MSM 6650 Final

Level-5 leadership pyramid

5. Executive 4. Effective leader 3. Competent manager 2. Contributing team member 1. Highly capable individual

Firm effects explain what percentage of overall performance?

55%

Threat of entry depresses industry profit potential in what two ways?

Firms may have to lower prices to make entry appear less attractive Increased spending among incumbent firms to satisfy existing customers

PESTLE factors are found where?

In the general environment

To assess competitive advantage we compare a firm's performance to what?

A benchmark - performance of other firms or the industry average

Representativeness

A cognitive bias in which conclusions are based on small samples, or even from one memorable case or anecdote

Conglomerate

A company that combines two or more strategic business units under one overarching corporation; follows an unrelated diversification strategy

Multinational Enterprise (MNE)

A company that deploys resources and capabilities in the procurement, production, and distribution of goods and services in at least two countries

Market-and-Technology Framework

A conceptual model to categorize innovations along the market (existing/new) and technology (existing/new) dimensions

Boston Consulting Group (BCG) growth-share matrix

A corporate planning tool in which the corporation is viewed as a portfolio of business units, which are represented graphically along relative market share (horizontal axis) and speed of market growth (vertical axis).

CAGE distance framework

A decision framework based on the relative distance between home and a foreign target country along four dimensions: cultural distance, administrative and political distance, geographic distance, and economic distance.

Stakeholder Impact Analysis

A decision tool with which managers can recognize, prioritize, and address the needs of different stakeholders, enabling the firm to achieve competitive advantage while acting as a good corporate citizen

Geoffrey Moore argues that each stage of the industry life cycle is dominated by what?

A different customer group

Behavioral Economics

A field of study that blends research findings from psychology with economics to provide valuable insights showing when and why individuals do not act like rational decision makers, as assumed in neoclassical economics

Resource immobility

A firm has resources that tend to be "sticky" and that do not move easily from firm to firm.

Resource Heterogeneity

A firm is a bundle of resources and capabilities that differ across firms.

Dynamic Capabilities

A firm's ability to create, deploy, modify, reconfigure, upgrade, or leverage its resources in its quest for competitive advantage

Absorptive Capacity

A firm's ability to understand external technology developments, evaluate them, and integrate them into current products or create new ones.

Innovation Ecosystem

A firm's embeddedness in a complex network of suppliers, buyers, and complementors, which requires interdependent strategic decision making

Inertia

A firm's resistance to change the status quo, which can set the stage for the firm's subsequent failure

Strategic Position

A firm's strategic profile based on the difference between value creation and cost (V − C).

Managerial Dubris

A form of self-delusion in which managers convince themselves of their superior skills in the face of clear evidence to the contrary

Core Rigidity

A former core competency that turned into a liability because the firm failed to hone, refine, and upgrade the competency as the environment changed.

Five Forces Model

A framework that identifies five forces that determine the profit potential of an industry and shape a firm's competitive strategy

Related Constrained Diversification strategy

A kind of related diversification strategy in which executives pursue only businesses where they can apply the resources and core competencies already available in the primary business

Related-Linked Diversification Strategy

A kind of related diversification strategy in which executives pursue various businesses opportunities that share only a limited number of linkages

Oligopoly

A market structure in which a few large firms dominate a market

Monopolistic Competition

A market structure in which many companies sell products with unique features

Industry Analysis

A method to (1) identify an industry's profit potential and (2) derive implications for a firm's strategic position within an industry

shared value creation framework

A model proposing that managers have a dual focus on shareholder value creation and value creation for society

Resource Based View

A model that sees certain types of resources as key to superior firm performance.

ambidextrous organization

An organization able to balance and harness different activities in trade-off situations

Strategic Initiative

Any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures.

Resources

Any asset such as cash, buildings, machinery, or intellectual property that a firm can draw on when executing a strategy

Serendipity

Any random events, pleasant surprises, and accidental happenstances that can have a profound impact on a firm's strategic initiatives

Emergent Strategy

Any unplanned strategic initiative bubbling up from the bottom of the organization

Exploitaion

Applying current knowledge to enhance firm performance in the short term.

