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  1. mission statement + vision= strategic plan
    strategic goals
  2. why the company exists- context for desisions - no time frame - external and internal use
    mission statement
  3. what leaders what the firm to be - guides development of strategy - inspiring new reality - time period - primarily internal use
  4. how to beat present and potential compeitiors - lists actions providing profit - changes with analysis, customer experience - internal use only
    Strategic Plan
  5. affect and are affected by strategic outcomes achieved and who have enforceable claims on performance
  6. are enforced by the stakeholder's ability to withold essential participation
    stakeholders claims
  7. shareholders and lenders who expect the firm to preserve and enhance the wealth they have entrusted to it - returns should be commensurate with the degree of risk to the shareholder
    capital market shareholders
  8. customers, suppliers, host communities, union officials
    product market stakeholders
  9. A product market stakeholder - demand reliable products at low prices
  10. A product market stakeholder - seek loyal customers willing to pay highest sustainable prices for goods and services
  11. A product market stakeholder - want companies willing to be long-term employes and providers of tax revenues while minimizing demands on public support services
    host communities
  12. A product market stakeholder - want secure jobs and desirable working conditions
    union officials
  13. employes - expect a dynamic, stimulating and rewarding work environment - are satisfied by a company that is growing and actively developing their skills
    ogranizational stakeholders
  14. Two issues affect the extent of stakeholder involvement in the firm
    • How to divide returns to keep stakeholders involved
    • how to increase returns so everyone has more to share
  15. Evaluating Firm Performance
    • Financial Ratio Analysis - BS and IS
    • Stakeholder Perspective - Employees, Customers, Owners
  16. 6 elements of the General Environment
    economic, political, technological, sociological, global, demographic
  17. little ability to predict this, even less to control, vary across industries
    external ( general environment)
  18. sometimes called the task or industry environment
    porter's five forces model
    Competitors, customers, suppliers
    competitive environment
  19. a group of firms producing products that are close substitutes - influence one another 0 includes a rich mix of competitive strategies that companies use in pursuing strategic competitiveness and above average returns
    industry (environment)
  20. Threat of new entrants
    baragaining power of suppliers
    threat of substitute products and services
    bargaining power of suppliers
    rivalry among existing firms
    Porter's Five Forces Model of Industry Competition
  21. profits of established firms in the industry may be eroded by new competitors
    the threat of new entrants
  22. _______ in an industry reduces the threat of new entrants : economies of scale, product differentitation, capital requirements, switching costs, access to distribution channels, cost disadvantages independent of scale, government policy, expected retaliation
    high barriers of entry
  23. threaten an industry - force down prices - bargain for higher quality or more services - play competitors against each other
    the bargaining power of buyers
  24. A buyer group is powerful when(6)
    • concentrated (purchases lg volumes)
    • products it purchases are standard
    • faces few switching costs
    • earns low profits
    • pose credible threat of reverse integration
    • product is unimportant to the quality of buyers prod or services
  25. suppliers can exert power by threatening to raise prices or reduce the quality of purchased goods and services
    bargaining power of suppliers
  26. A supplier group can be powerful when(6)
    • dominated by a few companies - more concentrated than the industry it sells to
    • doesnt contend with substitute products
    • industry is not an important customer to supplier
    • product is important t buyers business
    • products are differentiated or built of switching costs
    • poses credible threat of forward integration
  27. increases when buyers face switching costs, substitute product's price is lower, substitute products quality and perfomance are equal or greater
    differentiated industry products that are valued by customers reduce this threat
    threat of substitute products
  28. price competition, advertising battles, product introductions, increased customer service or warranties
    intensity of rivalry among competitors in an industry
  29. Industry rivalry increases when
    • numerous or equallly balanced competitors
    • industry growth slows or declines
    • high FC or storage costs
    • lack of differentiation opportunities - low switching costs
    • strategic stakes are high
    • high exit barriers prevent competitors from leaving
  30. low entry barriers
    suppliers and buyers have strong positions
    strong threat from substitute products
    intense rivalry among competitors
    underactive inudstry - low profit potential
  31. high entry barriers, suppliers and buyers have weak positions, few threats from substitute products, moderate rivalry among competitiors, high profit potential
    attractive industry
  32. two unassailable assumptions in industry analysis
    • no two firms are totally different
    • no two firms are exactly the same
  33. cluster of firms that share similar strategies
    strategic groups
  34. internal competition between ___ ___ ___ is greater than between firms outside that strategic group
    strategic group firms
  35. There is more ____ in the performance of firms withing strategic groups
