MGMT 386 Lecture Notes - Lecture 11: Pest Analysis, Iso 9000, Jetblue

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20 May 2018
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A firms theory about how to gain competitive advantages
competitive advantage
ability to create more economic value than rival firms
What is Systems theory
SWOT
What is SWOT analysis?
Strengths, weaknesses, opportunities, threats
What is the process we use to create a competitive advantage
Mission-> objectives-> external/internal analysis-> strategic choice-> strategy implementation ->
competitive advantage
SMART (high quality objectives)
Specific, Measurable, Attainable, Realistic, Timely
Economic Measures
Compare the firms return to its cost of capital rather than average return in the industry
Accounting Measures
ROA,ROE, gross profit, EPS, current ratio, quick ratio, debt to asset, debt to equity, inventory turnover
What is economic value added
general and local environment
business level strategy
Competing in single industry, cost leadership and differentiation (ex: local florist, JetBlue)
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corporate level strategy
Competing in multiple industries, strategic alliance (ex: walmart, GE, apple)
Chapter 2
...
external environment
Industry as a whole- fast food
Identifies threats and opportunities, takes time and effort, includes assessment of general and local
environment, provides essential of likelihood of profitability in an industry
General environment
DEPICT analysis and PEST analysis
DEPICT
Demographic, economic, political, international events, cultural, technology
-measures factors or forces examining the broad environment level
PEST analysis
Political, Economic, Social and Technological (more detailed analysis than DEPICT)
Local/industry environment
SCP model, Porter 5 forces (SERBS)
SCP (structure conduct performance)
Industry structure-> firm conduct-> performance
Michale porter 5 forces (SERBS)
Threat of supplier, entry, rivalry, buyers, substitutions
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Threat of suppliers
Extent to which firms who make critical resources available have leverage over firms in the industry
(Less supplier= threat= supplier have high power over firm
A lot supplier= low/weak threat= suppliers have low power over the firms)
threat of entry
Extent to which new firms can easily enter the industry and threaten to compete, likelihood of a new
firm coming into the industry
-economies of scale, product differentiation, government regulations, cost advantages independent of
scale
Threat of Rivalry
Level of intensity of competition among direct competitors
Threat of Substitutes
Level of intensity of competition among indirect competitors
Threat of buyers
Extent to which the buyer has power over firm in the industry
(Many buyers= low threat= buyers have low power
Less buyers= high threat= buyers have a lot power)
What are complementary goods?
Not competing but adds additional value when combined with another product or service
In what industry structure are certain opportunities available
Fragmented, emerging, maturing, declining
Chapter 3
...
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Document Summary

A firms theory about how to gain competitive advantages competitive advantage ability to create more economic value than rival firms. What is the process we use to create a competitive advantage. Mission-> objectives-> external/internal analysis-> strategic choice-> strategy implementation -> competitive advantage. Compare the firms return to its cost of capital rather than average return in the industry. Roa,roe, gross profit, eps, current ratio, quick ratio, debt to asset, debt to equity, inventory turnover. What is economic value added general and local environment business level strategy. Competing in single industry, cost leadership and differentiation (ex: local florist, jetblue) corporate level strategy. Competing in multiple industries, strategic alliance (ex: walmart, ge, apple) Identifies threats and opportunities, takes time and effort, includes assessment of general and local environment, provides essential of likelihood of profitability in an industry. Measures factors or forces examining the broad environment level. Political, economic, social and technological (more detailed analysis than depict)

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