Strategy

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Strategic Management

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A management field that combines analysis, formulation and implementation in order to gain competitive advantage.

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Strategy

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A set of goal-directed actions to create and sustain a superior performance relative to competitors.

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Competitive Advantage / Disadvantage / Parity

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Superior / Inferior / Same performance relatively to competitors in the industry or industry average.

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Sustainable Competitive Advantage

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Competitive advantage sustained over a prolonged period of time.

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CSR

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CORPORATE SOCIAL RESPONSIBILITY - FRAMEWORK - to recognize and address the economic, legal, ethical and philanthropic expectations that society has of the business at a certain time

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Industry Effects

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Firm performance attributed to the structure of the firm's industry.

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Firm Effects

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Firm performance attributed to the manager's actions.

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Stakeholders

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Organizations and individuals that are affected or can affect the firm's actions.

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Stakeholders Impact Analysis

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a decision tool to recognize, prioritize and address the needs of different stakeholders, so that the firm can gain c.a. + be a good corporate citizen.

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Stakeholder Strategy

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manage a diverse set of stakeholders effectively in order to gain competitive advantage.

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AFI Strategy Framework

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FRAMEWORK - links 3 managerial tasks: analyze, formulate, implement, that help to create a strategy and gain c.a.

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Black Swan Events

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Highly improbable but high-impact events.

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Autonomous Actions

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indipendent strategic initiatives undertaken by lower-level employees in response to unexpected situations.

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Core Values Statement

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statement of principles to guide a firm, to achieve the vision and fulfill the mission. Both internal and external. Includes ethical implications.

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Dominant Strategic Plan

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the strategic options that managers decide is the most plausible and that is then executed.

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Emergent Strategy

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unplanned strategic initiatives. Bottom up.

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Illusion of Control

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a tendency to overestimate their ability to control events.

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Intended Strategy

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

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Level 5 Leadership Pyramid

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FRAMEWORK - leadership progression with five sequential levels.

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Mission

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What an organization actually does. Products + services it plans to provide and markets where it competes. Where is the firm positioned now.

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Organizational Core Values

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Ethical standards that govern the behavior of individuals between a firm.

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Planned Emergence

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strategy process - firms allow bottom-up strategic initiatives to emerge, be evaluated and coordinated by top management.

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Realized Strategy

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intended + emergent strategy

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RAP

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RESOURCE - ALLOCATION PROCESS - the way a firm allocates its resources based on predetermined policies. It can greatly influence realizing strategy.

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Scenario Planning

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strategy planning activity top managements envisions different what-if scenarios to anticipate plausible futures to derive strategic responses.

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Serendipity

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random events that are high-impact on a firm's strategic initiatives.

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SBU

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STRATEGIC BUSINESS UNIT - a standalone division of a larger conglomerate. It's its own profit-and-loss responsibility.

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Strategic Commitments

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actions to achieve the mission. Costly, long-term, difficult to reverse.

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Strategy Formulation

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part of the strategic management - the choice of strategy in terms of where and how to compete.

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Strategy Implementation

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part of the strategic management - organization, coordination and integration of how work gets done or how strategy is executed.

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Strategic Initiative

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activity pursued by a firm to explore and develop new products and processes, new markets or new ventures.

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Strategic Leadership

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Executives' use of power and influence to direct the activities of others when pursuing organizational goals.

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Strategic Management Process

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method put in place by strategic leaders to formulate and implement a strategy that's gonna lead to sustainable c.a.

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Top-down Strategic Planning

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a strategic process through which top management attempts to program future success.

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Upper-echelons Theory

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FRAMEWORK - views organizational outcomes - strategic choices and performance levels - as reflections of the values of the members of the top management of the top management team.

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Vision

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A statement about what a firm ultimately wants to accomplish. ASPIRATION. The firm in the future.

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Competitive Industry Structure

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Elements and featurescommon to allindustries, includingthe number and size ofcompetitors, the firms’degree of pricing power,the type of product orservice offered, and theheight of entry barriers.

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Complement

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A product, service, orcompetency that addsvalue to the originalproduct offering whenthe two are used intandem.

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Complementor

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A company that providesa good or service thatleads customers to valueyour firm’s offeringmore when the two arecombined.

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Co-opetition

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Cooperation bycompetitors to achievea strategic objective.

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Entry Barriers

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Obstacles that determine how easily a firm can enter an industry.

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Exit Barriers

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Obstacles that determinehow easily a firm canleave an industry.

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Five Forces Model

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FRAMEWORK - identifies 5 forces that determine the profit potential of an industry and shape a firm's competitive strategy.

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Industry

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A group of companies that face more or less the same suppliers and buyers.

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Industry Analysis

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A method to identify an industry's profit potential and derive implications for a firm's strategic position.

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Industry Convergence

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A process wherebyformerly unrelatedindustries begin tosatisfy the samecustomer need. The set of companiesthat pursue a similarstrategy within aspecific industr

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Mobility Barriers

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Industry-specific factorsthat separate onestrategic group fromanother.

