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Midterm

BUS 478 Study Guide - Midterm Guide: Strategic Management, Competitive Advantage, Product Differentiation


Department
Business Administration
Course Code
BUS 478
Professor
Rui Jorge Basto da Silva
Study Guide
Midterm

This preview shows pages 1-2. to view the full 6 pages of the document.
Midterm 1 Notes
CHAPTER 1 NOTES
THESE NOTES ARE MADE FROM THE TESTBOOK AND TEST
BANK!!!!!!!!!
STRATEGIC COMPETITIVENESS
Strategic competitiveness - Strategic is achieved when a firm successfully formulates
and implements a value-creating strategy
Strategy is an integrated and coordinated set of commitments and actions designed to
exploit core competencies and gain a competitive advantage
Competitive advantage when a firm implements a strategy that creates superior value
for customers and that its competitors are unable to duplicate or find too costly to
imitate.
No C.A is permanent
Above average returns excess returns of what an investors expected to earn from
other investments with similar amounts of risk - Risk is in investors uncertainty bout
gains/losses.
Strategic management process - is the full set of commitments, decisions and action
required for a firm to achieve strategic competitiveness and earn above-averae resturns
Process: involves analysis, strategy, and performance
1. Analyse its
external environment and internal organizations
to determine
resource capabilities and core-competencies (this is what the strategy will
be based on)
a. With this info:
2. Strategy portion entails formulation and strategy implementation.
3. Performance the company takes actions to enact new strategy to achieve
above average returns
Two models used to gather info required in determining the best strategy

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INDUSTRIAL ORGANIZATION (I/O) MODEL.
IO Model suggest that the external environment is the primary determinant of a firm’s
strategic actions. EXTERNAL
Identifying and then operating effectively in an attractive industry or segment are
the keys to success
The industry that a company chooses to compete in has a stronger influence on
performance than the choices managers make inside the organization
Performance is determined by
o Economies of scale,
o Barriers to entry
o Diversification
o Product differentiation
o Degree of concentration of firms in industry
o Market frictions
Grounded in economics with 4 assumptions:
o 1) external environment imposes pressures and constraints that determine
the strategies that would result in above-average returns.
o 2) most firm competing in an industry control similar resources and pursue
similar strategies
o 3) resources used to implement strategies are highly mobile across firms so
any resource difference that develops is short-lived
o 4) decision markers are assumed to be rational and profit-maximizers
5 forces model - is used to find the most attractive industry suggest firms should
target the industry with the highest potential for above-average returns and then
implement either a cost-leadership or differentiation strategy.
Research findings show that 20% of a firm’s profitability is explained by the industry in
which it chooses. 36% is explained by firm’s characteristics and actions.
RESOURCE BASED MODEL
RB model suggest that a firm’s unique resources and capabilities are the critical link to
strategic competitiveness INTERNAL
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