Business Strategy & Policy Exam 1

Front 1

Three Basic Questions

Back 1

Where are we competitively, where do we want to be in 3-5 years, and how do we get there

Front 2

Business Strategy

Back 2

View of just the business and not the entire operation

Front 3

Corporate Strategy

Back 3

Arching over everything and all divisions

Front 4

Competitors

Back 4

Business entity that competes against another

Front 5

Competitive Advantage

Back 5

The purpose of strategic planning. Build, Structure, and Expand. Anything that will cause something to buy your product over another

Front 6

Distinctive Competence

Back 6

Similar to competitive advantage but applied to manufacturing firms

Front 7

Strategic Management Process

Back 7

Mission, Vision, Goals, Strategies, Structure, People

Front 8

Operational Planning (1 year or less)

Back 8

focus on current performance

Front 9

Strategic Planning (3-5-10 years)

Back 9

Focus on long term and competitive positioning.

Front 10

Four Stages of Strategy Development

Back 10

Analysis (where do we want/need to be), Formulation (Develop strategies, form the plan), Implementation (Start the plan, announce to shareholders/employees), Evaluate and Adjustment

Front 11

Analytical Tools

Back 11

Methods used in analyzing the competitive position of the firm

Front 12

Strategy Diamond

Back 12

Arenas (Where?), Vehicles (how?), Differentiators (Why?), Staging (sequence or speed), Economic Logic (How are profits achieved)

Front 13

SWOT Analysis

Back 13

Strengths (internal), Weaknesses (internal), Opportunities (external), Threats (external)

Front 14

Strategic Imperatives

Back 14

Goals which must be achieved in the company is to survive. Typical in every organizations strategic plan, which is critical for the organizations future existence

Front 15

Internal Growth "Build It"

Back 15

Focuses on growing through penetration, new products, new markets, etc.

Front 16

Acquisition/Merger "Buy It"

Back 16

Focuses on growing through buying or merging with other companies

Front 17

Effectiveness (goal achievement)

Back 17

A firm that accomplishes their goals

Front 18

Efficiency (cost, productivity, overhead)

Back 18

how well resources are utilized

Front 19

Resources

Back 19

The inputs that a firm uses to create goods and services

Front 20

Tangible

Back 20

perceptible by touch.

Front 21

Intangible

Back 21

unable to be touched or grasped; not having physical presence.

Front 22

Capabilities (transformation)

Back 22

Skill in using resources to create goods and services. The combination of procedures and expertise that a firm relies on to engage in distinct activities in the process of producing goods and services.

Front 23

Distinctive Competencies

Back 23

A competency unique to a business organization. The basis for the development of an unassailable competitive advantage.

Front 24

Value Chain

Back 24

The totality of a firms activities from the securing of raw materials through the transformation process (core competencies) to the delivery of finished goods through distribution channels

Front 25

Value Added Concept

Back 25

Value can be added in each step of the value chain.

Front 26

Core Competencies

Back 26

Activities a firm must do, which provide the fundamental basis for the provision of added value

Front 27

Inbound Logistics (upstream functions)

Back 27

Involves all aspects of securing raw materials and working with suppliers to secure inputs

Front 28

Outbound Logistics (downstream functions)

Back 28

Involves distribution channels and all actives post transformation for ultimately getting products/services to customers.

Front 29

Primary Activities

Back 29

Line Functions

Front 30

Support Activities

Back 30

Staff Functions

Front 31

Distribution Channels

Back 31

The chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer.

Front 32

Vertical Integration

Back 32

Opposite of outsourcing. When a company buys out a supplier and naturally, enlarges the company and expands core competencies.

or

The process of a firm to assume activities previously performed by suppliers or distributors

Front 33

Outsourcing

Back 33

Process of moving an activity previously performed as a core competency to another firm which can perform the activity more effectively and/or efficiently

Front 34

Offshoring

Back 34

Process of moving an activity outside the US while retaining the activity as a core competency of the firm.

Front 35

Economies of Scale

Back 35

Concept that unit price declines with increased volume

Front 36

Economies of Experience

Back 36

Concept that the more an activity is performed, the more efficiently it is achieved. The inverse of "learning curve"

Front 37

Benchmarketing

Back 37

Process of comparing activities to competitors to determine the "best practices"

Front 38

Financial Analysis

Back 38

Most valuable type of analysis

Front 39

VRINE Model

Back 39

Value, Rarity, Inimitability, Non-substitutability, Exploitability

Front 40

Three Environmental Levels

Back 40

Tool for external assessment that has 3 layers of analysis: Macro (external environment), industry or Competitive Environment, Strategic Group Environment

Front 41

Strategic Groupings

Back 41

Subset of firms which, because of similar strategies, resources, and capabilities, compete against each other more intensely than with other firms in an industry.

Front 42

PESTEL Analysis

Back 42

Tool of assessing the political, economic, sociocultural, technological, environmental, and legal contents in which a firm operates

Front 43

Competitive Intelligence

Back 43

Method whereby firms are able to gather information about their competitors

Front 44

Industry Concentration Vs. Fragmentation

Back 44

Fragmented markets are believed to be more competitive than concentrated markets, whereas concentrated markets are more difficult to enter.

