Strategic and Entrepreneurial thinking midterm

entrepreneurship

process by which entrepreneurs undertake economic risk to innovate and exploit entrepreneurial opportunities

low cost provider strategy

achieving a cost based advantage over rivals by driving costs out of the business

broad differentiation strategy

differentiating the firm’s product or service from rivals in ways that appeal to a broad spectrum of buyers

focused low cost strategy

concentrating on a narrow buyer segment by having lower costs to serve niche members at a lower price

focused differentiation strategy

concentrating on a narrow buyer segment by offering buyers customized attributes that meet their specialized needs and tastes better than rivals’ products

best cost provider strategy

giving customers more perceived value for their expectations on key quality features, performance, and/or service attributes that match or exceed their price expectations

value creation

when a company with a good strategy provides products and services to consumers at a price they’re willing to pay while keeping costs low enough to make a profit

stakeholder

organizations, groups, or individuals who affect or are affected by a company’s actions

proactive

strategy elements that include planned initiatives to improve the company’s financial performance and secure a competitive edge

reactive

strategy elements developed on the fly in response to unanticipated developments and fresh market conditions

abandoned and superseded

strategy elements that no longer fit with the company’s ongoing strategy

customer value proposition

what will satisfy the buyers wants and needs at a price customers will consider a good value. The greater the value provided and the lower the price, the more attractive the value proposition is to customers

the fit test

test that determines if a strategy is a good fit with the external and internal aspects of the firm’s dynamic situation

competitive advantage test

test that determines if a strategy is helping the company achieve a sustainable competitive advantage

performance test

test determining if a strategy is producing superior performance as indicated by the firm’s profitability, financial and competitive strengths, and market standing

vision

statement saying what a company’s purpose is and what they want to ultimately accomplish.

mission

statement that describes how we will accomplish our goals. describes what an organization does and how it proposes to accomplish its vision

values

statement of principles to guide an organization as it works to achieve its vision and its mission, includes both internal and external interactions as well as ethical considerations

profit formula

creates a cost structure that allows for acceptable profits, given that pricing is tied to the customer value proposition. The lower the costs for a given value proposition, the greater the ability to be a moneymaker

macro environment

external analysis that captures the broad environment the company is in. Includes factors so important they’re strategically relevant, but frameworks are static and may not consider future factors. PESTEL analysis

political

the P in PESTEL. Captures pressure from governments, NGOs, and social movements

economic

the first E in PESTEL. Captures the pressures from growth rates/employment rates, interest rates, and price stability

sociocultural

the S in PESTEL. Captures the pressures from people values, attitudes, lifestyles, and demographics

technology

the T in PESTEL. Captures the pressure from innovations, advancements, and AI

environmental

the second E in PESTEL. Captures the pressure from weather/climate, climate change, and water use.

legal

the L in PESTEL. Captures the pressure from regulations, laws, mandates, and court decisions.

industry

set of incumbent firms with the same set of suppliers and buyers

rivalry

one of the five forces that refers to the competitive struggle between companies to gain market share from each other. function of competitive industry structure, industry growth, strategic commitments, and exit barriers

perfect competition

market where there are a high number of buyers and sellers, identical products, perfect information, and no barriers to entry or exit.

monopolistic competition

market structure where there are many firms selling similar but differentiated products. There are low barriers to entry/exit, and firms compete on quality, branding, and price.

oligopoly

market structure dominated by a small number of large firms that hold significant market power and interdependence

monopoly

market structure where one firm has exclusive possession of the market by a supplier of a product/service

threat of entry by potential competitors

aspect of 5 forces analysis that makes an industry less attractive because it reduces the industry’s overall profit potential, and it increases spending by incumbent firms

substitute products

one of the five forces that depicts the products from different businesses or industries that can satisfy similar customer needs

bargaining power of suppliers

one of the five forces that depicts the power of those in the industry that provide such inputs as material and labor.

customer bargaining power

one of the five forces that depicts the power of those who ultimately use the product or the intermediaries that distribute the product