  36. are intended to create differences between the firm's position relative to those of its rivals
    business level strategies
  37. the firm competes in many customer segments
    broad scope
  38. the firm selects a segment or group of segments in the industry and tailors its strategy to serving them at the exclusion of others
    narrow scope
  39. an integrated set of actions taken to produce goods or services with features that are acceptable to customers at the lowest cost, relative to that of competitors with features that are acceptable to customers
    cost leadership strategy
  40. cost leadership strategy is characterized by
    • relatively strandardized products
    • features acceptable to many customers
    • lowest competitive price
  41. building efficient scale facilities ,tightly controlling production costs and overhead, minimizing costs of sales, R&D and service, building efficient manufacturing facilities, monitoring costs of activities provided by outsiders, simplifiying production processes
    cost saving actions required by this strategy
  42. competitive risks of cost leadership strategy
    • processes used may become obsolete due to competitor innovation
    • focus on cost reductions may occur at expense of customer's perceptions of differentiation
    • successful imitation of the cost leader's strategy
  43. an integrated set of actions taken to produce goods or services (at an acceptable cost) that customers perceive as being different in ways that are important to them
    differentiation strategy
  44. firms may differentiate along
    several dimensions at once
  45. firms achieve and sustain differentiation and above average profits when
    price premiums exceed extra costs of being unique
  46. requires integration with all parts of a firm's value chain
    successful differentiation
  47. an important aspect of differentiation is
    speed or quick response
  48. uniqueness that is not valuable, too much differentiation, too high a premium, differentiation that is easily imitated, dilution of brand identification, perceptions of differentiation may vary between buyers and sellers
    potential pitfalls of differentiation strategies
  49. price differential between competitors, differentiation ceases to provide value, experience narrows customer's perceived vaisks of dilues, counterfeit goods replicate
    competitive risks of differentiation
  50. an integrated set of actions taken to produce goods or services that serve the needs of a particular competitive segment
    focus strategies
  51. particular buyer group, different segment of a product line, different geographic makets
    focus strategy characteristics
  52. lg firms overlook sm niches, lack of resources to compete in broader market, able to serve a narrow market segment more effectively than larger industry, allows the firm to direct its resources to certain value chain activities
    factors that drive focused strategies
  53. stages of the industry life cycle
    introduction, growth, maturity, decline
  54. the study of why some firms outperform others
    strategic management
  55. strategy objective is to maximize shareholder wealth
    the economic value model
  56. objectives that are used as surrogates for eventual wealth or the fulfillment of a mission
    objectives other than wealth creation
  57. defines beneficiary group and maximizes wealth for total group
    stakeholder surplus model
  58. focused on the future
    general environment
  59. focused on factors and conditions influencing a firm's profitability within an industry
    industry environment
  60. focused on predicting the dynamics of competitors actions responses and inentions
    competitor environment
  61. a condidtion in the general environment that if exploited helps a company achieve strategic competitiveness
  62. a condition in the general environment that may hinder a company;s efforts to achieve strategic competitiveness
  63. marginal improvements in efficiency that a firm experiences as it incrementally increases its size
    economies of scale
  64. one time costs customers incur when the buy from a different supplier, new equip, retraining employees, psychic costs
    switching costs
  65. stocking or shelf space, price breaks, cooperative advertising allowances
    access to distribution channels
  66. proprietary product technology, favorable access to rm, desirable locations
    cost disadvantages independent of scale
  67. licensing and permit requirements, deregulation of industries
    governemtn policy
  68. responses by existing competitors may depend on a firm's present stake in the industry
    expected retaliation
  69. t/f demographic, economic, political/legal, sociocultural, techonological, and global are the six elements comprising the industry environment
  70. t/f the five forces model is a firm level analytical model
  71. t/f switching costs, access to distribution channels, economies of scale, large numbers of competing firms, and slow industry growth are some of the entry barriers that may affect the threat of new entrants to an industry
  72. t/f suppliers are powerful when no satifactory substitutes are available, the selling industry is relatively more concentrated and swithcing costs are high
  73. t/f an attractive industry is one that is characterized by high entry barriers, suppliers and buyers with strong bargaining power, low threats from substitute products, and low rivalry among firms
  74. typically, fast industry growth increases an industry's rivalry
  75. the aging of the population, changes in ethnic composition and effects of the baby boom are
    demographic changes
  76. a goup of firms producing products that are close substitutes
  77. belief by customers that a product is unique
    product differentiation
  78. which of the following is NOT an entry barrier to an industry?