Moral Hazard

Arises when people behave recklessly because they know they will be saved if things go wrong

Globalization Hypothesis

Assumption that consumer needs and preferences throughout the world are converging and thus becoming increasingly homogenous

Death-of-distance Hypothesis

Assumption that geographic location alone should not lead to firm-level competitive advantage because firms are now, more than ever, able to source inputs globally

"Time compression diseconomies" refers to the concept that ______.

Attempting to get a good outcome in less time tends to be ineffective

Game theory

Attempts to predict strategic behaviors by assuming the moves of competitors can be anticipated

Strategic Initiatives can bubble up deep within a firm through:

Autonomous actions Serendipity Resource Allocation Process (RAP)

The chasm framework operates on what type of curve?

Bell Shaped Cure

Economies of scale

Cost advantage of firms with larger output because they can spread fixed costs over more units, employ technology more efficiently, and demand better terms from suppliers

3 generic business level strategies

Cost leadership Differentiation Value innovation

What are the most important cost drivers?

Cost of input factors Economies of scale Learning curve effects Experience Curve effects

External Transaction Costs

Costs of searching for a firm or an individual with whom to contract, and then negotiating, monitoring, and enforcing the contract

Internal Transaction Costs

Costs pertaining to organizing an economic exchange within a hierarchy; also called administrative costs

Total Invested Capital

Debt + Equity

Business strategy formulation focuses on what?

Deciding HOW the firm should compete

Poison Pill

Defensive provisions to deter hostile takeovers by making the target firm less attractive

What is the first step in the strategic management process?

Define an organization's Mission, Vision, and Values

Product-Oriented Vision Statements

Defines a business in terms of a good or service provided Tends to force managers to take a more myopic view of the competitive landscape

What two techniques have proven effective at improving strategic decision making?

Devil's advocacy and dialectic inquiry

Foreign Direct Investment (FDI)

Direct investment in business operations in a foreign country

Activities

Distinct and fine-grained business processes that enable firms to add incremental value by transforming inputs into goods and services

Level 3: Competent Manager

Does things right by organizing resources necessary to accomplish organizational goals

What two customer groups form the Lion's Share?

Early majority and Late majority

Which of the four corporate social responsibilities is considered first and foremost for business enterprises

Economic

Society requires ________ and _________ responsibility

Economic and legal

The greater the difference between value creation and cost, then the greater the ___________

Economic contribution

Competitive Industry Structure

Elements and features common to all industries, including the number and size of competitors, the firms' degree of pricing power, the type of product or service offered, and the height of entry barriers

Artifacts

Elements that allow corporate culture to be expressed, such as via the design and layout of physical space, symbols, vocabulary, what stories are told, what events are celebrated and highlighted, and how they are celebrated

Task Environment

Environments that leaders do have some influence over, such as the composition of their strategic groups (rivals) or structure of their industry

Corporate Venture Capital (CVC)

Equity investments by established firms in entrepreneurial ventures

Society expects ________ and _______ responisbilty

Ethical and philanthropical

Organizational Core Values

Ethical standards and norms that govern the behavior of individuals within a firm or organization

Strategic Leadership

Executives' use of power and influence to direct assets in the pursuit of an organization's goals

Intensity of rivalry depends on:

Exit barriers Strategic commitments Industry growth Competitive industry structure

Total return to shareholders is a _________ and _______ performance metric

External & forward looking

CEOs spend most of their day doing what?

Face to face meetings

Companies that define themselves based on product-oriented vision statements are more likely to what?

Fail

ROIC (return on invested capital) is a good proxy for what?

Firm Profitability

Firm Effects

Firm performance attributed to the actions strategic leaders take

Industry Effects

Firm performance attributed to the structure of the industry in which the firm competes

Black Swan Events

Incidents that describe highly improbable but high-impact events

What are the 4 types of innovation?

