BUS 800 - final exam

Economies of scale

Reductions in unit costs that result from increases in the output of a particular product in a given period of time. Also known as scale economies.

Economies of scope

Reductions in unit costs that result from increases in the output of multiple products; i.e., using a resource across multiple activities.

scale economies

Synonym for economies of scale

vertical diversification

Synonym for vertical integration.

core competencies

Those capabilities fundamental to a firm's strategy and performance

key success factors

Those factors within the firm's market environment that determine the firm's ability to survive and prosper

distinctive competence

Those things that an organization does particularly well relative to its competitors

Corporate Social Responsibility

A business organization's accountability for the social and environmental as well as the economic consequences of its activities, and its commitment to having a positive impact on society

Adhocracies

A type of organization characterized by the absence of bureaucracy and hierarchy. Decision-making authority is diffused and located within organizational members' areas of specialization. Coordination is achieved informally through mutual adjustment.

firm as social entity

A viewpoint that sees management's responsibility as acting in the interests of a broad set of stakeholders and making a positive contribution to society at large

firm as property

A viewpoint that sees management's responsibility as acting in the interests of shareholders

relational contracts

Agreements based on informal social relationships between transacting partners rather than on formal legal documents.

Business environment

All the external influences that affect a firm's decisions and performance

Internal environment

All the factors within an organization that affect its strategic decision-making and performance; for example; its organizational structure, management systems, and human resources

PESTEL analysis

An environmental scanning framework that classifies external influences by source; i.e., political, economic, social, technological, ecological, and legal

Hierarchy

An ordered grouping of people with an established pecking order.

Tangible resources

Assets that can be touched or seen

Resources

Assets that the organization has and that it can use to pursue its objectives

Intangible resources

Assets that you cannot touch or see but that add value

tactic

a scheme for a specific action

absolute cost advantages

What a firm has over a rival producing a similar product or providing a similar service when its average costs of production are lower than its rivals at all levels of output

Organizational complexity

What occurs when a business has many diverse but interdependent parts that are linked through dense sets of interrelationships.

Competency traps

What occurs when a firm's core capabilities become core rigidities in that those capabilities no longer provide a competitive advantage yet are still relied on, thereby limiting innovation

institutional isomorphism

What occurs when organizations lock themselves into common structures and strategies that make it difficult for them to adapt to change.

strategic fit

What occurs when the firm's strategy is consistent with its external environment and its goals and values, resources and capabilities, and structure systems

Superior value advantage

What results when a firm chooses to employ a combination of low-cost and differentiation strategies to create a hybrid model of competitive advantage.

cost advantage

What results when a firm is able to supply an identical product or service to its rivals at a lower cost.

realized strategy

the actual strategy that is implemented

Agency relationship

the arrangement that exists when one person (known as the agent) acts on behalf of another (known as the principal). For example, the arrangements by which the managers of a firm (the agents) act on behalf of its owners (the principals).

vertical integration

the combination in one company of two or more stages of production normally operated by separate companies

emergent strategy

the decisions that emerge from the complex processes in which individual managers interpret the intended strategy and adapt to changing external circumstances

consumer surplus

the difference between the maximum price a consumer is willing to pay for a product or service and the amount he or she actually pays

Strategy

the means by which individuals or organizations achieve their objectives

Corporate strategy

the scope of the firm in terms of the industries and markets in which it competes

resource leverage

the utilization of resources to maximum advantage

planned emergence

this strategy is continually enacted through decisions that are made by every member of the organization

Capabilities

what organizations are able to do

Strategic Management

associated with increasing focus on competition as the central characteristic of the business environment and competitive advantage as the primary goal of strategy

business strategy

concerned with how the firm competes within a particular industry or market

intended strategy

strategy as conceived of by the top management team

born global companies

A company that operates internationally on start-up

differentiation advantage

A competitive advantage that is built on providing something unique that is valuable to buyers beyond simply offering a low price

Differentiation advantage

A competitive advantage that is built on providing something unique that is valuable to buyers beyond simply offering a low price.

Spot contracts

A contract for the immediate sale and delivery of a commodity

Long-term contracts

A contract involving a commitment to undertake agreed activity over several time periods.

franchise

A contractual agreement between the owner of a business system and trademark (the franchiser) and a licensee (franchisee) that permits the franchisee to produce and market the franchiser's product or service in a specified area.

operating budget

A detailed projection of all estimated income and expenses based on forecasted sales revenue during a given period.

virtual corporation

A firm whose primary function is to coordinate the activities of a network of suppliers and downstream partners. Coordination typically takes place through the use of information and communication technologies.

dynamic capabilities

A firm's ability to integrate, build, or reconfigure its internal and external capabilities in response to rapidly changing environments.

Non-substitutable

A resource that cannot be substituted by an alternative strategy or resource.

Bilateral monopolies

A single seller (a monopoly) and a single buyer (a monopsony) in the same market.

Hypercompetition

A situation characterized by intense and rapid competitive moves, where firms constantly strive to build new advantages and erode the advantages of their rivals

Technical standard

A technology or specification that is important for compatibility.

Organizational culture

The values, traditions, and social norms that exist informally within organizations.

variable costs

Costs that change when a firm's output changes

fixed costs

Costs that do not change when a firm's output changes

sunk costs

Costs that have already been incurred and that cannot be recovered regardless of future events

big data

Data that are gathered on a massive scale that can be used to provide insights into consumer trends

bounded rationality

Limited information-processing capacity, which constrains the set of choices that can be considered.

