internal
Term
Base your decisions on analysis for an ______ decision
Definition
Informed
Term
Develop resources within company to establish ________ _____________
Definition
Core Competencies
Term
3 categories of Stakeholders
Definition
  1. Those who own the firm (capital market stakeholders) - ex. Bill Ackman (J.C. Penny)
  2. Those who do business with the firm (product market stakeholders)
  3. Those who work for the organization (organizational stakeholders)
Term
The External Environment
Definition
  • Economic
  • Physical
  • Sociocultural (societal attitudes and cultural values)
  • Global
  • Technological
  • Political/Legal (legislative action, trade policies, and coporate governance)
  • Demographic
Term
Industry Environment
Definition
The set of factors that directly influences a firm and its competitive actions and responses
Term
External Environment Analysis
Definition
  • Scanning
  • Monitoring
  • Forecasting
  • Assessing
Term
The Demographic Segment
Definition
  • Population size
  • Age structure
  • Geographic distribution
  • Ethnic mix
  • Income distribution
Term
Economic Environment
Definition
The nature and direction of the economy in which a firm competes or may compete.
Term
Barriers to Entry
Definition
  • Economies of Scale
  • Product differentiation
  • Capital requirements
  • Switching Costs
  • Access to distribution channels
  • Cost disadvantages independent of scale
  • Government Policy
Term
Porter's Five Forces Model
Definition
  • Threats of new entrants
  • Bargaining power of suppliers
  • Bargaining power of buyers
  • Threat of substitute products
  • Intensity of competition
Term
Two missing concepts to Porter's Five Forces Model:
Definition
  1. Compliments to a product
  2. Strategic groups or industry
Term
What barriers protect your business?
Definition
  • Economies of scale
  • Brand Loyalty
  • Switching Costs
  • Capital Requirements
  • Proprietary Knowledge
Term
To be successful, firms need to base their strategy on a deep understanding of their ________ and ________
Definition
  • capabilities
  • weaknesses
Term
Firms need to know how to develop and maintain __________ __________ over their direct competition.
Definition
Competitive Advantage
Term
Competitive Advantage
Definition
  • using or building resources and capabilities to develop a value-creating strategy that your competition cannot match.
  • Should be measurable: increasing marketshare, above average profitability, etc.

 

Term
The value of a SWOT analysis
Definition
  • What are your resources and capabilities?
  • Are they getting better or worse over time? (Compare to yourself)
  • Are they world class or not? (Compare to others)
Term
Tangible Resources
Definition
  • workforce
  • facilities
  • technology
  • organization structure
  • financial resources
  • doctrine/training
Term
Intangible Resources
Definition
  • Cohesion and trust in workforce
  • leadership
  • corporate culture
  • reputation (Brand identity)
  • innovation/knowledge
Term
Core Competencies
Definition
  • resources/capabilities that enable a firm to establish and sustain a competitive advantage
  • If a competitor has a core competency, you can either build it or buy it.
Term
Four signals of Core Competencies
Definition
  • Valuable (resources that exploit)
  • Rare
  • Hard to imitate (historically unique, socially complex, causally ambiguous)
  • Hard to substitute
Term
Types of Business level strategies
Definition
  • Cost leadership
  • Differentiation
  • Focused cost leadership
  • Focused differentiation
  • Integrated cost leadership/differentiation
Term
Total Quality Management
Definition
A managerial process that emphasizes an organization's commitment to the custome and to continuous improvement of all processes through problem-solving approaches based on empowerment of employees.
Term
Business-Level Startegy
Definition
  • Every firm has a business-level strategy (whether they know it or not)
  • Rule #1: Never lose money
  • Rule #2: Never forget Rule #1
  • Developing a business-level startegy depends on knowing your customer
Term
Three Questions to ask when developing a Business-level strategy
Definition
  • Who are they?
  • What do they want?
  • How to provide it?
  • Based on these questions....How am I providing value? (Low cost v. differentiation) and Who am I providing value to? (Mass v. Focus)
Term
Cost leadership strategy
Definition
  • a strategy that produces goods or services with features that are acceptable to customers at the lowest cost relative to that of competitors.
  • Cost means the total cost to the customers of doing business with you.
  • Cost= price +reliability + probability of damages + ease of doing business
  • Use value chain analysis (compare cost by activity, identify cost of drivers, identify linkages, and identify opportunities for reducing costs)
Term
Structure for cost leadership strategy
Definition
  • The ability to maintain the strategy depends on effectiveness and efficiency.
  • Operations is main functions
  • Large centralized staff
  • Job roles are highly structured
Term
Differentiation
Definition
  • A strategy where a firm attempts to increase the perceived value of a good or service related to the perceived value of the goods and services of other items.
Term
Market Cap Formula
Definition
Stock price X Market Share
Term
Return on Equity Formula
Definition
Net income/Total equity
Term
Return on Assets Formula
Definition
Net income/Total assets
Term
Asset Turnover Formula
Definition
Sales/Total Assets
Term
Return on Sales Formula
Definition
Net Income/Sales
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