Incremental Radical Architectural Disruptive

Firm performance is determined primarily by what two factors?

Industry and firm effects

Cognitive limitation is also called what?

Information overload

Upper-echelons theory favors the idea that effective strategic leadership is the result of what?

Innate abilities and learning

What is the commercialization of an invention called?

Innovation

Capabilities are ________ in nature

Intangible

Competitive advantage is more likely to come from what type of resources?

Intangible Resources

Intra-Group rivalry exceeds what?

Inter-group rivalry

Organizations and the natural environment coexist in what kind of relationship?

Interdependent relationship

Industry and firm effects are

Interdependent. Both determine a firm's performance

What is often needed for autonomous actions to be successful?

Internal champions

Strategic control-and-reward systems

Internal-governance mechanisms put in place to align the incentives of principals (shareholders) and agents (employees).

Those pursuing corporate entrepreneurship are called:

Intrapreneurs

Who was the pioneer of the VRIO framework?

Jay Barney

Level-5 leadership pyramid was developed by who?

Jim Collins

Example of innovation in process technology:

Lean manufacturing

Which level of strategic leader presents a convincing vision and mission that helps groups improve their performance?

Level 4 - Effective leader

According to the Level-5 pyramid, which level of leadership has the fewest members?

Level 5 - Executives

What are two forms of long term contratcs?

Licensing and franchising

What tends to result from strong competitive rivalry

Limits to industry profit potential

The stronger the five forces the _______ the industry's profit potential

Lower

What are the rewards of superior value creation?

Market share and profitability

winner-take-all system

Markets where the market leader captures almost all of the market share

Strategic Management Process

Method put in place by strategic leaders to formulate and implement a strategy, which can lay the foundation for a sustainable competitive advantage.

Top down strategic planning is derived from what?

Military strategy

The computer hardware industry is an example of what type of competition?

Monopolistic

Energy providers are known as what type of monopoly?

Natural Monopoly

Stakeholder impact analysis focuses on what 3 stakeholder attributes?

Power Legitimacy Urgency

In perfect competition, consumers make buying choices based on what?

Price

What are the 3 most salient value drivers?

Product features Customer Service Complements

During the introductory stage of the industry life cycle, innovators will likely devote most of their time, money, and effort to ______.

R&D

What is often needed to create superior product features?

R&D

A firm generate value when _____ is greater than ______.

ROIC is greater than TIC (total invested capital)

Price stability is very ________

Rare

A firm that successfully executes a strategy benefits society how?

Reinvesting profits and increasing employment Creating value

Which type of diversification is most likely to lead to superior performance?

Related Diversification

Competitive advantage is always ________, not absolute.

Relative

What 2 assumptions are critical to the resource based view?

Resource heterogeneity Resource immobility

To achieve superior performance, companies compete for what?

Resources

Backwards Integration

Retailer performs some distribution and manufacturing activities Ex: Walmart's Equate and Great Value brands

Total Return to Shareholders

Return on risk capital that includes stock price appreciation plus dividends received over a specific period.

Economic Arbitrage

Rich firms buying where costs are low and selling where prices are high

The development of most industries follows a _______ curve

S Shaped

Economies of Scope

Savings that come from producing two (or more) outputs at less cost than producing each output individually, despite using the same resources and technology

Stakeholder strategy argues that focusing only on the needs of ______ places the firm at risk of failure.

Shareholders

Shareholder Capitalism

Shareholders—the providers of the necessary risk capital and the legal owners of public companies—have the most legitimate claim on profits

Principal-Agent Problem

Situation in which an agent performing activities on behalf of a principal pursues his or her own interests

Information Asymmetry

Situation in which one party is more informed than another because of the possession of private information

Diversification Discount

Situation in which the stock price of highly diversified firms is valued at less than the sum of their individual business units.

