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Definition
| the name given to a performance measurement framework; framework employs a variety of different strategic and non-financial performance metrics, in combination with traditional financial measures, to produce a single "balanced" measure of performance and condition |
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| the reason a customer chooses to transact with one firm over another; it is episodic and best understood through the eyes of the customer |
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| the gap between the value a customer places on a good or service and the price that he or she pays; it is the difference between the actual price and the price a customer would have been willing to pay |
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| Industrial organization (IO) economics |
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Definition
| an area within the larger field of evonomics concerned with the competitive forces that affect firm behavior and performance; proposes that a firm's performance is a function of strategic conduct, which in turn is a function of industry structure |
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| Resource-based view (RBV) |
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Definition
| holds that competitive advantage, and the economic rents or profits associated with it, is a function of a firm's unique and valuable bundle of resources; such advantage can persist as long as these resource bundles are not effectively imitated or substituted |
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| a measure of financial performance that was developed as a tool to identify firms in danger of bankruptcy; the measure itself weights 5 common financial ratios to product an index of overall financial health |
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| Economic Value Added (EVA) |
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Definition
| a measure of financial performance incorporating both accounting measure of profitability and the firm's overall cost of capital; the result is a measure that reflects economic profit or the return over the minimum required by investors |
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| Generally accepted accounting principles (GAAP) |
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Definition
| the set of rules and guidelines that govern how accountants should record and report financial information; framework is established and maingained by the FASAB |
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| those whose ownership stock is not traded publicly or listed or traded on any public exchange |
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| those whose ownership stock is available to the public and is lsted and traded on a public exchange |
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| an individual or a firm holding a stake in an organization's future and performance; implies a set of interests beyond those that are purely economic, as would be characterist of absentee stockholders |
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| a measure of financial performance and is the ratio of the market value of a firm, divided by the replacement cost of its booked assets; to the extent that the ratio is greater than 1, it suggests that management and strategy are adding value to the firm's assets |
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| the competitive relationship between suppliers and buyers of any good or service and relates to the ability of either party to exert power and influence over the other |
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| Deterministic theories of management |
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Definition
| view a firm's performance as being largely attributable to factors and forces within the environment; the rold of management in this view is simply to assess these forces and respond to them appropriately |
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| a concept based on the open systems view, where strategic success is linked simultaneously to the strategy, the characteristics of the firm, and the environment; in this view, any combination of strategies, resources, and conditions can yield competitive advantage, when properly aligned |
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Definition
| the patterns an organization takes on and repeats over time, without special intent or effort; these patterns may reflect principles of the firm's founders or practices that were instrumental in some early success; they become part of the routine set of accepted practices or actions within an organization |
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| drivers of success within a particular industry, environment, or setting; they are the things that are essential for competitive advantage, in relation to specific sets of customers and specific comeptitive conditions |
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| a concept linking the specifity of strategic actions to the certainty of a particular setting; idea is to set long-term goals in general terms, so as to allow for flexibility and adaptation, but to move forward through incremental and small steps, minimizing commitment and risk and increasing opportunities for learning |
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Definition
| views success as a result of interdependence between the conditons of the environment and the characteristics of the firm; all __ __ whether organization sor organisms, survive by acquiring inputs, performing some value added transformations on the, and then returning them to the environment in the form or outputs |
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Definition
| help by the organization but are in excess of what is needed to satisfy immediate needs; typically either unabsorbed and available in the form of cash, receivables, or excess credit, or absorbed and held in the form of excess capacity, excess inventory, or redundant capabilities |
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| Voluntaristic theories of management |
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Definition
| view a firm's performance as being largely a function of specific actions and resources; the role of management in this view is to leverage unique characteristics and assets, so as to be distinct from the competition |
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| represents one of the primary mechanisms by which firms differentiate their products and services |
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| describes those investments made by incumbent firms that discourage new entrants from opting to compete; incumbent's investments in excess capacity, altering cost structures, product differentiation, and vertical integration can all increase barriers to entry, and may also have an effect on smaller existing competitors |
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| describes the process whereby the economic structure of industries is revolutionize from within - old structures become replaced by new ones; for management, the concept suggests that only those firms that can respond to dynamic capital markets and relax their conventional notions of control and decision making can maintain superior, long-term returns |
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| a measure of economic growth wherein the average per unit costs associated with the production, marketing, or distribution of a product/service decreases as the number of units increases |
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| occur when the average total cost of production decreases as the number of different goods/services produced increases |
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| a measure of the rate of response of quantity demanded resulting from a change in price, with all other factors held constant; for products with high __, a price increase will result in a decrease in revenue, since the revenue lost from decreasing quantity demanded outweighs revenue gaines from the price increase |
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| exist when there is not sustainable, equilibrium, market-clearing price; that condition exists where capacity exceeds the quantity demanded at the price equal to minimum average cost |
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| a market condition whereby only one firm produces (or provides an overwhelming majority of) a certain good; in such conditions, the demand curve for the firm is identical to the market demand curve; these firms will produce a quantity at the level where marginal costs = marginal revenue |
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| a focused, tangible segment of the general market that receives no or limited service from existing mainstream providers; such segments, which tend to be either undetected or omitted by potential competitors, can be attractive targets for focused differentiators |
