Glossary
- Acquisition
- When one company purchases another company.
- Adaptability
- A willingness and capacity to reshape supply chains when necessary.
- Agency problem
- The interest of individuals that act as agents to manage the company may not align with the interest of the firm’s stockholders.
- Agility
- The supply chain’s relative capacity to act rapidly in response to dramatic changes in supply and demand.
- Alignment
- Creating consistency in the interests of all participants in a supply chain.
- Anchoring and adjustment bias
- Individuals react to arbitrary or irrelevant numbers when setting financial or other numerical targets.
- Autonomy
- Whether an individual or team of individuals within an organization has the freedom to develop an entrepreneurial idea and then see it through to completion.
- Availability bias
- Readily available information is incorrectly assessed to also be more likely.
- Baby boomers
- The generation born between 1946 and 1964, corresponding with a population “boom” following the end of World War II.
- Backward integration strategy
- A strategy that involves a firm entering the business of one of its suppliers.
- Backward vertical integration
- a strategy that involves a buyer entering the industry that it purchases goods or services from
- Behavioral control
- A focus on specifying the actions that ultimately lead to results.
- Best value supply chains
- Supply chains that focus on the total value added to the customer as opposed to individual outcomes, such as speed or cost.
- Best-cost
- A business-level strategy followed by firms that charge relatively low prices and offers substantial differentiation.
- Bias of escalation of commitment
- To continue on a failing course of action even after it becomes clear that this may be a poor path to follow.
- Blue ocean strategy
- Creating a new, untapped market rather than competing with rivals in an existing market.
- Board insiders
- Members of the board of directors that are generally employed inside of the organization.
- Board of directors
- A group of individuals, either elected or appointed, that oversees the activities of an organization or corporation.
- Board outsiders
- Members of the board of directors that are generally employed outside of the organization.
- Boundaryless organization
- When the usual barriers between parts of the organization as well as barriers between the organization and others are removed.
- Bricolage
- Using whatever materials and resources happen to be available as the inputs into a creative process.
- Business risk
- The potential that a business operation might fail.
- Buyers
- Purchasers of the goods or services that the competitors in an industry create.
- CEO duality
- When the chief executive officer is also the chairman of the board of directors.
- Cash cows
- High market share units within slow-growing industries.
- Clan control
- Relying on shared traditions, expectations, values, and norms to lead people to work toward the good of their organization.
- Co-opetition
- A blending of competition and cooperation between two firms.
- Colocation
- When goods and services offered under different brands are located close to one another.
- Competitors
- The set of firms that produces goods or services within an industry.
- Concentration strategies
- Actions that firms use to try to compete successfully within only a single industry.
- Copyright
- Provides exclusive rights to the creators of original artistic works such as books, movies, songs, and screenplays.
- Core competency
- A skill set that is difficult for competitors to imitate, can be leveraged in different businesses, and contributes to the benefits enjoyed by customers within each business.
- Corporate raiders
- An individual or firm that purchases stock in another firm with the goal of an eventual takeover.
- Corporate social performance (CSP)
- The degree to which a firm’s actions honor ethical values that respect individuals, communities, and the natural environment.
- Corporation
- A legal form of ownership wherein shares of ownership are publicly traded in stock markets, and management is performed by professional executives.
- Cost
- The price paid for supply chain inputs.
- Cost leadership
- Generic strategy that offers products or services with acceptable quality and features to a broad set of customers at a low price.
- Cultural risk
- The potential for a company’s operations in a country to struggle because of differences in language, customs, norms, and customer preferences.
- Deliberate strategy
- Parts of the intended plan that an organization continues to pursue over time.
- Demand conditions
- The nature of domestic customers, especially whether they have high expectations of the goods and services that they buy.
- Differentiation strategy
- A generic positioning that attempts to convince customers to pay a premium price for its goods or services by providing unique and desirable features.
- Difficult to imitate
- Resources that cannot be easily duplicated by competitors and are often protected by various legal means, including trademarks, patents, and copyrights.