Diversification Premium

Situation in which the stock price of related-diversification firms is valued at greater than the sum of their individual business units

What are the 4 key building blocks of organizational structure?

Specialization Formalization Centralization Hierarchy

Core Values Statement

Statement of principles to guide an organization as it works to achieve its vision and fulfill its mission, often used as a touchpoint for employees to understand the company culture

However noble the mission statement, to achieve competitive advantage a company must make what?

Strategic commitments

Autonomous Actions

Strategic initiatives undertaken by lower-level employees on their own volition and often in response to unexpected situations

Power defined

Strategic leader's ability to influence other organizational members to do things, including things they wouldn't do otherwise

Nonmarket Strategy

Strategic leaders' activities outside market exchanges where firms sell products or provide services to influence a firm's general environment through, for example, lobbying, public relations, contributions, and litigation in ways that are favorable to the firm

global standardization strategy

Strategy attempting to reap significant economies of scale and location economies by pursuing a global division of labor based on wherever best-of-class capabilities reside at the lowest cost

What is the premise of Henry Mintzberg's position regarding strategic planning

Strategy can be planned or emerge from the bottom-up.

integration-responsiveness framework

Strategy framework that juxtaposes the pressures an MNE faces for cost reductions and local responsiveness to derive four different strategies to gain and sustain competitive advantage when competing globally

Scenario Planning

Strategy planning activity in which top management envisions different what-if scenarios to anticipate plausible futures in order to derive strategic responses

Multidomestic Strategy

Strategy pursued by MNEs that attempts to maximize local responsiveness, with the intent that local consumers will perceive them to be domestic companies

Which three key levers can managers use when shaping their organization into a firm with the highest level of competitive advantage?

Structure Culture Control

In a nutshell, strategy is the art and science of _________

Success and failure

Customer switching costs

Sunk costs incurred by moving from one supplier to another

Apple iPhones are an example of what?

Sustainable competitive advantage

Behavioral economics suggests that decision making is governed by what two systems?

System 1 and System 2

Horizontal axis of M&T framework:

Technologies

Opportunism

The act of seeking self-interest with guile.

Geoffrey Moore calls the fall of a company between life cycle stages what?

The chasm

The difference between two points on a learning curve is what?

The cumulative output

Corporate Strategy

The decisions that senior management makes and the goal-directed actions it takes to gain and sustain competitive advantage in several industries and markets simultaneously

Value

The dollar amount (V) a consumer attaches to a good or service

Resource Stocks

The firm's current level of intangible resources

Resource Flows

The firm's level of investments to maintain or build a resource

Dialectic Inquiry

The generation of a plan (a thesis) and a counterplan (an antithesis) that reflect plausible but conflicting courses of action.

Business Level Strategy

The goal-directed actions managers take in their quest for competitive advantage when competing in a single product market

Corporate Citizenship

The idea that firms should voluntarily give back to society when they are able to do so

The Value Chain

The internal activities a firm engages in when transforming inputs into outputs; each activity adds incremental value

Reservation Price

The maximum price a consumer is willing to pay for a product or service based on the total perceived consumer benefits

Parent Subsidiary Relationship

The most-integrated alternative to performing an activity within one's own corporate family. The corporate parent owns the subsidiary and can direct it via command and control.

Intended Strategy

The outcome of a rational and structured top-down strategic plan.

Network effects are:

The positive effect (externality) that one user of a product or service has on the value of that product for other users

Horizontal Integration

The process of merging with competitors, leading to industry consolidation

Strategic Entrepreneurship

The pursuit of innovation using tools and concepts from strategic management Ex: Apple constantly developing new technology

Social Entrepreneurship

The pursuit of social goals while creating a profitable business

Strategic Group

The set of companies that pursue a similar strategy within a specific industry

Early majority enters in what stage?