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Network Effects

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

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PESTEL Model

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FRAMEWORK - analyze an important set of external factors that might impinge upon a firm, creating both opportunities and threats.

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Strategic Group

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The set of companiesthat pursue a similarstrategy within aspecific industry.

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Strategic Group Model

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FRAMEWORK - explains differences in firm performance within the same industry.

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Strategic Position

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A firm's strategic profile based on the difference between value creation and cost.

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Threat Of Entry

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The risk that potential competitors will enter an industry.

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Activities

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Distinct and fine-grainedbusiness processes that enablefirms to add incremental valueby transforming inputs intogoods and services.

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Capabilities

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Organizational and managerialskills necessary to orchestratea diverse set of resources anddeploy them strategically.

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Casual Ambiguity

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A situation in whichthe cause and effect ofa phenomenon are notreadily apparent.

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Core Competencies

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Unique strengths, embedded deepwithin a firm, that are critical togaining and sustaining competitiveadvantage.

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Core Rigidity

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A former corecompetency that turnedinto a liability becausethe firm failed to hone,refine, and upgradethe competency as theenvironment changed.

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Costly-to-imitate Resources

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One of the four key framework. A resourceis costly to imitate if firms that do notpossess the resourceare unable to developor buy the resourceat a comparable cost.

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Dynamic Capabilities

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A firm’s ability tocreate, deploy, modify,reconfigure, upgrade, orleverage its resources inits quest for competitiveadvantage.

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Dynamic Capabilities Perspective

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MODEL - that emphasizesa firm’s ability tomodify and leverage itsresource base in a waythat enables it to gainand sustain competitiveadvantage in a constantlychanging environment.

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Intangible Resources

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Resources that do not have physicalattributes and thus are invisible.

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Intellectual Property Protection

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A critical intangibleresource that canprovide a strongisolating mechanism,and thus help to sustaina competitive advantage

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Isolating Mechanism

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Barriers to imitation that prevent rivals fromcompeting away theadvantage a firm mayenjoy.

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Organized to Capture Value

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One of the four key framework. Thecharacteristic of havingin place an effectiveorganizational structure,processes, and systemsto fully exploit thecompetitive potential of the firm’s resources,capabilities, andcompetencies.

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Path Dependence

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A situation in whichthe options one facesin the current situationare limited by decisionsmade in the past.

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Primary Activities

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Firm activies that add value directly bytransforming inputsinto outputs as thefirm moves a productor service horizontallyalong the internalvalue chain.

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Rare Resource

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One of the four key framework. A resource is rare if the number of firms that possess it is less than the number of firms it would require to reach a state of perfect competition.

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Resource-Based View

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

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Resource Flows

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The firm’s level ofinvestments to maintainor build a resource.

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Resource Heterogeneity

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Assumption in theresource-based viewthat a firm is a bundleof resources andcapabilities that differacross firms.

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Resource Immobility

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Assumption in theresource-basedview that a firm hasresources that tend to not move easily fromfirm to firm.

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Resource Stocks

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The firm’s current levelof intangible resources.

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Resources

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Any assets that a firm candraw on when formulating andimplementing a strategy.

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Social Complexity

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A situation in whichdifferent social andbusiness systemsinteract with oneanother.

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Support Activities

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Firm activities that add value indirectly, but are necessary to sustain primary activities.

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SWOT Analysis

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FRAMEWORK - allows managers to synthesize insights obtained from an internal analysis of the company’s strengths and weaknesses with those from an analysis of external opportunities and threats to derive strategic implications.

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Tangible Resources

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Resources that have physical attributes andthus are visible.

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Valuable Resource

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One of the four key framework. A resourceis valuable if it helps afirm exploit an externalopportunity or offset anexternal threat.

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Value Chain

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The internal activitiesa firm engages in whentransforming inputs into outputs, each activity adds incremental value.

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VRIO Framework

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FRAMEWORK - explains and predicts firm-level competitive advantage.

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Logical Incrementalism

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A management philosophy which states that strategies do not come into existence based on a one-time decision but rather, it exists through making small decisions that are evaluated periodically. These small decisions are not made randomly but logically through experimentation and learning.

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Power of Buyers

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The pressures an industry’s customers can put on the producer’s margins in the industry by demanding a lower price or higher product quality.

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Industry life cycle

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The five differentstages—introduction,growth, shakeout,maturity, and decline—that occur in theevolution of an industryover time.

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Balance Scorecard

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Strategy implementationtool that harnessesmultiple internal andexternal performancemetrics in order tobalance financial andstrategic goals.

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Ambidextrous Organization

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An organization ableto balance and harnessdifferent activities intrade-off situations.

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Horizontal Integration

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The process of mergingwith competitors,leading to industryconsolidation.

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Learning Races

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Situations in which bothpartners in a strategicalliance are motivatedto form an alliance forlearning, but the rate atwhich the firms learnmay vary.

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Real-Options Perspective

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Approach to strategicdecision making thatbreaks down a largerinvestment decisioninto a set of smallerdecisions that arestaged sequentially overtime.