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MGT455 Strategic Management CH5.1
Internal Scanning: Organizational Analysis
50
Management
Undergraduate 4
09/28/2011

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Term
Capabilities
Definition
a corporation's ability to exploit its resources
Term
Competency
Definition
A cross-functional integration and coordination of capabilities (such as using R&D, marketing, and MIS for a product)
Term
Core competency
Definition
Collection of competencies that crosses divisional boundaries, is widespread within corporation, and is something that the corporation does exceedingly well.
Term
Distinctive Competency
Definition
when a core competency is superior to those of the competition
Term
VRIO framework
Definition
proposes 4 questions to evaluate a firm's competencies
-Value: Does it provide customer value and comp. adv.?
-Rareness: Do no other competitors possess it?
-Imitability: Is it costly for others to imitate it?
-Organization: Is the firm organized to exploit the resource?
Term
5 step resource based approach to strategy analysis
Definition
1.Identify/classify firm's resources in terms of strengths/weaknesses
2.combine firm's strengths into specific capabilities and core competencies
3.Appraise the profit potential of these capabilities and competencies in terms of their potential for sustainable comp. adv. and ability to harvest the profits resulting from there use.
4.Select the strategy that best exploits the firms capabilities and competencies relative to external opportunities.
5.Identify resource gaps and invest in upgrading weaknesses
Term
Corp. gains access to a distinctive competency in 4 ways
Definition
1.Asset endowment, such as a key patent
2.Acquired from someone else through acquisition
3.may be shared with another business unit or alliance partner
4.may be carefully built and accumulated over time within companies
Term
Durability
Definition
rate at which a firm's underlying resources, capabilities, or core competencies depreciate or become obsolete.
Term
Imitability
Definition
rate at which a firm's underlying resources, capabilities, or core competencies can be duplicated by others.
Term
Transparency
Definition
speed with which other firms can understand the relationship of resources and capabilities supporting a successful firm's strategy
Term
Transferability
Definition
Ability of competitors to gather the resources and capabilities necessary to suport a competitive challenge.
Term
Replicability
Definition
Ability of competitors to use duplicated resources and capabilities to imitate the other firm's success.
Term
Explicit vs. Tacit knowledge
Definition
Explicit-easily articulated/communicated (easy to identify)
Tacit-deeply rooted in employee experience or in corporate culture
Term
continuum of sustainability
Definition
(High to Low)
-Slow-cycle resource (strongly shielded, patents, brand name)
-Standard-cycle Resources (standardized mass production, economies of sale, complicated processes)
-Fast-cycle resources (Easily duplicated, idea driven)
Term
Business Model
Definition
company's method for making money in the current business environment.
Term
Customer Solutions model
Definition
consulting model, IBM sells expertise
Term
Profit Pyramid Model
Definition
Get customers to buy in at low-price/low-margin entry and move up to high-price/high-margin products
Term
Multi-component system/installed base model
Definition
Gillette invented to sell razors at break-even in order to make money on higher-margin razors
Term
Advertising Model
Definition
offers basic product free in order to make money on advertising.Google
Term
Switchboard model
Definition
firm acts as intermediary to connect multiple buyers/sellers. ebay/amazon
Term
Time Model
Definition
product r/d and speed. Being first to market a new innovation allos for high margin earnings, when others enter, move on.
Term
Efficiency Model
Definition
company waits until a product becomes standardized then enters market with a low-priced, low margin product that appeals to the mass market. Wal-mart
Term
Blockbuster Model
Definition
Focus is on high investment into a few products with high potential payoffs-especially if protected by patents
Term
Profit multiplier model
Definition
develop a concept that may or not make money on its own but, through synergy, can spinn off many profitable products. Walt disney (used characters to develop theme parks/merchandise)
Term
Entrepreneurial model
Definition
Company offers specialized products/services to market niches that are too small to be worthwhile to large competitors but have potential to grow quickly.
Term
De Facto industry standard model
Definition
Offers products free or at low price to saturate market and become standard. Then offer high-margin products using the standard.
Term
Value Chain
Definition
set of value-creating activities that begin with basic raw materials coming from supplier, moving on to a series of value-added activities involved in producing and marketing a product or service, and ending with distributors getting the final goods into the hands of the ultimate consumer
Term
example value chain
Definition
raw materials>primary manufacturing>fabrication>distributor>retailer
Term
upstream
Definition
ex: Oil, upstream refers to oil exploration, drilling, and moving crude to refinery
Term
downstream
Definition
ex:In Oil, refers to refining the oil plus transporting and marketing gasoline and refined oil to distributors and gas station retailers.
Term
Company Center of Gravity
Definition
part of the chain that is most important to the company. where greatest expertise/capabilities lie (core competencies)
Term
primary activities (manuf. firm)
Definition
-inbound logistics (raw mat. handling/warehousing)
-Operations (machining, assembling, testing)
-Outbound Logistics (warehousing+distribution of finished product)
-Marketing and sales
-Service (Installation, repair, parts)
Term
Support Activities (manuf. firm)
Definition
Ensure primary activities operate efficiently
-Procurement (purchasing of supplies)
-Tech Development (R&D, product+process develop.)
-Human Resource Mgmt (recruiting, training, develop.)
-Firm Infrastructure (general mgmt, accounting, finance, strategic planning)
Term
Economies of Scope
Definition
Result when the value chains of two separate products or services share activities, such as same marketing channels or manufacturing facilities.
Term
Simple Structure
Definition
no functional or product categories and is appropriate for small companies with few product lines (stage 1)
Term
Functional Structure
Definition
medium sized firm, several products, one industry. Employees are specialists in important business functions (manuf., marketing, finance, etc.)
Term
Divisional Structure
Definition
Large corps, many products, several related industries. Employees are functional specialists.
Term
Strategic Business Units (SBU)
Definition
Any size or level, organized into BUs composed of independent product-market segments that are given responsibility over mgmt of own group. must have 1)unique mission, 2)identifiable competitors, 3)an external market focus, and 4)control of its business functions
Term
Conglomerate Structure
Definition
appropriate for large corp. Varient of divisional. Assemblage of legally independent firms (subsidiaries) under one corporate umbrella.
Term
Corporate Culture functions (4)
Definition
1. convey sense of identity for employees
2. Help generate emp. commitment to something greater
3. Add to stability of the org. as a social system
4. Serves as a frame of reference for employees to use to make sense of org. activites and use as a guide for appropriate behavior
Term
Market Position
Definition
Who are our customers? specific marketing concentration.
Term
Market segmentation
Definition
divide market into segments to focus on
Term
Marketing Mix
Definition
Product, Place, Price, Promotion
Term
Product Life Cycle
Definition
Sales over time. Introduction, Growth, Maturity, Decline
Term
corporate reputation
Definition
stakeholder's perceptions of a corporations ability to produce quality goods and a corporations prominence in the minds of stakeholders.
Term
financial leverage
Definition
ratio of total debt to total assets, helpful in describing how debt is being used to increase earnings available to shareholders
-high lvg increases EPS, less taxable income, but fewer shareholders share profits.
Term
Capital budgeting
Definition
analyzing and ranking of possible investments in fixed assets (land, buildings, equipment)
Term
R&D intensity
Definition
Principal means of gaining market share.spending on R&D as a percentage of sales revenue
Term
Technological Competence
Definition
A corp's proficiency in managing research personnel and integrating their innovation into it's operations
Term
Technology Transfer
Definition
tech from lab to marketplace
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