The shakeout stage

Value Innovation

The simultaneous pursuit of differentiation and low cost in a way that creates a leap in value for both the firm and the consumers

Scope of Competition

The size—narrow or broad—of the market in which a firm chooses to compete

Dominant Strategic Plan

The strategic option that top managers decide most closely matches the current reality and which is then executed

Network Effects

The value of a product or service for an individual user increases with the number of total users

Inflation occurs when ________.

There is too much money in the economy

Porter's 5 Forces

Threat of entry Power of buyers Power of suppliers Threat of substitutes Rivalry among existing firms

Objective of corporate level strategy:

To increase overall corporate value so that it is higher than the sum of the individual business units

Strategic positioning requires what?

Trade offs

Equity investments are also known as _______.

Try before you buy

Specialized Assets

Unique assets with high opportunity cost: They have significantly more value in their intended use than in their next-best use

Planned Emergence

Unplanned, bottom-up strategic initiative that emerges and can be evaluated by top management

In order for a product or service to be considered patentable, it must be ______.

Useful Novel Non Obvious

For a resource to be the basis of a competitive advantage, it must be

VRIO: Valuable Rare costly to Imitate and the firm must be Organized to capture the value of the resources

According to the VRIO framework, in order for a firm to gain a temporary competitive advantage, a resource must be at least both ______.

Valuable and Rare

Corporate strategy determines the boundaries of a firm along what 3 dimensions?

Vertical Integration Diversification Geographic Scope

Industry Value Chains are also called what?

Vertical Value Chains

Values ask:

What commitments do we make and what safeguards do we put in place to act both legally and ethically?

Vision asks:

What do we want to accomplish ultimately?

A well devised strategy is based on what two things?

What to do What not to do

Theory of bounded rationality

When individuals face decisions, their rationality is confined by cognitive limitations and the time available to make a decision. Thus, individuals tend to "satisfice" rather than to optimize.

When does a stakeholder have power over a company?

When it can get the company to do something that it would not otherwise do

Growth Rate

a measure of the change in the amount of goods and services produced by a nation's economy

SBU (strategic business unit)

a standalone division of a larger conglomerate, with its own profit-and-loss responsibility

polycentric innovation strategy

a strategy in which MNEs now draw on multiple, equally important innovation hubs throughout the world characteristic of Globalization 3.0

Illusion of control

a tendency by people to overestimate their ability to control events

Confirmation Bias

a tendency to search for information that confirms one's preconceptions

Agency Theory

a theory that views the firm as a nexus of legal contracts

Stakeholder Strategy

an integrative approach to managing a diverse set of stakeholders effectively in order to gain and sustain competitive advantage

Strategic Management

an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage

Isolating mechanisms

barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy

Matrix Structure

combines functional and multi divisional structures

Corporate strategy

concerns questions relating to where to compete in terms of industry, markets, and geography

Strategy implementation

concerns the organization, coordination, and integration of how work gets done

When identifying stakeholders, a firm should focus on those stakeholders that _________.

currently have, or could potentially have, a material effect on the firm

External Stakeholders

customers, suppliers, alliance partners, creditors, unions, communities, governments, media

Single Business Firm

derives 95% or more of its revenues from one business

Dominant Business Firm

derives between 70 and 95 percent of its revenues from a single business, but pursues at least one other business activity

Internal stakeholders

employees, stockholders, board members

Incremental Innovation

existing market, existing technology

Architectural Innovation

existing technology, new market

The 4 I's:

idea, invention, innovation, imitation

COGS/Revenue

indicates how efficiently a company can produce a good

SG&A/Revenue

indicates how much of each dollar that the firm earns in sales is invested in sales, general, and administrative (SG&A) expenses. Generally, this ratio is an indicator of the firm's focus on marketing and sales to promote its products and services.