- Disruptive innovation
- An improvement that conflicts with, and threatens to replace, traditional approaches to competing within an industry.
- Distinctive competence
- A set of activities that an organization performs especially well.
- Diversification discount
- The tendency of investors to undervalue the shares of a diversified firm.
- Diversification strategies
- Involve a firm entering entirely new industries.
- Divestment
- Selling off part of a firm’s operations.
- Division of labour
- A process of splitting up a task into a series of smaller tasks, each of which is performed by a specialist.
- Dogs
- Low-market-share units within slow-growing industries.
- Dynamic capability
- The unique ability to improve, update, or create new capabilities, especially in reaction to changes in its environment.
- Economic risk
- The potential for a country’s economic conditions and policies, property rights protections, and currency exchange rates to harm a firm’s operations.
- Economic segment
- The portion of the general environment that involves economic and financial conditions.
- Economies of scale
- A cost advantage created when a firm can produce a good or service at a lower per unit price due to producing the good or service in large quantities.
- Effective corporate governance
- The processes, policies, and laws that govern an organization (often corporations) establish accountability and try to eliminate conflicts of interest associated with the principle-agent problems.
- Emergent strategy
- An unplanned direction that arises in response to unexpected opportunities and challenges.
- Enactment
- A theoretical perspective that contends that an organization can, at least in part, create an environment for itself that is beneficial to the organization by putting strategies in place that reshape competitive conditions in a favorable way.
- Entrepreneurial orientation (EO)
- The processes, practices, and decision-making styles of organizations that act entrepreneurially.
- Environment
- The set of external conditions and forces that have the potential to influence the organization.
- Environmental determinism
- A theoretical perspective that contends that organizations are limited in their ability to adapt to the conditions around them.
- Environmental segment
- The portion of the general environment that involves the natural environment.
- Exit barriers
- Factors that make it difficult for a firm to stop competing in an industry.
- Exporting
- Creating goods within a firm’s home country and then shipping them to another country where they are sold to customers by a local firm.
- Factor conditions
- The nature of raw material and other inputs that firms need to create goods and services.
- Fighting brand
- A lower-end brand that a firm introduces to try protect the firm’s market share without damaging the firm’s existing brands.
- Firm infrastructure
- How the firm is organized and led by executives.
- Firm strategy, structure, and rivalry
- How challenging it is for firms to survive domestic competition.
- First mover
- An initial entrant into a market.
- First-mover advantage
- When the initial move into a market allows a firm to establish a dominant position that other firms struggle to overcome.
- Five forces analysis
- A technique for understanding an industry by examining the interactions among competitors, potential new entrants, substitutes for the industry’s offerings, suppliers to the industry, and the industry’s buyers.
- Flexibility
- A supply chain’s responsiveness to changes in customers’ needs.
- Focus strategies
- Generic business approaches that involve targeting a relatively narrow niche of potential customers.
- Focused cost leadership
- A generic business strategy that requires competing based on price to target a narrow market.
- Focused differentiation
- A generic business strategy that requires offering unique features that fulfill the demands of a narrow market.
- Foothold
- A small position that a firm intentionally establishes within a market in which it does not yet compete.
- Forward vertical integration
- A strategy that involves a supplier entering the industry that it supplies inputs to.
- Forward vertical integration a strategy
- Involves a supplier entering the industry to which it supplies product.
- Framing
- The way information is presented alters the decision an individual makes.
- Franchising
- An organization (called a franchisor) grants the right to use its brand name, products, and processes to other organizations (known as franchisees) in exchange for an up-front payment (a franchise fee) and a percentage of franchisees’ revenues (a royalty fee).
- Functional structure
- An organizational arrangement whereby employees are divided into departments that each handle activities related to an area of the business, such as marketing, production, human resources, information technology, and customer service
- Fundamental attribution error
- When good outcomes are attributed to personal characteristics (e.g., intelligence), but undesirable outcomes are attributed to external circumstances (e.g., the weather).
