Strategic Management Chapter 3

Technology Development

Activities associated with the development of new knowledge that is applied to the firm's operations.

Human Resource Management

Activities involved in the recruiting, hiring, training, development, and compensation of all types of personnel.

Causal Ambiguity

A characteristic of a firm's resources that is costly to imitate because a competitor cannot determine what the resource is and/or how it can be re-created.

Social Complexity

A characteristic of a firm's resources that is costly to imitate because the social engineering required is beyond the capability of competitors, including interpersonal relations among managers, organizational culture, and reputation with suppliers and customers.

Path Dependency

A characteristic of resources that is developed and/or accumulated through a unique series of events.

Support Activities

Activities of the value chain that either add value by themselves or add value through important relationships with both primary activities and other support activities; including procurement, technology development, human resource management, and general administration.

General Administration

Activities that support the entire value chain and not individual activities; Includes general management, planning, finance, accounting, legal and government affairs, quality management, and information systems.

General Limitation of SWOT Analysis

Although SWOT analyses have much to offer, it is only a starting point. A SWOT analysis by itself rarely helps a firm develop competitive advantages that it can sustain over time.

Financial Ratio Analysis

A technique for measuring the performance of a firm according to its balance sheet, income statement, and market valuation.

The "Prosumer" Concept

A key to success for some leading-edge firms is to team up with their most important stakeholder, its customers, to satisfy their particular needs.

Balanced Scorecard

A method of evaluating a firm's performance using performance measures from the customers', internal, innovation and learning, and financial perspectives.

Value-Chain Analysis

A strategic analysis of an organization that uses value-creating activities.

Interrelationships

Collaborative and strategic exchange relationships between value-chain activities either within firms or between firms. Strategic exchange relationships involve exchange of resources such as information, people, technology, or money that contribute to the success of the firm.

Outbound Logistics

Collecting, storing, and distributing the product or service to buyers. These activities include finished goods, warehousing, material handling, delivery vehicle operation, order processing, and scheduling.

Examples of Human Resources

Experience and capabilities of employees, trust, effectiveness of work teams, managerial skills, etc.

Employee Bargaining Power

If employees are vital to forming a firm's unique capability, they will earn disproportionately high wages.

Operations

Includes all activities associated with transforming inputs into the final product form, such as machining, packaging, assembly, testing, printing, and facility operations

Innovation and Learning Perspective

Measures of firm performance that indicate how well firms are changing their product and service offerings to adapt to changes in the internal and external environments.

Customer Perspective

Measures of firm performance that indicate how well firms are satisfying customers' expectations.

Internal Business Perspective

Measures of firm performance that indicate how well firms' internal processes, decisions, and actions are contributing to customer satisfaction

Financial Perspective

Measures of firms' financial performance that indicate how well strategy, implementation and execution are contributing bottom-line improvement.

Intangible Resources

Organizational assets that are difficult to identify and account for and are typically embedded in unique routines and practices, including human resources, innovation resources, and reputation resources.

Examples of Organizational Capabilities

Outstanding customer service, excellent product development capabilities, superb innovation processes, and flexibility in manufacturing processes.

Inbound Logistics

Receiving, storing, and distributing inputs of a product. This includes material handling, warehousing, inventory control, vehicle scheduling, and returns to suppliers.

Tangible Resources

Resources that are easy to identify, including physical assets, organizational resources, financial resources, and technological resources.

Primary Activities

Sequential activities of the value chain that refer to the physical creation of the product or service, its sale and transfer to the buyer, and its service after the sale, including inbound logistics, operations, outbound logistics, marketing, sales, and service.

Value

The amount that buyers are willing to pay for what a firm provides them and is measured by total revenue.

Examples of Organizational Resources

The company's strategic planning process, it's employee development program, and its reward systems.

Organizational Capabilities

The competencies or skills that a firm employs to transform inputs into outputs.

Procurement

The function of purchasing inputs used in the firm's value chain, including raw materials, supplies, and other consumable items as well as assets such as machinery, laboratory equipment, office equipment, and buildings.

The Resource-Based View of the Firm

The perspective that firms' competitive advantages are due to their endowment of strategic resources that are valuable, rare, costly to imitate, and costly to substitute.

Marketing and Sales

These activities are associated with purchases of products and services by end users and the inducements used to get them to make purchases. These include advertising, promotion, sales force, quoting, channel selection, channel relations, and pricing. (Ex. Product Placement)

Service

This primary activity includes all actions associated with providing service to enhance or maintain the value of the product, such as installation, repair, training, parts supply, and product adjustment.

When are resources valuable?

When they enable a firm to formulate and implement strategies that improve its efficiency or effectiveness.