Industry Life Cycle Stages

introduction, growth, shakeout, maturity, decline

Ecological factors

involve broad environmental issues such as the natural environment, global warming, and sustainable economic growth

Explicit Knowledge

knowledge that can be codified; concerns knowing about a process or product

Tacit Knowledge

knowledge that cannot be codified; concerns knowing how to do a certain task and can be acquired only through active participation in that task

Global Strategy Formulation

managers examine where and how the firm should compete around the world

Radical Innovation

new market, new technology

Disruptive Innovation

new technology, existing market

upper-echelons theory

organizational outcomes reflect the values of the top management team

sustainable competitive advantage

outperforming competitors or the industry average over a prolonged period of time

Competitive Parity

performance of two or more firms at the same level

Capital Requirements

price of the entry ticket into a new industry

Core competencies of a business are generated by the interaction of ______.

resources and capabilities

System 2 Decision Making

slow, deliberate, analytical, and consciously effortful mode of reasoning

What is the goal of organizational design?

to enable managers to translate their chosen strategy into a realized one

Competitive Disadvantage

underperformance relative to other competitors in the same industry or the industry average

When does a stakeholder have a legitimate claim?

when it is perceived to be legally valid or otherwise appropriate

When does a stakeholder have an urgent claim?

when it requires a company's immediate attention and response

Shortcomings of Top-Down Strategic Planning

1. Information flows one way; top down 2. Formulation of strategy is separate from implementation 3. Simply cannot know the future

3 types of specialized assets

1. Site specificity 2. Physical-asset specificity 3. Human-asset specificity

The five forces model provides what kind of snapshot?

A point in time snapshot of a moving target

Founder Imprinting

A process by which the founder defines and shapes an organization's culture, which can persist for decades after his or her departure

Top Down Strategic Planning

A rational, data-driven strategy process through which top management attempts to program future success.

Leveraged Buyout (LBO)

A single investor or group of investors buys, with the help of borrowed money (leveraged against the company's assets), the outstanding shares of a publicly traded company in order to take it private

Causal Ambiguity

A situation in which the cause and effect of a phenomenon are not readily apparent

Path Dependence

A situation in which the options one faces in the current situation are limited by decisions made in the past.

Adverse Selection

A situation that occurs when information asymmetry increases the likelihood of selecting inferior alternatives

Sociocultural Factors

A society's culture, norms, and values

transaction cost economics

A strategic framework that helps strategic leaders decide what activities to do in house and what services to obtain from the external environment

Sustainable Strategies

A strategy along the economic, social, and ecological dimensions that can be pursued over time without detrimental effects on people or the planet

Strategic Intent

A stretch goal that pervades the organization with a sense of winning, which it aims to achieve by building the necessary resources and capabilities through continuous learning

Corporate Governance

A system of mechanisms to direct and control an enterprise in order to ensure that it pursues its strategic goals successfully and legally

Cognitive Bias

A systematic error in thinking that affects the decisions and judgments that people make

Taper Integration

A way of orchestrating value activities in which a firm is backwardly integrated but also relies on outside-market firms for some of its supplies and/or is forwardly integrated but also relies on outside-market firms for some of its distribution

What are the 3 traditional frameworks used to measure firm performance?

Accounting profitability Shareholder value creation Economic value creation

Hostile Takeover

Acquisition in which the target company does not wish to be acquired

Strategic Commitments

Actions that are costly, long-term oriented, and difficult to reverse

A firm's external environment consists of what?

All factors outside of the firm that can affect its potential to gain and sustain a competitive advantage

Efficient Market Hypothesis

All information regarding a firm's past, current, and future performance is embedded in the market price of a firms stock

Customer-oriented vision statements

Allow companies to adapt to changing environments Focus employees on problem solving for the customer

Platform Business Model

An enterprise that creates value by matching external producers and consumers in a way that creates value for all participants

Effective stakeholder management helps a firm do what?

Build a strong public reputation

A disruptive innovation is more likely to be successful if it ______.

Captures the low end of a market first

Experience Curve

Change in technology while cumulative output remains constant

Triple Bottom Line

Combination of economic, social, and ecological concerns—or profits, people, and planet—that can lead to a sustainable strategy.