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| a vew describing organizations and industries as evolving through relatively long periods of stable and incremental change punctuated by relatively short periods of radical and fundamental change; these changes disrupt the established patterns of activity and provide the basis for new equilibrium periods |
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| the costs incurred when customers change from one supplier or market to another; they are a key factor in determining the bargaining power of suppliers/buyers; when they are high/low barganing power of suppliers is high/low and bargaining power of buyers is low/high |
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| the process by which innovations are adopted and spread by firms and individuals other than the original innovator; occurs at different rates over the course of the introduction of a new product |
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| costs incurred by a firm's primary activities - activities that contribute directly to its revenue-generating activities |
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| specific capabilities of a firm that exceed the capabilities of its competitors; unique location, strong reputation, key technology, etc |
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| price paid by the customer and realized by the producer; the value at which the purchase takes place |
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| costs that relate to the support functions - the activities that contribute indirectly to the revenue-generating functions of a firm |
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| those that canoot be seen and measured in an objective fashion; reputation, culture, visionary leadership, etc |
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| activities in the value chain that contribute directly to the products and services that customers see and buy; inbound logistics, operations, outbound logistics, sales, service |
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| activities in the value chain that do not contribute directly to revenue but rather support those functions |
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| those that can be seen and measured in an objective fashion; locations, facilities, technologies, finances |
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| relates to the qualities of a product or service as perceived bty the customers and in relation to their needs; these customer judgments about value, attractiveness, and desirability are subjective and bound to the context in which they occur |
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| framework for illustrating the sequential activities in which firms engage to create value for the customers; a common and highly generalizeable framework that applies in a multitude of settings |
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| goods of uniform value and quality that are produced by multiple suppliers, such that buyers see them as being interchangeable |
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| a graphical representation of a mathematical function, describing the relationship between the price of a commodity and the quantity demanded at that price |
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| Dynamic capabilities perspective |
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Definition
| the ability to develop and sustain competitive advantage through renewing competences so as to achieve congruence with a rapidly changing environment |
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| a condition whereby a certain percentage change in the cost of a good results in a more than equal percentage change in the demand for that same good |
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| a change from the state of system from factors external to the model and not explained by the model |
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| describes three basic approaches to achieving competitive advantage: "cost leadership", "differentiation", and "focus" |
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| the explanation of competitive advantage provided by the field of industrial organization evonomics; studies the strategic behavior of firms and the structure of competitive markets |
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| a condition whereby a certain percentage change in the cost of a good results in a less than equal percentage change in the demand for that same good |
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| the ability to charge above marginal costs, even in the presence of competition; suppliers with this can behave as if they were monopolies because of the inelasticity of the demand for their products and services |
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| Production possibilities frontier |
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Definition
| term used to describe a graphical depiction of the different combinations of goods that a rational producer can make with certain fixed amounts of resources |
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| not having sufficient resources, goods, or services to fulfill the extant demand; implies that wants and needs cannot be satisfied simultaneously, which means trade-offs much be made |
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| a self-evident true statement with multiple parts that is true regardless of the truth of the parts; ex: the statement "either all sheep are white or not all of them are" is a self-evident truth |
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| a term that reflects all the various direct and indirect costs related to purchasing an asset; includes not only its purchase price but all ofther aspects of its further use, such as installation, training, and maintenance |
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| that part of a firm's strategy that focuses on how a single business or a single business unit will compete in its industry or business environment |
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| a corporation that is highly diversified and involved in a number of unrelated businesses |
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| a factor that can enable better products, services, and methods and that can be shared across different units or activities of a firm. They are embedded in the firm's resources and so are difficult to observe and imitate directly |
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| a person who purchases or attempts to purchase a controlling interest in a company against the wishes of the current management; will often then sell off the assets of the company and generate a substantial profit |
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| a strategy for expanding organizational scope or reducing organizational risk by adding additional products, services, locations, or customers to a company's existing portfolio |
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| a change in ownership that occurs against the wishes of the target company's management and board of directors |
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| the way in which a firm enters a new country or place or business; ex: exporting, licensing, joint venture, or direct investment |
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| said to occur when, because of their mutual interdependence, rival firms engage in tacitly collusive or non-competitive actions across a range of common market interactions |
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| the current value of an investment's future net cash flows, discounted by the effects of time and risk, minus the initial investment; suggests a good investment when positive |
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| a business unit or department within a larger corporation that is treated as a distinct entity, with its own revenues, expenses, and profit |
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| Strategic business units (SBUs) |
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Definition
| distinct and semi-autonomous units within a larger corporation; they will often operate in their own industry, with their own business-level strategy, and with full responsibility for their own revenues, costs, and profits |
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| applies in situations where different units cooperate to produce more than could be produced otherwise; is said to occur when the whole is greater than the sum of the parts |
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| refers to the current value of a sum of money to be received or paid at some time in the future, adjusted either for the growth that will occur through earnings or for the discount taken to reflect opportunity costs |
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