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33 Cards in this Set
- Front
- Back
- 3rd side (hint)
Indicators of how well a company's strategy is working
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1) achievement of financial and Strategic objectives
2) if financial performance is above industry standards 3) gaining customers and market share |
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specific signs of how well a company's strategy is working
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1) whether sales are growing faster, slower or the same as the market as a whole
2) whether the company is acquiring customers at an attractive rate 3) whether the films image and reputation is growing stronger or weaker 4) whether the firms profit margins are increasing or decreasing and compare to competitors 5) trends in the firms net profits and return on on investment relative to competitors 6) whether the company's financial strength and credit rating are improving or declining 7) how well the company stacks up to rivals price, quality, features, customer service, ect. 8) whether key measures of operating performance are improving, remaining steady, or deteriorating |
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signs of weak strategy or execution
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sluggish financial performance and second-rate market accomplishments
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competitive assets
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a company's resources and capabilities
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resource and capability analysis
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Step 1. identify the company's competitive resources and capabilities
Step 2. examine them more closely to ascertain which are the most competitively important and whether they can support a sustainable competitive advantage. |
a tool used to size up a company's competitive assets and determine if they can support a sustainable competitive advantage.
step 2 involves applying the four tests of a resource's competitive power |
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resource
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a productive input or competitive asset that is owned or controlled by the firm
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capability
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the capacity of a firm to perform some internal activity competently
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capabilities are developed through deployment of resources
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types of resources
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tangible - physical, financial, technological, and organizational resources
intangible - human and intellectual assets, brands, image, reputation, relationship with suppliers, company culture, |
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Two approaches to finding out a company's capabilities
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1) looking at a company's list of resources and considering whether the company has built up any capabilities from them
2) survey the functions the firm performs to find capabilities associated with each function |
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Resource bundle
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A closely integrated set of competitive assets centered around one or more cross functional capability
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VRIN tests for sustainable competitive advantage
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Asks if resources are
Valuable - makes company more effective competitor Rare Inimitable Non-substitutable |
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Social complexity & causal ambiguity
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Factors that inhibit rival's ability to imitate a firm's resources and capabilities.
Social complexity - company culture, trust based relationships with buyers and suppliers Casual ambiguity - makes it hard for other firms to figure out how complex resources contribute to competitive advantage |
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Dynamic capability
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The ongoing capacity of a company to modify its existing resources and capabilities and create new ones
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SWOT analysis
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Strengths
Weaknesses market Opportunities external Threats |
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Competence
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An activity that a firm had learned to perform with proficiency
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I.e. A capability
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Core competence
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An activity that a company performs proficiently that is also central to its strategy and competitive success
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Distinctive competence
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A competitively important activity that a firm performs better than its rivals.
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A competitively superior internal strength
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Strength vs weakness
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Strength - represents a competitive asset
Weakness - shortcomings that make a competitive liability |
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types of weaknesses
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1) inferior or unproven skills, expertise, or intellectual capital in important areas
2) deficiencies in competitively important physical , organizational, or intangible assets 3) missing of inferior capabilities in key areas |
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most profitable market opportunities
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match up well with the firm's competitive assets
offer the best prospect for growth and profitability present the most potential for competitive advantage |
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the 2 most important parts of SWOT analysis
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1) drawing conclusions from SWOT listings
2) translating these conclusions into strategic actions |
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questions that SWOT analysis answers
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1) what are the attractive aspects of the company's situation?
2) What aspects are of most concern? 3) are the internal strengths and competitive assets strong enough to allow the company to compete successfully? 4) are the weaknesses and competitive deficiencies small enough to be easily correctable, or are they fatal? 5) do strengths outweigh weaknesses enough? 6) are there attractive market opportunities suited to the company's strengths? 7) does the company have the resources to pursue said opportunities 8) on a scale of 1 - 10, what are the company's future prospects? |
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the basis of good strategy
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a company's strengths should always be the basis of its strategy. Emphasising on the best competitive assets is the safest route to attracting customers and competing successfully.
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steps in SWOT analysis
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increases vulnerability
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the higher a company's prices are above its competitors, the more vulnerable it becomes
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decreases vulnerability
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the greater the amount of customer value a company can offer relative to its rivals, the less vulnerable it becomes.
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value chain
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identifies the primary activities and related supporting activities that create customer value
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types of activities in a value chain
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primary activities - foremost in creating value for customers
support activities - facilitate and enhance the performance of the primary activities |
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the primary purpose of value chain analysis
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to compare, activity by activity, how effectively and efficiently a company delivers value to is customers relative to rivals.
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Benchmarking
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Comparing how different companies perform various value chain activities, and then making cross company comparisons on how cost effective each company is
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Objective of benchmarking
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Identify the best practices and emulate them
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Improving internal value chain activities
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Improve cost effectiveness
Improve delivery of value to customers Improve supplier related activities Improve forward channel activities |
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Competitive strength assessment
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Step 1) make list of industry key success factors
Step 2) assign weight to each measure of competitive strength Step 3) calculate weighted strength of each competitor on each strength measure Step 4) sum each companies' weighted strength Step 5) use step 4 to draw conclusions |
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