Realized Strategy

Combination of intended and emergent strategy

A good strategy is based on what 3 elements?

Competitive advantage Guiding policy Coherent actions

A resource that is valuable but not rare leads to what?

Competitive parity

A horizontal integration strategy leads to industry ____________.

Consolidation

Cognitive Limitations

Constraints such as time or the brain's inability to process large amounts of data that prevent us from appropriately processing and evaluating each piece of information we encounter.

What are the costs associated with related-diversification strategies?

Coordination and Influence Costs

3 areas of strategy formulation and implementation

Corporate Business Functional

Related Diversification Strategy

Corporate strategy in which a firm derives less than 70 percent of its revenues from a single business activity and obtains revenues from other lines of business that are linked to the primary business activity.

Perfect Competition

Fragmented with many small firms,, a commodity product, ease of entry, and little ability for each firm to raise its prices

Capital is a _______ resource, that can be relatively easy to acquire in the face of attractive returns

Fungible

Oligopolies are analyzed using what theory?

Game theory

Establishing a solid strategic position that competitors cannot easily imitate is the key objective of a company in the ______ stage.

Growth

Employment levels are directly effected by what?

Growth rate

What 5 macroeconomic factors can affect a firm's strategy?

Growth rates Employment levels Interest rates Price stability Currency exchange rates

Early adopters enter in what stage?

Growth stage

Who developed the Theory of Bounded Rationality?

Herbert Simon

Mission asks:

How do we accomplish our goals?

ROR ( Return on Revenue)

How much of the firm's sales is converted into profits

Business strategy

How to compete

Functional Strategy

How to implement a chosen business strategy

5 steps of stakeholder impact analysis

Identify stakeholders Identify stakeholder's interests Identify opportunities and threats Identify social responsibilities Address stakeholder concerns

When is a resource valuable?

If it helps a firm exploit an external opportunity or offset an external threat

Threat of potential entry is reduced when _____________

Network effects are present

The preferred method of competition in an oligopoly is what?

Non Price Competition

Market Capitalization

Number of outstanding shares x share price

Entry Barriers

Obstacles that determine how easily a firm can enter an industry

Strategic positioning

Obtaining a unique position within an industry while providing value to customers and controlling costs

FedEx and UPS are examples of what type of competition?

Oligopoly

Capabilities

Organizational and managerial skills necessary to orchestrate a diverse set of resources and deploy them strategically

Managers would examine how the firm should be structured in order to implement the desired strategy in what step of the strategy implementation phase?

Organizational design

multidivisional structure (M-form)

Organizational structure that consists of several distinct strategic business units (SBUs), each with its own profit-and-loss (P&L) responsibility

System 1 Decision Making

Our intuitive decision-making system, which is typically fast, automatic, effortless, implicit, and emotional.

Minimum Efficient Scale

Output range needed to bring down the cost per unit as much as possible, allowing a firm to stake out the lowest-cost position that is achievable through economies of scale

National Competitive Advantage

World leadership in specific industries

Positive externality

a benefit that is enjoyed by a third-party as a result of an economic transaction

Escalating Commitment Bias

a cognitive bias that occurs when decision makers, having already committed significant resources to a project, commit even more resources after receiving feedback that the project is failing

Deflation

a decrease in the general level of prices

Organizational Inertia

a firm's resistance to changes in the status quo

Two parts of the strategy process:

strategy formulation and strategy implementation

Strategy formulation

the choice of strategy in terms of where and how to compete

Price Stability

the lack of change in price levels of goods and services

The steeper the learning curve, the ______

the more learning has occurred

Churn rate

the rate at which customers leave a product or service

Strategy defined

the set of goal-directed actions a firm takes to achieve a competitive advantage

Economic value creation is calculated as ______.

the sum of consumer and producer surplus

Reason by analogy

the tendency to use simple analogies to make sense out of complex problems

Cube-Square Rule

the volume of a body such as a pipe or a tank increases disproportionately more than its surface