Shared service organization

Organizations with central departments that supply common administrative and technical services to the operating businesses

Inimitable

Resources that a firm's competitor cannot imitate.

Valuable

Resources that are typically related to their ability to improve the effectiveness and efficiency of the operations of the organization, especially in light of any external threats or opportunities.

Rare

Resources whose existence rests with a relatively small number of industry players.

Time-based competition

Rivalry based on speed to market.

Capital expenditure budgets

That part of a company's overall financial plan that deals with expenditure on assets such as equipment and facilities.

Architechtural capabilities

The ability of a firm to innovate at a product or systems level; i.e., to change the way in which component parts fit together.

Competitive advantage

The ability of one firm to earn (or have the potential to earn) a persistently higher rate of profit than rivals that operate in the same market

Competitive advantage

The ability of one firm to earn (or have the potential to earn) a persistently higher rate of profit than rivals that operate in the same market.

relational capability

The ability to build and maintain social relationships, in particular by building trust, developing inter-firm knowledge-sharing routines, and establishing mechanisms for coordination

Incumbency advantage

The advantages experienced by existing competitors in an industry or market relative to newcomers.

first-mover advantage

The advantages that an initial occupant of a strategic position or niche gains by pre-empting the best resources or by using early entry to build superior resources and capabilities

isolating mechanism

The barriers that protect a firm's profits from being driven down by the competitive process.

component capabilities

The capabilities of various partners and contractors to whom a firm has outsourced their supply of component parts or sub-systems.

transaction costs

The costs associated with participating in a market; e.g., the costs of searching for a particular product or negotiating a price.

Strategic innovation

The creation of value for customers from novel products, experiences, or modes of product delivery.

cost drivers

The determinants of a firm's unit costs (cost per unit of output) relative to its competitors

producer surplus

The difference between the amount that a producer receives from the sale of a good and the lowest amount that producer is willing to accept for that good

Consumer surplus

The difference between the maximum price a consumer is willing to pay for a product or service and the amount he or she actually pays

Specialization

The division of labour into separate tasks

Network effects

The effect that one user of a good or service has on the value of that good or service to other people.

Diversification

The expansion of an existing firm into another product line or field of operation.

Horizontal diversification

The extension of the firm's activities into areas that are at the same stage of the production process as its existing activities

Substitutability

The extent to which goods or services can be interchanged or can act as replacements for one another

Organizational capability

The firm's capacity to deploy resources for a desired end result

organizational capability

The firm's capacity to deploy resources for a desired end result

Strategy process

The way in which strategy is conceived and put in to practice.

functional analysis

The identification of organizational capabilities in relation to each of the principal functional areas of the firm; e.g., operations, sales, and distribution

Competency modelling

The identification of the set of skills, content knowledge, attitudes, and values associated with superior performers within a particular job category, then the assessment of each employee against that profile

internal capital market

The mechanism by which the headquarters allocates funds to various divisions of the business.

industry life cycle

The notion that industries, like products, go through distinct phases that comprise introduction, growth, maturity, and decline.

product life cycle

The notion that products go through distinct stages from their introduction to eventual withdrawal from the market

barrier to entry

The obstacles a firm faces in trying to enter a particular market

barriers to exit

The obstacles a firm faces in trying to leave a particular market

Human resources

The people who staff and run an organization

stakeholder approach

The practice of viewing the business organizations as a coalition of interest groups where top management's role is to balance these different, often conflicting, interests

administrative mechanism

The process by which decisions concerning production and resource allocation are made by managers rather than the market.

market mechanism

The process by which individuals and firms, guided by market prices, make independent decisions to buy and sell goods and services

benchmarking

The process by which one organization gathers information on other organizations in order to evaluate and improve its own performance

Routinization

The process by which the regular activities performed by an organization become a set of customary, standardized procedures

segmentation

The process of partitioning a market based on characteristics that are likely to influence consumers' purchasing behaviour

Entrepreneurship

The process through which individuals identify opportunities, allocate resources, create value, and assume risk for new ventures

satisficing

The propensity for individuals (and organizations) to terminate the search for better solutions when they reach a satisfactory level performance rather than to pursue optimal performance

Value chain analysis

The separation of the activities of the firm into a sequential chain and the exploration of the linkages between activities to gain insight into the firm's competitive position and capabilities

Organizational process

The sequence of actions through which a specific task is performed

Common ownership

The shared possession of assets.

casual ambiguity

The situation where it is difficult or impossible to map the connections between actions and results. When causal ambiguity exists, the source of a successful firm's competitive advantage is unknown

uncertain imitability

The situation where there is ambiguity associated with the causes of a competitor's success.

brand extension

The use of an established brand name in a new product category

corporate culture

The values and ways of thinking that senior managers wish to encourage within their organization.

organizational culture

The values, traditions, and social norms that exist informally within organizations

resource-based view

resources and capabilities of the firm became regarded as the main source of competitive advantage and the primary basis for formulating strategy

corporate planning

sets goals and objectives, forecasts key economic trends (including market demand, market share, revenue, costs, and margins), established priorities for different products and business areas of the firm, and allocated capital expenditures