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Strategic Management (Exam 1)

Chapter 1
Chapter 1
Strategic Competitiveness
is achieved when a firm successfully formulates and implements a value-creating strategy
Strategy
an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage
Competitive Advantage
Something a firm does better than anyone else
Above-average returns
returns in excess of what an investor expects to earn from other investments with a similar amount of risk
Risk
an investor’s uncertainty about the economic gains or losses that will result from a particular investment
Average returns
returns equal to those an investor expects to earn from other investments with a similar amount of risk
Strategic Management Process
the full set of commitment, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns
Global Economy
goods, services, people, skills, and ideas move freely across geographic borders
Strategic Flexibility
a set of capabilities used to respond to various demands and opportunities existing in a dynamic and uncertain competitive environment
Resources
inputs into a firm’s production process, such as capital equipment, the skills of individual employees, patents, finances, and talented managers
Capability
the capacity for a set of resources to perform a task or an activity in an integrative manner
Core Competencies
Something a firm does well (act as the source for competitive advantage)
Vision
a picture of what the firm wants to be and, in broad terms, what it wants to ultimately achieve
Mission
specifies the businesses in which the firm intends to compete and the customers it intends to serve
Stakeholders
individuals, groups, and organizations that can affect the firm’s vision and mission, are affected by the strategic outcomes achieved, and have enforceable claims on the firm’s performance
Strategic Leaders
people located in different areas and levels of the firm using the strategic management process to select strategic actions that help the firm achieve its vision and fulfill its mission
Organizational Culture
refers to the complex set of ideologies, symbols, and core values that are shared throughout the firm and that influence how the firm conducts business
Profit Pool
entails the total profits earned in an industry at all points along the value chain
Chapter 2
Chapter 2
General Environment
composed of dimensions in the broader society that influence an industry and the firms within it
Industry Environment
the set of factors that directly influences a firm and its competitive actions and responses
Competitor Analysis
how companies gather and interpret information about their competitors
Opportunity
a condition in the general environment that, if exploited effectively, helps a company reach strategic competitiveness
Threat
a condition in the general environment that may hinder a company’s efforts to achieve strategic competitiveness
7 Segments of General Environment
Demographic, Economic, Political/Legal, Sociocultural, Technological, Physical Environment, Global
Industry
a group of firms producing products that are close substitutes
Strategic group
A set of firms emphasizing similar strategic dimensions and using a similar strategy
Competitor Intelligence
the set of data and information the firm gathers to better understand and anticipate competitors’ objectives, strategies, assumptions, and capabilities
Global mind-set
the ability to analyze, understand, and manage an internal organization in ways that are not dependent on the assumptions of a single country, culture, or context
Value
the customer’s perceived level of performance
Valuable capabilities
allow the firm to exploit opportunities or neutralize threats in its external environment
Rare capabilities
capabilities that few, if any, competitors possess
Costly-to-imitate capabilities
capabilities that other firms cannot easily develop
Nonsubstitutable capabilities
capabilities that do not have strategic equivalents
Value-chain activities
activities or tasks the firm completes in order to produce products and then sell, distribute and service those products in ways that create value for the customer
Support activities
activities of tasks the firm completes in order to support the work being done to produce, sell, distribute, and service the products the firm is producing
Outsourcing
the purchase of a value-creating activity or a support function activity from an external supplier
Business-level strategy
an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets
Market segmentation
the process used to cluster people with similar needs into individual and identifiable groups
Total Quality Management (TQM)
a system firms use to (1) increase customer satisfaction (2) cut costs, and (3) reduce the amount of time required to introduce innovative products to the market with a focus on employee empowerment.

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