- General environment (or macroenvironment)
- Overall trends and events in society such as social trends, technological trends, demographics, and economic conditions.
- Generation X
- The generation born between 1965 and 1980; the X symbolizes the unknown nature of this generation.
- Generation Y
- The generation following Generation X; this group is also known as millennials as well as “The Trophy Generation.”
- Generic strategy
- A general way of positioning a firm’s business-level strategy within an industry.
- Global strategy
- To sacrifice responsiveness to local preferences in favor of efficiency.
- Goals
- Narrower aims that organizations pursue to serve their visions and missions.
- Golden parachute
- A financial package (often including stock options and bonuses worth millions of dollars) given to executives likely to lose their jobs after a takeover.
- Greenfield venture
- A foreign operation that a firm creates entirely by itself.
- Greenmail
- An unfriendly firm forces a target company to repurchase a large block of stock at a premium to thwart a takeover attempt.
- Hidden gems
- CEOs who lack fame but possess positive reputations.
- Hindsight bias
- Mistakes seem obvious after they have already occurred.
- Horizontal integration
- Pursuing a concentration strategy by acquiring or merging with a rival.
- Horizontal linkages
- Relationships between equals in an organization.
- Hostile takeover
- An attempt to purchase a company that is strongly resisted by the targeted firm’s CEO and/or board.
- Hypercompetition
- A situation that involves very rapid and unpredictable moves and countermoves that can undermine competitive advantages.
- Icons
- CEOs who possess both fame and strong reputations.
- Industry (or competitive environment)
- Multiple organizations that collectively compete with one another by providing similar goods, services, or both.
- Informal linkages
- Unofficial relationships such as personal friendships, rivalries, and politics.
- Innovativeness
- The tendency to pursue creativity and experimentation.
- Institutional investors
- Organizations that invest large sums of money into a broad portfolio of holding, such as banks, retirement funds, mutual funds, and pension funds.
- Institutional theory
- A theoretical perspective that describes the extent to which firms copy one another’s strategies.
- Intangible resources
- Resources that are difficult to see, touch, or quantify, such as the knowledge and skills of employees, a firm’s reputation, and a firm’s culture.
- Intellectual property
- The legal rights that result from intellectual activity in the industrial, scientific, literary, and artistic fields (Canadian Intellectual Property Office, 2014).
- Intellectual property rights
- The ability of an organization to protect intangible goods such as movies, software, and video games from piracy.
- Intended strategy
- The plan that an organization hopes to execute.
- Joint venture
- A cooperative arrangement that involves two or more organizations, each contributing to the creation of a new entity.
- Judgments about correlation and causality
- To make inaccurate attributions about the causes of events.
- Just-in-time inventory management (JIT)
- A production system that conserves space and lowers costs by requiring inputs to arrive at the moment they are needed.
- Legal segment
- The portion of the general environment that involves the law and courts.
- Leveraged buyout (LBO)
- A company that is purchased through significant debt.
- Licensing
- One organization grants another the right to create its product, often using patented technology, in exchange for a fee.
- Limited liability company (LLC)
- A form of ownership that is granted wherein owners are not personally responsible for debts that the LLC accumulates (as in a corporation) and the LLC can be run in a flexible manner (as in a partnership).
- Liquidation
- Shutting down portions of a firm’s operations, often at a tremendous financial loss.
- Management by objectives (MBO)
- A process wherein managers and employees work together to create goals.
- Market development
- Trying to sell existing products within new markets.
- Market penetration
- An attempt to gain additional share of existing markets using existing products.
- Marketing mix
- The four Ps (product, price, place, and promotion) that firms use to offer customers a coherent and persuasive message.
- Matrix structures
- An organizational arrangement that relies heavily on cross-functional teams that each work on a different project.
- Merger
- The joining of two similarly sized companies into one company.
- Misunderstandings about sampling
- To draw broad conclusions from small sets of observations instead of more reliable sources of information derived from large, randomly drawn samples.
