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