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Chapt. 2
MGMT 5700 Test #1
43
Management
Not Applicable
09/19/2011

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Cards

Term
general environment
Definition
can have an impact on a firm's strategic choices

-technological change
-demographic trends
-cultural trends
-economic climate
-legal and political conditions
-specific international events
Term
technological change
Definition
creates both opportunity, as firms begin to explore how to use technology to create new products and services
Term
demographics
Definition
the distribution of individuals in a society in terms of age, sex, marital statues, income, ethnicity, and other personal attributes that determine buying power
Term
economic climate
Definition
the overall health of the economic systems within which a firm operates
Term
recession
Definition
when an activity in an economy is relatively low
Term
depression
Definition
a severe recession that lasts for several years
Term
business cycle
Definition
alternating pattern of prosperity followed by recession, followed by prosperity
Term
SCP model
Definition
structure-conduct-performance
Term
industry structure
Definition
-number of competing firms
-homogeneity of products
-cost of entry and exit
Term
firm conduct
Definition
strategies firms pursue to gain competitive advantage
Term
performance
Definition
firm level: competitive advantage, parity, temporary or sustained competitive advantage
society: productive and allocative efficiency, level of employment, progress
Term
five forces framework
Definition
1. entry
2. rivalry
3. buyers
4. substitutes
5. suppliers
Term
environmental threat
Definition
an individual, group, or organization outside a firm that seeks to reduce the level of that firm's performance
Term
new entrants
Definition
firms that have either recently started operating in an industry or that threaten to begin operations in an industry
Term
perfectly competitive
Definition
when there are numbers of competing firms, the products being sold are homogeneous with respect to cost and product attributes and entry and exit costs are low
Term
monopolistically competitive industries
Definition
there are large numbers of competing firms and low-cost entry into and exit from the industry
Term
oligopolies
Definition
characterized by a small number of competing firms, by homogeneous products, and by high entry and exit costs
Term
monopolistic industries
Definition
consist of only a single firm
Term
barriers to entry
Definition
attributes of an industry's structure that increase the cost of entry
Term
economies of scale
Definition
exist in an industry when a firm's costs fall as a function of volume of production
Term
diseconomies of scale
Definition
exist when a firm's costs rise as a function of its volume of production
Term
product differentiation
Definition
incumbent firms possess brand identification and customer loyalty that potential entrants do not
Term
propriety technology
Definition
gives incumbent firms important cost advantages over potential entrants
Term
managerial know-how
Definition
the often-taken-for-granted knowledge and information that are needed to compete in an industry on a day-to-day basis
Term
rivalry
Definition
the intensity of competition among a firm's direct competitors
Term
substitutes
Definition
meet approximately the same customer needs, but do so in different ways.
Term
suppliers
Definition
make a wide variety of raw materials, labor, and other critical assets available to firms
Term
forward vertical integration
Definition
suppliers cease to be suppliers only and become suppliers and rivals
Term
buyers
Definition
purchase a firm's products or services
Term
backward vertical integration
Definition
a buyer has a strong incentive to enter into its supplier's business to capture some of the economic profits being earned by the supplier
Term
fragmented industries
Definition
industries in which a large number of small or medium-sized firms operate and no small set of firms has dominant market share or creates dominant technologies
Term
emerging industries
Definition
new created or newly re-created industries formed by technological innovations, changes in demand, the emergence of new customer needs, and so forth
Term
first-mover advantages
Definition
advantages that come to firms that make important strategic and technological decisions early in the development of an industry
Term
technological leadership strategy
Definition
firms that make early investments in particular technology
Term
strategically valuable assets
Definition
resources required to successfully compete in an industry
Term
customer-switching costs
Definition
exist when customers make investments in order to use a firm's particular products or services
Term
mature industries
Definition
-slowing growth in the total industry demand
-the development of experienced repeat customers
-a slowdown in increases in production capacity
-a slowdown in the introduction of new products or services
-an increase in the amount of international competition
-an overall reduction in the profitability of firms in the industry
Term
processes
Definition
activities a firm engages in to design, produce, and sell its products or services
Term
process innovation
Definition
a firm's effort to refine and improve its current processes
Term
market leader
Definition
a firm establishes itself as this by having the largest market share in the industry
Term
niche strategy
Definition
a firm reduces its scope of operations and focuses on narrow segments of the declining market
Term
harvest strategy
Definition
firms do not expect to remain in the industry in the long-term and engage in a long, systematic, phased withdrawal, extracting as much value as possible during the withdrawal period
Term
divestment
Definition
used to quickly extract a firm from a declining industry, used by firms without a competitive advantage
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