- Mobility barriers
- Factors that make it unlikely or illogical for a firm to change strategic groups over time.
- Multidivisional structure
- An organizational arrangement whereby employees are divided into departments based on products, services, and/or geographic regions.
- Multidomestic strategy
- To sacrifice efficiency in favor of responsiveness to varying preferences across countries.
- Multinational corporation (MNC)
- A firm that has operations in more than one country.
- Multipoint competition
- A situation in which a firm faces the same rival in more than one market.
- Mutual forbearance
- A situation in which rivals do not act aggressively because each recognizes that the other can retaliate in multiple markets.
- Nationalization
- The seizure of privately owned business operations by a national government.
- Nonrealized strategy
- Parts of the intended plan that are abandoned.
- Nonsubstitutable
- Resources that exist when competitors cannot find alternative ways to gain the benefits that a resource provides.
- Offshoring
- The relocation of a business activity to another country.
- Omnibus bill
- A proposed law that covers a number of diverse or unrelated topics.
- Opportunities
- Events and trends that create chances to improve an organization’s performance level.
- Organizational chart
- A diagram that depicts how firms’ structures are built using two basic building blocks: vertical linkages and horizontal linkages.
- Organizational control systems
- Allow executives to track how well the organization is performing, identify areas of concern, and then take action to address the concerns.
- Organizational culture
- Values and norms embraced by an organization that determine how people interact with other organizational members as well as external stakeholders.
- Organizational structure
- How tasks are assigned and grouped together with formal reporting relationships.
- Output control
- A focus on measurable results within an organization.
- Overconfidence bias
- To be more confident in your abilities to predict an event than logic suggests is actually possible.
- PESTEL analysis
- The examination of political, economic, social, technological, environmental, and legal factors and their implications for an organization.
- Partnership
- A legal form of business wherein two or more partners share ownership of a firm.
- Patents
- Legal decree that protects inventions from direct imitation for a limited period of time.
- Piracy
- Theft of trademark or copyrighted material.
- Place
- A physical purchase point as well as a distribution channel.
- Poison pill
- An attempt to make the firm’s stock unattractive to raiders by letting shareholders buy stock at a discount, which creates a conversion of equity to debt that makes the firm less attractive.
- Political risk
- The potential for government upheaval or interference with business to harm an operation within a country.
- Political segment
- The portion of the general environment that involves governments.
- Portfolio planning
- A process that helps executives make decisions involving their firms’ various industries.
- Potential new entrants
- Firms that do not currently compete in an industry but might join the industry in the future.
- Price
- The amount firms charge for their goods or services.
- Price sensitive
- The extent to which a price increase makes a buyer less likely to purchase an item.
- Proactiveness
- The tendency to anticipate and act on future needs.
- Product
- Goods and services a firm sells to customers.
- Product development
- Creating new products to serve existing markets.
- Promotion
- The communications used to market a product, including advertising, public relations, and other forms of direct and indirect selling.
- Quality
- The relative reliability of supply chain activities.
- Quality circle
- A formal group of employees that meet regularly to brainstorm solutions to organizational problems.
- Question marks
- Low-market-share units within fast-growing industries.
- Realized strategy
- The plan of action that an organization actually follows.
- Related and supporting industries
- The extent to which firms’ domestic suppliers and other complementary industries are developed and helpful.
- Related diversification
- When a firm moves into a new industry that has important similarities with the firm’s existing industry or industries.
- Representativeness
- Use of stereotypes of similar occurrences when making judgments or decisions.
- Reshoring
- The relocation of jobs that had been sent overseas back to a firm’s home country.
- Resource-based theory
- A theory that contends that the possession of strategic resources can provide an organization with competitive advantages over its rivals.
- Retrenchment
- Reducing the size of part of a firm’s operations, often through laying off employees.
- Risk taking
- The tendency to engage in bold rather than cautious actions.
