Strategic Management Test 2 Chaps 5 & 6
Situation Analysis
the process of finding a strategic fit between external opportunities and internal strengths while working around external and internal weaknesses
Imitability
the rate at which a firm's underlying resources, capabilities or core competencies can be duplicated by others
Durability
the rate at which a firm's underlying resources, capabilities or core competencies depreciate or become obsolete
Transparency
the speed at which other firms under the relationship of resources and capabilities support a successful strategy
Ways to access a distinctive competency
- Asset endowment - Acquired from someone else - Shared with another business - Built and accumulated within the company
Trends Driving Virtual Teams
- Flatter organizational structures - Turbulent environments - Increased employee autonomy - Higher knowledge requirements - Increased globalization
Quality of work life includes:
- Introducing participative problem solving - Restructuring work - Introducing innovative reward systems - Improving the work environment
Criticisms of SWOT analysis
- It is simply the opinions of those filling out the boxes. - Virtually everything that is a strength is also a weakness. - Virtually everything that is an opportunity is also a threat. - Adding layers of effort does not improve the validity of the list.
Competitive Strategy raises these questions:
- Should we compete on the basis of lower cost (and thus price), or should we differentiate our products or services on some basis other than cost, such as quality or service? - Should we compete head-to-head with our major competitors for the biggest but most sought-after share of the market, or should we focus on a niche in which we can satisfy a less sought-after but also profitable segment of the market? (groceries are head-to-head)
Strategic Window
- a unique market opportunity that is available for a particular time
Cost leadership
- ability of a company or a business unit to design, produce and market a comparable product more efficiently than its competitors (Walmart) - lower-cost competitive strategy that aims at the broad mass market and requires "aggressive construction of efficient-scale facilities, vigorous pursuit of cost reductions from experience, tight cost and overhead control, avoidance of marginal customer accounts, and cost minimization"
focus
- ability of a company to provide unique and superior value to a particular buyer group, segment of the market line or geographic market
Differentiation
- ability of a company to provide unique and superior value to the buyer in terms of product quality, special features or after-sale service
Cost focus
low-cost competitive strategy that focuses on a particular buyer group or geographic market and attempts to serve only this niche to the exclusion of others
Financial leverage
o Ratio of total debt to total assets o Describes how debt is used to increase earnings available to common shareholders
R&D intensity
o Spending on R&D as a percentage of sales revenue o Principal means of gaining market share in global competition
fragmented industry
- many small- and medium-size companies compete for relatively small shares of the total market (convivence store, car washes) - Products are typically in early stages of product life cycle - Focus strategies are used
Human Diversity
- the mix in the workplace of people from different races, cultures and backgrounds - provides a competitive advantage
5 Business model elements
-Who it serves -What it provides -How it makes money -How it differentiates and sustains competitive advantage -How it provides its product/service
Functions of Corporate Culture
1. Conveys a sense of identity for employees 2. Generates employee commitment 3. Adds to the stability of the organization as a social system 4. Serves as a frame of reference for employees to understand organizational activities and as a guide for behavior
VRIO Framework of Analysis
Value: Does it provide customer value and competitive advantage? Rareness: Do no other competitors possess it?Imitability: Is it costly for others to imitate?Organization: Is the firm organized to exploit the resource?
