Tran exam 3

Closed Innovation

"Not Invented Here" syndrome sometimes referred to by decision makers: everything coming from outside is suspicious and not reliable.

Strategic alliance

- a voluntary arrangement between firms that involves the sharing of knowledge,resources and capabilities with the intent of developing processes, products, or services. - help change industry to firm's favor -influence industry standards

Strategic Outsourcing

1. Moving from one or more internal value chain activities outside the firm's boundaries to other firm's boundaries to other firms in the industry value chain. 11.off-shoring - when outsourced activities take place outside the home country.

Innovation

A developed product or process that builds off a previous idea.

Managerial hubris

A form of self-delusion in which managers convince themselves of superior skills despite evidence of contrary

Idea

Abstract concepts or basic research findings

Disruptive Innovation

An innovation that leverages new technologies to attack existing markets from the bottom up. Can be sucessful because of a stealth attack or a slow response by incumbent firms.

Merger

Combination of two or more companies into a single firm

types of diversification - unrelated

Companies that pursue unrelated diversification strategies are often known as conglomerates

First motor advantages

Competetive advantages that accrue to the sucessfull innovator, these include economies of scale, learning curve effects, and experience.

Imitation

Competitiors copy a successful innovation

Introduction

Core competency is R&D its strategic objective is market acceptance and future growth with an emphasis on uniqueness and performance.

Growth Stage

Demand increases rapidly, first time buyers want to purchase A main incentive is trying new ideas and producing small quantities.

Industry Value Chain

Depicts the transformation of raw materials into finished goods and services along distinct vertical stages.

Reverse Innovation

Disrupt yourself rather than wait for others, An innovation that was developed for emerging economies before being introduced in developed economies.It is also known as frugal innovatio.

Maturity Stage

During this stage, sales growth has started to slow down, and the product has already reached widespread acceptance in the market competitive intensity increases

Vertical integration

Firm's ownership of its production of needed inputs or of the channels by which it disturbs it outputs.

Shakeout Stage

Firms begin to compete more intensely, and this forces weaker firms out of the consolidated industry. Biggest strategic advantage is their low prices, and only the strong survive.

Four Steps of the innovation Process

Idea - Invention Innovation Imitation

Three dimensions of corporate strategy

In what stages of the industry value chain should we participate? Industry value chain - vertical integration What range of products and services should we offer? Range of products and services - diversification Where should we compete geographically? Geographic scope - (regional, national or global markets)

industry life cycle:

Introduction Growth Shakeout Maturity Decline

Incremental Innovation

It buils on established knoweldge base and steadily improves an exisiting product. It targets exisiting tech.

Principal-agent problem

Managers may have incentives to acquire because 1. not for anticipated 2.to build an empire 3. to receive more prestige, power, and play

Backward vertical integration vs forward integration

Moving ownership of activities upstream to the inputs of the industry value chain. Moving ownership of activities downstream closer to the end (customer) point of the industry value chain.

Product Innovation

New or recombined knowledge embodied in new products. (Phones to Cell phones)

Process Innovation

New ways to produce existing products or deliver exisiting services.

Acquisition

One company's purchase of the property and obligations of another company.

Horizontal integration

The merging of companies that make similar products

BCG Growth share matrix

This helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis.

Invention

Transformation of an idea into a new product or process/the modification and recombination

Alliance management

a firm's ability to effectively three alliance-related task concurrently 1. partner selection and alliance formation- willingness to make available necessary resources and to accept short-term sacrifices to ensure long-term rewards 2. alliance design and governance - must design and choose an appropriate governance mechanism and have inter organizational trust 3. Post-formation alliance management - ongoing management alliance; they make relation-specific investments, establish knowledge-sharing routines, and build information.

industry standard

a standard that most industries operate by in a certain field of industry—many are regulated by law

Joint venture

a venture by a partnership or conglomerate designed to share risk or expertise

Principal-agent problem

a. a disadvantage of the make decision b. Principal - owner of the firm c. Agent - a manager performing activities on behalf of the principal. d. A situation in which an agent performing on behalf of a principal pursues his or her own interests. (managerial perks and job security)

Transaction cost economics

a. one of the key underlying concepts to understanding corporate strategy. b.All internal and external costs associated with an economic exchange. c.It also determines whether it is cost effective to Vertically integrate or Diversify.

Hostile takeover

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

types of diversification - double

company that generates between 70 and 95%

Co-opetition

cooperation by competitiors to achieve a strategic alliance.

Decline Stage

demands falls, strong pressure on prices options include 1. Exit - bankruptcy/liquidation 2. harvest - reduce further investments 3.Maintain - support at given level 4.Consolidate : buy rivals

Corporate Diversification

diversification is an increase in the variety of products and services a firm offers or markets and geographic regions in which it competes.

Corporate strategy

management's decisions and goal-directed actions to gain and sustain competitive advantage in several industries.

Types of strategic alliance - Non-Equity Alliance

partnership based on contracts between firms (supply agreements, distribution agreements) share explicit knowledge - knowledge that can be codified; concerns knowing about a process or product.

Types of strategic alliance - Equity Alliance

partnership in which at least one partner takes partial ownership in the other. tactic knowledge - Tacit knowledge can be defined as skills, ideas and experiences that people have but are not codified and may not necessarily be easily expressed With tacit knowledge, people are not often aware of the knowledge they possess or how it can be valuable to others. Effective transfer of tacit knowledge generally requires extensive personal contact, regular interaction and trust.

Learning race

situations in which both partners in a strategic alliance are motivated to form an alliance for learning, but the rate at which they learn may vary.

Relational view of competitive advantage

strategic management framework that proposes that critical resources and capabilities frequently are embedded in strategic alliances that span firm boundaries.

Tapering Integration

1.Backward integration and relying on others for suppliers 2. Forward integration and relying on others for distribution

types of diversification - related

30% of its revenues from sources outside of the dominant business and whose units are linked to each other by the sharing of resources, and by product, technological, and distribution linkages.

type of diversification - Single

90% of its revenues are generated by the dominant business.