Front 45

Porters 5 Forces

Back 45

“Attractiveness” suggests the industry’s potential for profitability. Originally intended to evaluate entry into “new” industry; now used to evaluate whether to remain in an “existing” industry based on projected attractiveness in 3-5 years.

Front 46

5 Forces

Back 46

Threat of New Entrants, Power of Buyers, Power of Suppliers, Intensity of Industry Rivalry, Threat of Substitutes

Front 47

Complementor Firm

Back 47

Any firm of industry, which through its success and growth, benefits another firm or industry

Front 48

Concept of Industry Life Cycle

Back 48

Pattern of evolution followed by an industry inception to current and future states

Front 49

Commoditization (Undifferentiated price competition)

Back 49

Competitive market environment in which, products/services are "undifferentiated" and competition is based solely on price

Front 50

Market/Industry Consolidation

Back 50

Reduction in the number of competitors in a market. Result of a market becoming "concentrated"

Front 51

Product Life Cycle

Back 51

Introduction, Growth, Mature, Decline

Front 52

Re-invigoration, Reinvention, Restarting

Back 52

As industries mature, certain segments may emerge to reinvigorate them, sometimes even resorting their growth industries.

Front 53

Strategic Positioning

Back 53

Means by which managers situate a firm relative to its rivals

Front 54

Low Cost Leadership

Back 54

Based on producing a good or offering a service while maintaining total costs that are lower than what it takes competitors

Front 55

Differentiation

Back 55

Based on products or offering services with quality, reliability, or prestige that is discernibly higher than that of competitors and for which customers are willing to pay

Front 56

Focus Low Cost Leadership

Back 56

Based on being a low-cost leader in a narrow market segment

Front 57

Focus Differentiation

Back 57

Based on targeting products to relatively small segments

Front 58

Market Segmentation

Back 58

ways that a market cant be split up and categorized

Front 59

Economies of Scale

Back 59

unit prices of production typically decreases with increased volume. Concept is also applied to purchasing power

Front 60

Diseconomies of Scale

Back 60

average total cost per unit of production increases at higher levels of output

Front 61

Minimum Efficient Scale

Back 61

The output level that delivers that lowest total average cost

Front 62

Learning Curve (economies of experience)

Back 62

With any new activity there will be a period of inefficiency until experience provides efficiency and greater proficiency at the task

Front 63

Branding

Back 63

One of the principal forms of differentiation of products and services.

Front 64

Strategy Evaluation Criteria

Back 64

Does your strategy exploit your key resources?, Does your strategy fit with current industry
conditions?, Will your differentiators be sustainable?, Are the elements of your strategy consistent and aligned with your strategic position?
Can your strategy be implemented?

Front 65

Industry Evolution

Back 65

Differentiated markets become undifferentiated (commoditized) as products or services are imitated/replicated by competitors thus minimizing/eliminating competitive advantage

Front 66

Commoditization

Back 66

Industries evolve over time from differentiated competition to undifferentiated competition

Front 67

Technological Change/Disruption

Back 67

Technological change is disruptive when change is discontinuous, so that it does not sustain existing lenders advantage.

Front 68

Speed of Change

Back 68

Critical factor in keeping up with the basis of competition in an industry.

Front 69

High End Disruption

Back 69

Creation of new markets and/or redefining bases of competition. May result in huge new markets in which, new players redefine industry rules to unseat the largest incumbents.

Front 70

Low End Disruption

Back 70

Targets low end of markets/ least desirable customers.

Front 71

Hybrid Disruption

Back 71

Most newcomers adopt some combination of new-market strategies

Front 72

First Mover Advantage

Back 72

The firm that is the first to offer a new product/service in a market

Front 73

Second Mover Advantage (fast follower)

Back 73

Second significant company to move into a market quickly following the first mover.

Front 74

Containment

Back 74

Limit the extent to which the new entrant's innovation impacts your business

Front 75

Neutralization

Back 75

Try to short-circuit the moves of innovations or new entrants before they make them

Front 76

Shaping

Back 76

Shape the innovation so it becomes something the incumbent can live with or even benefit from

Front 77

Absorption

Back 77

Minimize the risks entitled by being either a first mover or an initiator

Front 78

Annulment

Back 78

Improve incumbent products and services to annul an innovation or new entrants offering

Front 79

Portfolio Planning

Back 79

practice of mapping diversified business or products based on their relative strengths and market attractiveness

Front 80

Vertical Scope

Back 80

(Level of Diversification along the Value Chain), The extent to which a firm is vertically integrated

Front 81

Horizontal Scope

Back 81

(Level of Related Diversification), Extent to which a firm participates in related market segments or industries outside its existing value-chain activities

Front 82

Economy of Scope

Back 82

(Lower cost as a result of sharing resources to produce more than one product), condition under which lower total average costs result from sharing resources to product more than one product or service.

Front 83

Coevolution

Back 83

Concept of diversification in which two or more interdependent businesses adapt to each other

Front 84

Boston Consulting Model

Back 84

Stars, Cash Cows, Problem Children, Dogs

Front 85

Synergy

Back 85

Condition under which the combined benefits of activities in two or more areas are greater than the simple sum or those benefits.

Front 86

Strategic Options

Back 86

Related Diversification, Unrelated Diversification (Conglomerate Concept), Vertical Integration, Outsourcing, Off-shoring, Horizontal Integration, Strategic Alliances, Corporate Refocus/Strategic Audit