Core competency
a collection of competencies that cross divisional boundaries, is wide-spread throughout the corporation and is something the corporation does exceedingly well
Business model
a company's method for making money in the current business environment
Product Life Cycle
a graph showing time plotted against the sales of a product as it moves from introduction through growth and maturity to decline Introduction Growth Maturity Decline
Autonomous Teams
a group of people work together without a supervisor to plan, coordinate and evaluate their work
Strategic alliances
a long-term cooperative arrangement between two or more independent firms or business units that engage in business activities for mutual economic gain
Brand
a name, term, symbol, design, or combination thereof that identifies a seller's products and differentiates them from competitors' products
value-chain partnership
a strong and close alliance in which one company or unit forms a long-term arrangement with a key supplier or distributor for mutual advantage
Corporate brand
a type of brand in which the company's name serves as the brand
Corporate reputation
a widely held perception of a company by the general public Consists of two attributes: - Stakeholders' perception of quality - Corporation's prominence in the minds of stakeholders
SWOT Approach
acronym used to describe the particular Strengths, Weaknesses, Opportunities and Threats that are potential strategic factors for a specific company
Licensing arrangement
agreement in which the licensing firm grants rights to another firm in another country or market to produce and/or sell a product
Resources
an organization's assets (tangible, intangible)
differentiation focus
concentrates on a particular buyer group, product line segment or geographic market to serve the needs of a narrow strategic market more effectively than its competitors
Product R&D
concentrates on marketing and is concerned with product or product packaging improvements
Strategy Formulation
concerned with developing a corporation's mission, objectives, strategies and policies
Engineering R&D
concerned with engineering, concentrating on quality control and the development of design specifications and improved production equipment
Organizational Analysis
concerned with identifying and developing an organization's resources and competencies
joint venture
cooperative business activity, formed by two or more separate organizations for strategic purposes, that creates an independent business entity and allocates ownership, operational responsibilities and financial risks and rewards to each member, while preserving their separate identity/autonomy
Distinctive competency
core competencies that are superior to those of the competition
Strategic Rollup
developed in the mid-1990s as an efficient way to quickly consolidate a fragmented industry 1. The acquired firms are typically owner operated. 2. The objective is to reinvent an entire industry. 3. They involve large numbers of firms
Consolidated Industry
dominated by a few large firms, each of which struggles to differentiate its products from those of the competition premium on a firm's ability to achieve cost leadership
Business Strategy
focuses on improving the competitive position of a company's or business unit's products or services within the specific industry or market segment that the company or business unit serves (Competitive, cooperative)
Basic R&D
focuses on theoretical problems
Clusters
geographic concentrations of interconnected companies and industries Access to: o Employees o Suppliers o Specialized information o Complementary products
Virtual teams
groups of geographically and/or organizationally dispersed co-workers that are assembled using a combination of telecommunications and information technologies to accomplish an organizational task
sustained competitive advantage
is increasingly a matter not of a single advantage maintained over time, but more a matter of sequencing advantages over time.
Intermittent systems
item is normally processed sequentially, but the work and sequence of the process vary
Explicit knowledge
knowledge that can be easily articulated and communicated
Tacit knowledge
knowledge that is not easily communicated because it is deeply rooted in employee experience or the company's culture
Capital budgeting
o The analyzing and ranking of possible investments in fixed assets in terms of additional outlays and receipts that will result from each investment o Hurdle point
Technology transfer
o The process of taking new technology from the laboratory to the marketplace
Capabilities
refer to a corporation's ability to exploit its resources Consist of business processes and routines that manage the interaction among resources to turn inputs into outputs
Market position
refers to the selection of specific areas for marketing concentration and can be expressed in terms of market, product and geographic locations
Basic Organizational Structures
simple, functional, divisional, strategic business units, conglomerate (grouping of related businesses)
Propitious niche
so well-suited to the firm's internal and external environment that other corporations are not likely to challenge or dislodge it
Concurrent Engineering
specialists work side-by-side and compare notes constantly to design cost-effective products with features customers want
Transferability
the ability of competitors to gather the resources and capabilities necessary to support a competitive challenge
Replicability
the ability of competitors to use duplicated resources and capabilities to imitate the other firm's success
Collusion
the active cooperation of firms within an industry to reduce output and raise prices to avoid economic law of supply and demand (ILLEGAL)
Competitive Scope
the breadth of the company's or business unit's target market
Corporate culture
the collection of beliefs, expectations and values learned and shared by a corporation's members and transmitted from one generation of employees to another
Cultural intensity
the degree of which members of a unit accept the norms, values and other cultural content associated with the unit, shows the culture's depth
Cultural integration
the extent of which units throughout the organization share a common culture, shows the culture's breadth
Supply chain management
the forming of networks for sourcing raw materials, manufacturing products or creating services, storing and distributing the goods and delivering them to customers and consumers
Operating Leverage
the impact of a specific change in sales volume on net operating income
Marketing Mix
the particular combination of key variables under a corporation's control that can be used to affect demand and to gain competitive advantage Product Place Promotion Price
experience curve
unit production costs decline by some fixed percentage each time the total accumulated volume of production units doubles
Cross-functional work teams
various disciplines are involved in a project from the beginning
stuck in the middle
when a company has no competitive advantage and is doomed to below-average performance
Continuous systems
work is laid out in lines on which products can be continuously assembled or processed
Reasons to form an alliance
• Obtain or learn new capabilities • Obtain access to specific markets • Reduce financial risk • Reduce political risk