MGT 3659: Midterm Exam
complementor
a company that provides a good or service that leads customers to value your firm's offering more when the two are combined
level-5 leadership pyramid
a conceptual framework of leadership progression with five distinct, sequential levels
upper-echelons theory
a conceptual framework that views organizational outcomes - strategic choices and performance levels - as reflection of the values of the members of the top management team
intellectual property (IP) protection
a critical intangible resource that can provide a strong isolating mechanism, and thus help to sustain a competitive advantage
stakeholder impact analysis
a decision tool with which managers can recognize, prioritize, and address the needs of different stakeholders, enabling the firm to achieve competitive advantage while acting as a good corporate citizen
market capitalization
a firm performance metric that captures the total dollar market value of a company's total outstanding shares at any given point in time
dynamic capability
a firm's ability create, deploy, modify, reconfigure, upgrade, or leverage its resources in its quest for competitive advantage
strategic position
a firm's strategic profile based on the difference between value creation and cost (V - C)
core rigidity
a former core competency that turned into a liability because the firm failed to hone, refine, and upgrade the competency as the environment changed
SWOT analysis
a framework that allows managers to synthesize insights obtained from an internal analysis of the company's strengths and weakness with those from an analysis of external opportunities and threats to derive strategic implications
PESTEL model
a framework that categorizes and analyzes an important set of external factors (political, economic, sociocultural, technological, ecological, and legal) that might impinge upon a firm; these factors can create both opportunities and threats for the firm
strategic group model
a framework that explains differences in firm performance within the same industry
corporate social responsibility
a framework that helps firms recognize and address the economic, legal, social, and philanthropic expectations that society has of the business enterprise at a given point in time
five forces model
a framework that identifies five forces that determine the profit potential of an industry and shape a firm's competitive strategy
industry
a group of incumbent companies that face more or less the same set of suppliers and buyers
industry analysis
a method to (1) identify an industry's profit potential and (2) derive implications for a firm's strategic position within an industry
dynamic capabilities perspective
a model that emphasized a firm's ability to modify and leverage its resource base in a way that enables it to gain and sustain competitive advantage in a constantly changing environment
AFI strategy framework
a model that links three interdependent strategic management tasks - analyze, formulate, and implement - that, together, help managers plan and implement a strategy that can improve performance and result in competitive advantage
resource-based view
a model that see certain types of resources as key to superior firm performance
industry convergence
a process whereby formerly unrelated industries begin to satisfy the same customer need
complement
a product, service, or competency that adds value to the original product offering when the two are used in tandem
top-down strategic planning
a rational, data-driven strategy process through which top management attempts to program future success
costly-to-imitate
a resource is costly to imitate if firms that do not possess the resource are unable to develop or buy the resource at a comparable cost
rare resource
a resource is rare if the number of firms that possess it is less than the number of firms it would require to reach a state of perfect competition
valuable resources
a resource is valuable if it helps a firm exploit an external opportunity or offset an external threat
social complexity
a situation in which different social and business systems interact with one another
path dependence
a situation in which the options one faces in the current situation are limited by decisions made in the past
vision
a statement about what an organization ultimately wants to accomplish; it captures the company's aspiration
sustainable strategy
a strategy along the economic, social, and ecological dimensions that can be pursued over time without detrimental effects on people or the planet
good strategy
a strategy is good when it enables a firm to achieve superior performance. Consists of three elements: (1) a diagnosis of the competitive challenge; (2) a guiding policy to address the competitive challenge; (3) a set of coherent actions to implement a firm's guiding policy
strategic intent
a stretch goal that pervades the organization with a sense of winning, which it aims to achieve by building the necessary resources and capabilities through continuous learning
illusion of control
a tendency by people to overestimate their ability to control events
VRIO Framework
a theoretical framework that explains and predicts firm-level competitive advantage
stakeholder strategy
an integrative approach to managing a diverse set of stakeholders effectively in order to gain and sustain competitive advantage
strategic management
an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage
producer surplus
another term for profit, the difference between price charged (P) and the cost to produce (C), or (P - C)
strategic initiative
any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures
resources
any assets that a firm can draw on when formulating and implementing a strategy
serendipity
any random events, pleasant surprises, and accidental happenstances that can have a profound impact on a firm's strategic initiatives
emergent strategy
any unplanned strategic initiative bubbling up from the bottom of the organization
resource immobility
assumption in the resource-based view that a firm has resource that tend to be "sticky" and that do not move easily from firm to firm
resource heterogeneity
assumption in the resource-based view that a firm is a bundle of resource and capabilities that differ across firms
isolating mechanisms
barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy
organized to capture value
characteristic of having in place an effective organizational structure, processes, and systems to fully exploit the competitive potential of the firm's resources capabilities, and competencies
triple bottom line
