Chapter 1
In the external analysis phase of the AFI strategy framework, managers should ask
"How do external forces affect our strategy and competitive advantage?"
Stakeholders impact analysis is a decision tool designed to
Achieve a competitive & act as a good corporate citizen
competitive parity
Achieving the standard or average results as compared to others within the industry
AFI Framework
Analysis, Formulation, Implementation (5 step process)
What elements comprise strategic management?
Analysis, Formulation, and Implementation
competitive advantage
Assessed relative to other competitors in the industry
When a firm implements a strategy that leads to superior performance relative to other companies in the same industry, it is said to have achieved
Competitive advantage
strategy
Set of actions a firm takes to achieve a competitive advantage
Strategic Management
The field of management that focuses on attaining competitive advantage by combing analysis, formulation, and implementation
Stakeholders impact analysis
1. Id stakeholders 2. Recognize stakeholders' interests and claims 3. Opportunities & threats 4. Economic, legal, & philanthropic responsibilities for stakeholders 5. Effectively address the stakeholders concerns
Which of the four csr is considered first and foremost for business enterprises
Economic
Which of csr elements are required by society?
Economic & legal responsibilities
Governments, unions, and customers
External stakeholders
Managers have ________ resources in their quest for competitive advantage
Limited
Sustainable competitive advantage exists when a firm
Maintains superior performance relative to its industry over a long period of time
Goals of a stakeholders strategy
Manage various stakeholders effectively & gain and sustain competitive advantage
Why do new companies underperform in comparison to their competitors?
Start ups often lose money early on
Effective guiding policy is supported by and stays consistent through the use of
Strategic commitments
Trade offs
Two conflicting strategic options
A well devised strategy is about which two things
What to do and what not to do
Legitimate claim
When needs of a firm are within the bounds of the law OR are otherwise relevant to the firm
The overall purpose of a firm's strategy is
to perform better than other companies in the same industry
Stakeholder strategy
A firms attempt to web relationships between internal and external stakeholders in order to create value
If a firm has a 10% roi while industry average is 18% the firm has
Competitive disadvantage
What legal developments allow business to function as an institution
Contact enforcement & property rights
What must a firm do after diagnosing it's specific competitive challenge?
Create an effective guiding policy
Primary strategic objectives
Creative value & controlling costs
What topics should be considered during the analysis phase of AFI framework?
External environment and associated challenges Firm's business model and competitive advantages Role of strategic leadership and the strategy process Firm's internal strengths and resources
Corporate Social Responsibility (CSR)
Guides firms in identifying & addressing their economic, legal,ethical, and philanthropic obligations to society
Corporate citizenship
Idea that firms should voluntarily give back to society when they are able to do so
What is a sign indicating investors expect future growth?
Increasing value of company stock
Employees, board members, stockholders
Internal stakeholders
Effective guiding policy
Overall approach chosen to overcome obstacles identified in diagnosis
The expectations that society has toward business, in contrast to what society requires, result in in which elements of the pyramid of csr?
Philanthropic & ethical responsibilities
Competitive disadvantage
When a firm performs below the industry average or is outperformed by competitors