Strategic Management: Chapter 3 Internal Analysis – Flashcards
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Its profitability is greater than the average profitability of all companies in its industry.
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A company has competitive advantage when?
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What a company is able to maintain above-average profitability over a number of years.
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Sustained competitive advantage?
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Competitive advantage.
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What is the primary objective of strategy?
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Firm-specific strengths that allow a company to differentiate its products and/or achieve substantially lower costs to achieve a competitive advantage.
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Distinctive Competencies?
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Resources and capabilities.
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Distinctive competencies arise from?
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Asset of a company.
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Resource?
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Tangible and intangible
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Types of resources.
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Physical entities, such as land, buildings, equipment, inventory, and money.
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Tangible resource?
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Nonphysical entities such as brand names, company reputation, experiential knowledge, and intellectual property, including patients, copyrights, and trademarks.
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Intangible resource?
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They enable a company to create a strong demand for its products and/or lower its costs.
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Resources are most valuable when?
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They are rare, in that they are barriers to imitation.
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Valuable resources are likely to lead to sustainable competitive advantage if?
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A company's skills at coordinating its resources and putting them to productive use.
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Capabilities?
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(1) Value customers place on products (2) Price company charges for product (3) Cost of creating product
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A company's profitability depends on what? (At the most basic level)
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The idea that a company is a chain of activities that transforms inputs into outputs that customers value.
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Value Chain
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Activities related to the design, creation, and delivery of the product, its marketing and its support and after-sales service.
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Primary activities
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Activities of the value chain that provide inputs that allow the primary activities to take place.
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Support activities
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Research and development, production, marketing and sales, and customer service.
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Primary activities include:
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Material Management (logistics), HR, Info. systems, and company infrastructure.
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Support activities include:
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The output produced per employee.
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Employee Productivity
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Customers perceive that its attributes provide them with higher utility than the attributes of products sold by rivals.
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A product has superior quality when?
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Quality as excellence and quality as reliability.
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Customers evaluate quality in what two categories?
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Development of products that are new to the world or have superior attributes to existing products.
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Product Innovation
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Development of a new process for producing products and delivering them to customers.
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Process innovation
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Time that it takes for a good to be delivered or a service to be performed.
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Customer response time
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Net profit/invested capital
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ROIC=?
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What is left over after the government takes its share in taxes.
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Net profit
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the amount that is invested in the operations of a company: property, plant, equipment, inventories, and other assets.
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Invested Capital
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Factors that make it difficult for a competitor to copy a company's distinctive competencies.
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Barriers to imitation
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Pankaj Ghemawat
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Who states that, "A major determinant of the capability of competitors to rapidly imitate a company's competitive advantage is the nature of the competitor's prior strategic commitments."
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The ability of an enterprise to identify, value, assimilate, and use knew knowledge.
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Absorptive capacity
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Inertia, prior strategic commitments, the Icarus Paradox
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Why companies fail?