combination of economic, social, and ecological concerns - or profits, people, and plant - that can lead to a sustainable strategy
realized strategy
combination of intended and emergent strategy
co-opetition
cooperation by competitors to achieve a strategic objective
mission
description of what an organization actually does - the products and services it plans to provide, and the markets in which it will compete
profit
difference between price charged (P) and the cost to produce (C), or (P - C)
consumer surplus
difference between the value a consumer attaches to a good or service (V) and what he or she paid for it (P), or (V - P)
economic value created
difference between value (V) and cost (C), or (V - C)
activities
distinct and fine-grained business processes that enable firms to add incremental value by transforming inputs into good and services
competitive industry structure
elements and features common to all industries, including the number and size of competitors, the firms' degree of pricing power, the type of product or service offered, and the height of entry barriers
organizational core values
ethical standards and norms that govern the behavior of individuals within a firm or organization
strategic leadership
executives' use of power and influence to direct the activities of others when pursuing an organization's goals
strategic commitment
firm actions that are costly, long-term oriented, and difficult to reverse
primary activities
firm activities that add value directly by transforming inputs into outputs as the firm moves a product or service horizontally along the internal value chain
support activities
firm activities that add value indirectly, but are necessary to sustain primary activities
firm effects
firm performance attributed to the actions managers take
industry effects
firm performance attributed to the structure of the industry in which the firm competes
black swan events
incidents that describe highly improbable but high-impact events
shareholders
individuals or organizations that own one or more shares of stock in a public company
mobility barriers
industry-specific factors that separate one strategic group from another
strategic management process
method put in place by strategic leaders to formulate and implement a strategy, which can lay the foundation for a sustainable competitive advantage
entry barriers
obstacles that determine how easily a firm can enter an industry and often significantly predict industry profit potential
exit barriers
obstacles that determine how easily a firm can leave an industry
capabilities
organizational and managerial skills necessary to orchestrate a diverse set of resources and deploy them strategically
stakeholders
organizations, groups, and individuals that can affect or are affected by a firm's actions
sustainable competitive advantage
outperforming competitors or the industry average over a prolonged period of time
competitive parity
performance of two or more firms at the same level
intangible resources
resource that do not have physical attributes and thus are invisible
tangible resources
resources that have physical attributes and thus are visible
total return to shareholders
return on risk capital that includes stock price appreciation plus dividends received over a specific period
causal ambiguity
situation in which the cause and effect of a phenomenon are not readily apparent
strategic business unit
standalone divisions of a larger conglomerate, each with their own profit-and-loss responsibility
core values statement
statement of principles to guide an organization as it works to achieve its vision and fulfill its mission, for both internal conduct and external interactions; it often includes explicit ethical considerations
business model
stipulates how the firm conducts its business with its buyers, suppliers, and partners in order to make money
autonomous actions
strategic initiatives undertaken by lower-level employees on their own volition and often in response to unexpected situations
balanced scorecard
strategy implementation tool that harnesses multiple internal and external performance metrics in order to balance financial and strategic goals
scenario planning
strategy planning activity in which top management envisions different what-if scenarios to anticipate plausible futures in order to derive strategic responses
planned emergence
strategy process in which organizational structure and systems allow bottom-up strategic initiatives to emerge and be evaluated and coordinated by top management
competitive advantage
superior performance relative to other competitors in the same industry or the industry average
strategic activity system
the conceptualization of a firm as a network of interconnected activities
resource stocks
the firm's current level of intangible resources
resource flows
the firm's level of investments to maintain or build a resource
value chain
the internal activities a firm engages in which transforming inputs into outputs; each activity adds incremental value
reservation price
the maximum price a consumer is willing to pay for a product or service based on the total perceived consumer benefits
risk capital
the money provided by shareholders in exchange for an equity share in a company; it cannot be recovered if the firm goes bankrupt
intended strategy
the outcome of a rational and structure top-down strategic plan
strategy formulation
the part of the strategic management process that concerns the choice of strategy in terms of where and how to compete
strategy implementation
the part of the strategic management process that concerns the organization, coordination, and integration of how work gets done, or strategy execution
network effects
the positive effect (externality) that one user of a product or service has on the value of that product for other users
threat of entry
the risk that potential competitors will enter an industry
strategic group
the set of companies the pursue a similar strategy within a specific industry
strategy
the set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors
dominant strategic plan
the strategic option that top managers decide most closely matches the current reality and which is then executed
opportunity costs
the value of the best forgone alternative use of the resources employed
resource-allocation process
the way a firm allocates its resources based on predetermined policies, which can be critical in shaping its realized strategy
competitive disadvantage
underperformance relative to other competitors in the same industry or the industry average
core competencies
unique strengths, embedded deep within a firm, that are critical to gaining and sustaining competitive advantage
