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BUAD 441
Strategic Management
| Term | Definition |
|---|---|
| forward integration | when a manufacturer decides to perform distribution and/or retail functions within the distribution channel |
| backward integration | - when a company purchases or starts a company that it either buys from or sells to and integrates this new business into its own - a buyer decides to also produce the product |
| Parts of the general analysis | Economic, Demographic, Political/Legal, Technological, Social cultural, Global, Physical |
| Parts of the industry analysis | Buyers, Suppliers, Rivals, Entrance, Substitutes |
| Industry/Organization (I/O) Model | says you want few substitutes, Industry rivalry, potential entrants, & many Suppliers, & Buyers |
| Stakeholders: 1. Capital Market 2. Product Market 3. Organizational | 1. share holders & major suppliers 2. buyers & suppliers 3. employees & managers |
| Key Success Factors (KSF) | The combination of important facts that is required in order to accomplish one or more desirable business goals |
| competitive advantage | when a firm implements a strategy that creates superior value for customers that its competitors can't duplicate or find costly to imitate |
| The external analysis is used to determine what? | - Opportunities and Threats - KSF |
| The internal analysis is used to determine what? | strengths & weaknesses |
| What is industry analysis? | analysis focused at understanding the competitive dynamics of an industry, not the company |
| Porter's Five Forces | 1. Competitors 2. Entrants 3. Suppliers 4. Buyers 5. Substitutes |
| Unattractive industry has what? | - low entry barriers - suppliers & buyers have strong positions - strong threats from substitute products - intense rivalry among competitors - low profit potential |
| Attractive industry has what? | - high entry barriers - suppliers & buyers have weak positions - few threats from substitute products - moderate rivalry among competitors - high profit potential |
| value | - is a product's performance characteristics & attributes for which customers are willing to pay for - the customer determines the value |
| Tangible Resources | assets that can be observed & quantified |
| Intangible Resources | - assets that can not be observed & quantified - based on the firm's history and accumulate over time - ex: knowledge, trust, skills |
| support functions | - activities or tasks the firm completes in order to support the work being done to produce, sell, distribute, & service - ex: finance, HR, MIS |
| sustainable competitive advantages - VRI | based on internal capabilities & resources that are: valuable, rare,& inimitable (difficult to imitate/substitute) |
| substitutes | - goods that perform similar functions and do not directly compete against each other - ex: cars & motorcycles |
| cost | marginal cost to produce one unit of the product with a particular level of value |
| economic contribution | difference between product's value and its cost to the firm |
| capabilities | the ability of a firm to use its resources to accomplish tasks at a high level of expertise continuously over time |
| breadth of line | the product line that the company has to offer to its customers - ex: one-stop shopping, interchangeable parts |
| Scale Economies | decline in average costs as volume increases |
| Scope Economies | cost of producing two products together is lower than the cost of producing them separately |
| Learning Curve | decline in cost with cumulative volume increases as learning takes place and practices improve |
| lower input cost | lower resource inputs costs allow firms to take advantage of industry opportunities and to absorb changes in the costs of inputs better than competitors with higher resource cost structures |
| vertical integration | - for specialized tasks, coordination costs are lower within the firm than with a market supplier - putting more parts of the organization under one roof |
| Cost Leader Strategy | integrated set of actions taken to produce goods & services with features that are acceptable to customers at the low cost, relative to those of its competitors |
| Differentiation Strategy | integrated set of actions taken to produce goods or services that customers perceive as being different in ways that are important to them |
| Focused Cost Leader & Focused Differentiation Strategies | Same as Cost Leader & Differentiation Strategies, but specific market segment, niche, emphasis on activities |
| Integrated Cost Lead and Differentiation Strategy | involves engaging in primary value chain activities & support functions that allow a firm to simultaneously pursue low cost and differentiations |
Created by:
NickUD
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