- SWOT analysis
- A technique for understanding a firm’s situation by considering its strengths and weaknesses, along with the opportunities and threats that exist in the firm’s environment.
- Satisficing
- To settle for the first acceptable alternative instead of seeking the best possible (optimal) decision.
- Scoundrels
- CEOs who display high levels of relative fame but low levels of reputation.
- Sensitivity-training groups (or T-groups)
- Groups of people that meet to discuss emotions, feelings, beliefs, and biases about workplace issues to gain greater understanding of themselves and others.
- Shark repellent
- Defenses against takeover attempts.
- Silent killers
- CEOs who are overlooked and ignored sources of harm to their firms.
- Simple structure
- An arrangement that does not rely on formal systems of division of labor, often because one person performs all the tasks that the organization needs to accomplish.
- Social entrepreneurship
- Entrepreneurial actions where both economic and social value creation occur.
- Social segment
- The portion of the general environment that involves demographics and cultural trends.
- Sole proprietorship
- A firm that is owned by one person.
- Speed (cycle time)
- The time duration from initiation to completion of the production and distribution process.
- Spin-off
- Creating a new company whose stock is owned by investors out of a piece of a bigger company.
- Stakeholders
- Individuals and groups that have an interest to stake a claim in an organization.
- Stars
- High-market-share units within fast-growing industries.
- Strategic alliance
- A cooperative arrangement between two or more organizations that does not involve the creation of a new entity.
- Strategic groups
- Sets of firms that follow similar strategies.
- Strategic ploy
- A specific move designed to outwit or trick competitors.
- Strategic supply chain management
- The use of supply chains as a means to create competitive advantages and enhance firm performance.
- Strategy as pattern
- The extent to which a firm’s actions over time are consistent.
- Strategy as perspective
- How executives interpret the competitive landscape around them.
- Strategy as position
- A firm’s place in the industry relative to its competitors.
- Stuck in the middle
- A situation in which a business-level strategy does not offer features that are unique enough to convince customers to buy its offerings and its prices are too high to compete effectively on based on price.
- Substitutes
- Offerings from other industries that fulfill the same need or a very similar need as an industry’s products or services.
- Suppliers
- Providers of inputs that the competitors in an industry need to create goods or services.
- Supply chain
- A system of people, activities, information, and resources involved in creating a product and moving it to the customer.
- Sustained competitive advantage
- A competitive advantage that will endure over time.
- Tangible resources
- Resources that can be readily seen, touched, and quantified, such as physical assets, property, plant, equipment, and cash.
- Technological segment
- The portion of the general environment that involves scientific advances.
- Threats
- Events and trends that may undermine an organization’s performance.
- Trademarks
- A word (or words), a design, or a combination of these used to identify the goods or services of one person or organization.
- Traditionalists
- The generation born between 1925 and 1946 that fought in World War II and lived through the Great Depression.
- Transaction cost economics
- A theory that centers on whether it is cheaper for a firm to make or to buy the products that it needs.
- Transnational strategy
- Involves balancing the desire for efficiency with the need to varying preferences across countries.
- Triple bottom line
- An approach to assessing performance that emphasizes the concerns of people (social responsibility) and the planet (environmental sustainability) in addition to profit.
- Unity of command
- The principle that each person within an organization should only report directly to one supervisor.
- Unrelated diversification
- When a firm enters an industry that lacks any important similarities with the firm’s existing industry or industries.
- Value chain
- A tool that charts the path by which inputs, including employees, create products and services for sale to clients & customers.
- Vertical integration
- When a firm gets involved in new portions of the value chain.
- Vertical linkages
- Relationships within an organizational structure that show the lines of responsibility through which a supervisor delegates authority to subordinates, oversees their activities, evaluates their performance, and guides them toward improvement when necessary.
- Vision
- What the organization hopes to become in the future.
- White knight
- A firm that rescues a target firm by offering a friendly takeover as an alternative to a hostile one.
- Wholly owned subsidiary
- A business operation in a foreign country that a firm fully owns.