    expected competitor retaliation
    economies of scale
    customer product loyalty
    bargaining power of suppliers
    bargaining power of suppliers
  79. The threat of new entrants is increased if
    product differentiation in the industry is low
  80. ______ are powerful when they offer credible threat of forward integration
  81. upper limits on the prices a firm can charge are impacted by
    the cost of substitute products
  82. vision statements are used to create a better understanding of the organization's overall purpose and direction. Vision statements
    evoke powerful and compelling mental images
  83. Industry A is characterized by high fixed costs while Industry B has low fixed costs which industry would have a lower threat of new entrants? Higher degree of rivalry?
    Industry A, Industry A
  84. If you believed in a pure five forces model of above average returns which of the following things is least important? industry analysis, competitor analysis, analysis of general environment, analysis of resources, capabilities, and core competencies
    all are equally important
  85. If an industry has high exit barriers and high entrance barriers returns to the industry should be
    low and stable
  86. t/f firms implementing cost leadership strategies often sell no-frills standardized goods or services to the industry's most typical customers
  87. support activities in the value chain are generic across business strategies
  88. t/f A differentiator's product price is typically less than that of a cost leader
  89. t/f a risk of the differentiation strategy is that the firm's means of differentiation may eventually not provide value to the customer
  90. t/f McDonald's brand recognition is a fundamental source of differentiation, while the rigorous standardization of processes allows it to lower costs. Thust McDonald's is a classic example of the focused differentiation strategy
  91. a company using a narrow scope in its business strategy is limiting the
    group of product segments served
  92. providing products with features acceptable to customers at the lowest competitive price
    cost leadership strategy
  93. a firm successfully implementing a differentiationg strategy would expect
    to charge premium prices
  94. In the ___ stage of the industry life cycle, the emphasis on proitionduct design is very high, the intensity of competition is low and the market growth rate is low
  95. There is an emphasis on product variety prices are declining rapidly, and although the firm may be making a profit, cash flows may be negative
    growth stage
  96. In the ____ stage of the industry life cycle, there are many segments competition is very intense, and the emphasis on process design is high
  97. a market that mainly competes on the basis of price and has stagnant growth is characteristic of what life cycle stage
  98. as markets mature
    there is increasing emphasis on efficiency
  99. t/f firms can earn above average returns even if they do not develop or sustain a competitive advantage
  100. T/F the sustainability of a competitivie advantage depends upon the imitability of the core competence, the availability of substitutues for the core competence, and the rate of core competence obsolesence.
  101. The bargaining power of suppliers is enhanced under
    the following market condition
    dominance by a few suppliers
  102. High product differentiation is generally accompanied
    decreased emphasis on competition based on price
  103. An analysis of the economic segment of the external environment does NOT include
    A. interest rates.
    B. international trade.
    C. the strength of the U.S. dollar.
    D. the move toward a contingent work force.
    the move toward a contingent work force
  104. If an industry has high exit barriers and
    high entrance barriers, returns to the industry should be
    low and stable
  105. The value of a
    company in the market is a result of
    • its ROE & the value of additional operating
    • options (VOP).
  106. Which of the following is a risk (or pitfall) of cost
    A. cost cutting may lead to the loss of desirable features
    B. attempts to stay ahead of the competition may lead to unacceptable quality
    C. cost differences increase as the market matures
    D. producers are more able to withstand increases in suppliers' cost
    • attempts to stay ahead of the competition may
    • lead to unacceptable quality
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