Card Set Information

2014-11-02 06:55:54
Management 01
Management 01 - PRC, STR, STG
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  1. What makes a successful strategy?
    • 1. Long-term, simple and agreed objectives
    • 2. Profound understanding of the competitive environment
    • 3. Objective appraisal of resources
    • 4. Effective Implementation
  2. Difference strategy / tactic
    Strategy is the overall plan, tactic is a scheme for a specific maneuver
  3. Corporate strategy / Business strategy
    Industry attractiveness (where should we compete?) / competitive advantage (how should we compete?)
  4. Strategy is about..
    achieving success!
  5. Bounded Rationality
    Subject to the cognitive limitations that constrain all human beings.
  6. A heuristic
    A rule of thumb that reduces the search required to find an acceptable solution to a decision problem
  7. Two basic questions about strategic choices
    Where (corporate strategy) / How (business strategy) to compete?
  8. Intended strategy
    Strategy as conceived of by the top management team.
  9. Realised strategy
    Actual strategy that is implemented.
  10. Emergent strategy
    The decisions that emerge from the complex processes in which individual managers interpret the intended strategy and adapt to changing circumstances.
  11. 4 Components of the framework for strategy analysis
    goals and values, resources and capabilities, structure and management systems, industry environment
  12. Two ways of creating value
    production and commerce
  13. Value Added
    The difference between a firm's output and the cost of its material inputs
  14. Consumer surplus
    Satisfaction customers gain exceeds the price they pay (difference between the price they pay and the maximum price they are willing to pay)
  15. Stakeholder approach to the firm
    The view of the business enterprise as a coalition of interest groups where top management's role is to balance these different (often conflicting) interests
  16. What is profit?
    The surplus of revenues over costs
  17. Accounting profit
    combines two types of returns (return to capital and economic profit)
  18. Economic profit (often referred to as rent or economic rent)
    surplus available after all inputs
  19. Economic value added (EVA)
    Net operating profit after tax (NOPAT) - cost of capital
  20. Intrinsic value
    The NPV of the stream of profits that accrue to owners dicounted at the cost of equity
  21. 3 drivers of enterprise value
    rate of return on capital, cost of capital, profit growth
  22. Balanced scorecards
    answers to 4 questions: 1. How do we look t shareholders? 2. How do customers see us? 3. What must we excel at? 4. Can we continue to improve and create value?
  23. Obliquity
    pursuing our goals indirectly
  24. Property conception
    Views the firm as a set of assets owned by shareholders
  25. Social entity conception
    Views the firm as the community of individuals that is sustained and supported by its relationships with its social, political, economic and natural environment.
  26. 3 reasons why CSR (corporate social responsibility) is in the interest of companies
    • 1. Sustainability argument
    • 2. Reputation argument
    • 3. License-to-operate argument
  27. Shared value
    Creating economic value in a way which also creates value for society.
  28. Growth options
    Platform investments, strategic alliances and joint ventures, organizational capabilities
  29. Industry environment consists of..
    .. customers, suppliers and competitors
  30. Producer surplus (economic rent)
    The stronger the competition, the more is received by customers and the less by producers
  31. Profits earned are determined by 3 factors:
    value of the product to the customers, intensity of competition, bargaining power of suppliers and customers
  32. Spectrum of industry structures
    Perfect competition, oligopoly, duopoly, monopoly
  33. Porter's five forces of competition
    Industry competitors, potential entrants, substitutes (horizontal competition), bargaining power of suppliers and buyers (vertical competition)
  34. Economies of scale
    High entrance costs (production facilities, technology, research, marketing) require amortising these indivisible costs over a large volume of output (hence the threat of new entrance is small)
  35. Principal sources of barriers to market entry:
    Capital requirements, economies of scale, absolute cost advantages, prouct differentiation, access to channels of distribution, governmental and legal barriers, retaliation, effectiveness of barriers to entry
  36. Concentration ratio
    Combined market share of the leading producers
  37. 6 factors that determine the intensity of competition (rivalry)
    Concentration, diversity of competitors, product differentiation, excess capacity and exit barriers, cost conditions
  38. 3 sources for architectural advantages
    creating one's own bottlenecks, redefining roles and responsibilities
  39. bottlenecks
    activities where scarcity and the potential for control offer superior opportunities for profit
  40. Definition of "industry"
    a group of firms that supplies a market