Term
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Definition
| defined as its theory about how to gain competitive advantages |
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Term
| strategic management process |
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Definition
| a sequential set of analyses and choices that can increase the likelihood that a firm will choose a good strategy (one that generates a competitive advantage) |
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Definition
| a company's long-term process |
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Definition
| the place where missions are often written down |
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Term
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Definition
| firms whose mission is central to all they do |
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Definition
| specific measurable targets a firm can use to evaluate the extent to which it is realizing its mission |
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Definition
| a firm identifies the critical threats and opportunities in its competitive environment |
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Definition
| helps a firm identify its organizational strengths and weaknesses |
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Term
| business-level strategies |
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Definition
| actions firms take to gain competitive advantage in a single market or industry |
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Term
| corporate-level strategies |
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Definition
| actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously. |
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Term
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Definition
| occurs when a firm adopts organizational policies and practices that are consistent with its strategies |
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Term
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Definition
| when a firm is able to create more economic value than rival firms |
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Term
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Definition
| the difference between the perceived benefits gained by a customer that purchases a firm's products or services and the full economic cost of these products or services |
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Term
| temporary competitive advantage |
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Definition
| a competitive advantage that lasts for a very short time |
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Term
| sustained competitive advantage |
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Definition
| lasts for a very long time |
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Term
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Definition
| firms that create the same economic value as their rivals experience |
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Term
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Definition
| firms that generate less economic value than their rivals |
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Term
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Definition
| a measure of its competitive advantage calculated by suing information from a firm's published profit and loss and balance sheet statements |
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Term
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Definition
| numbers taken from a firm's financial statements that are manipulated in ways that describe various aspects of a firm's performance |
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Term
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Definition
| ratios with some measure of profit in the numerator and some measure of a firm size or assets in the denominator |
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Term
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Definition
| ratios that focus on the ability of a firm to meet its short-term financial obligations |
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Term
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Definition
| ratios that focus on the level of a firm's financial flexibility, including its ability to obtain more debt |
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Term
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Definition
| ratios that focus on the level of activity in a firm's business |
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Term
| above average accounting performance |
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Definition
| a firm's performance is greater than the industry average |
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Term
| average accounting performance |
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Definition
| performance is equal to the industry average |
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Term
| below average accounting performance |
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Definition
| performance is less than the industry average |
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Term
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Definition
| the rate of return that a firm promises to pay its suppliers of capital to induce them to invest in the firm |
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Term
| economic measures of competitive advantage |
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Definition
| compare a firm's level of return to its cost of capital instead of to the average level of return in the industry |
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Term
| weighted average cost of capital |
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Definition
| % of a firm's total capital (which is debt times the cost of debt, plus the percentage of a firm's total capital OR equity times the cost of equity) |
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Term
| above normal economic performance |
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Definition
| a firm that earns above its cost of capital |
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Term
| normal economic performance |
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Definition
| a firm that earns its cost of capital |
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Term
| below normal economic performance |
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Definition
| a firm that earns less than its cost of capital is in the process of liquidating |
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Term
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Definition
| theories of how to gain competitive advantage in an industry that emerge over time |
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