Risks of Focused Strategies, Best-Cost Provider, Strategic Offensives, Defensive Strategies, Vertical Integration, Outsourcing, Strategic Alliances, International Strategies, Business Ethics, Corporate Social Responsibility

Gross Profit

Net sales - cost of goods sold

Shifting Preferences

Niche members' changing product attribute preferences

Best Cost Provider

Offering upscale attributes at a lower cost than rivals

Corporate Social Responsibility

Operating honorably, philanthropy, environment, employee well-being, diversity

Vertically Integrated Firm

Participates in multiple stages of an industry's value chain

Joint Venture

Partnership involving an independent corporate entity

Horizontal Scope

Product/service breadth, geographic presence, competitive footprint

Dimensions of Performance

Profit, people, planet

Defensive Strategies

Protecting market position and advantage

Reasons for Integrating Backwards

Reducing supplier power, input costs, ensuring supply, protecting know-how

First-Mover Advantages

Reputation, switching costs, property rights, learning curve, technical standard

Contribution Margin

Sales - Variable Costs

Net Profit

Sales revenue - COGS - SG&A - Interest - tax - other expenses

Operating Earnings

Sales revenue - COGS - SGA

Dumping

Selling goods in foreign markets below normal prices

Focused Low-Cost Strategy

Serving a specific niche with low-cost products

Focused Differentiation Strategy

Serving a specific niche with unique product attributes

Why M&A Sometimes Fails

Strategic and organizational issues

Cross-Market Subsidization

Supporting offensives with resources from other markets

Choosing Rivals to Attack

Targeting vulnerable, weak, struggling, or small competitors

Why Companies Enter Foreign Markets

Access to customers, lower costs, resources, core competencies

Integrating Backwards

Achieving scale economies, matching supplier efficiency

Signaling

Announcing commitment, matching terms/prices, strong counter-response

Broad Differentiation Strategy

Appealing to a large buyer group with unique products

Drivers of Outsourcing

Better/cheaper, focus on core competencies

Outsourcing Criteria

Better/cheaper, not crucial, flexibility, risk reduction, expertise, core focus

Strongest Assets

Brand name, efficient production, technology, reputation for quality

Strategic Offensive Principles

Building, attacking weaknesses, surprise, swift actions

Disadvantages of Vertical Integration

Business risk, slow adoption, inflexibility, capacity matching, channel conflict

Reasons for Dispersing Activities

Buyer-related, transportation costs, diseconomies, trade barriers, dispersion benefits

Building Competitive Advantage

Creating and sustaining a unique advantage over rivals

Blue-Ocean Strategy

Creating demand in an uncontested market

Drawbacks of Alliances and JVs

Culture clash, poor fit, dependence, protection of proprietary info

Business Case for CSR

Customer relationships, workforce satisfaction, cost savings, differentiation, reputation, investment

Best-Cost Provider Strategy

Delivering superior value on quality/service/features/performance and price

Home Country Advantage

Demand, strategy, structure, factor conditions, related industries

Complexity of Competing Across Borders

Different advantages, location-based value chain, government policies, currency exchange, buyer preferences

Channel Conflict

Disagreements among marketing channel members

Benefits of Increasing Horizontal Scope

Efficiency, access, bargaining power, reduced rivalry, flexibility

Vertical Integration Strategy

Expands activities backward or forward in the value chain

Strategic Options for Entering Foreign Markets

Export, license, franchise, own, alliance/JV

Drivers of Unethical Behavior

Faulty oversight, short-term pressure, weak ethical environment

Strategic Alliance

Formal agreement between separate companies to work together

Business Case for Ethical Strategy

Good business, shareholder interest, reputation, publicity, investment

Gross Profit Margin

Gross Profit/Sales

Vertical Integration Wisdom

Hidden factor knowledge, incentive to perform

Risks of Outsourcing

Hollowing out resources, loss of control, lack of investment, loss of proprietary info

Late-Mover Advantages

Imitation, better products, market uncertainties

Intensifying Rivalry

Increased competition and decreased segment profits

Strategic Offensive

Initiating actions to improve market position

Vertical Scope

Involvement in stages of an industry's value chain

Reasons for Integrating Forward

Lower costs, bargaining power, access to end users, brand strength, differentiation

Reasons for Concentrating Activities

Lower costs, scale economies, learning, superior resources

Principal Offensive Strategies

Lower price, first to market, product innovation, adopt good ideas, hit-and-run, preemptive strike

Purposes of Defensive Strategies

Lower risk, weaken impact, influence challengers

Making Alliances Work

Manage, trust, safeguards, commitments, learning

Profit Sanctuaries

Markets with substantial profits and protected positions

Horizontal M&A Strategies

Merger, acquisition to combine firms

Benefits of Alliances and JVs

Minimize problems, extend scope, reduce self-sufficiency, flexibility, high-tech industries

Equity

More expensive than debt

Moral Case for Ethical Strategy

Unethical strategy is morally wrong and reflects badly on personnel

Competitor Matching

Competitors imitating a focused firm's capabilities

Outsourcing

Contracting out value chain activities to outside vendors