Chapter 1
Competitive advantage: is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.
Sources of competitive advantage: 1.Structural Perspective “Higher profits result from better positioning” –Rivalry restraint, structural barriers to competition. 2.Resource/Capability Perspective “Higher profits result from unique resources and superior capability” –Resource/competence-based competition, rare, valuable, inimitable, non-substitutable .3.Information Perspective “Higher profits result from superior information”–Information asymmetry, adverse selection, moral hazard 4.Commitment Perspective “Higher profits result from specificity and timing” –Asset-specificity (correct governance), first mover advantage (correct strategy) 5.Connectivity Perspective “Higher profits result from network structure and corporate ties between businesses”–Alliances, dense network, structural holes
Strategic Management Process •Strategic Analysis–Goals and objectives, external environment, internal environment, intellectual capital •Strategic Formulation–Business-level strategy, corporate-level strategy, international strategy, new economy •Strategic Formulation–Strategic control, corporate governance, organizational design
Chapter 2
SWOT Analysis: •Strength •Weaknesses •Opportunities •Threats
Porter’s Five Forces Model of Industry Competition: 1.Threat of new entrants: –Profits of established firms in the industry may be eroded by new competitors – High entry barriers lead to low threat of new entries –Economies of scale –Product differentiation –Capital requirements –Switching costs –Access to distribution channels –Cost disadvantages independent of scale. 2.The bargaining power of buyers: –Force down prices –Bargain for higher quality