Midterm 1 Business Strategy and Entrepreneurship Review

A set of 25 vocabulary flashcards covering key strategic frameworks, industry structures, value disciplines, and effectuation principles from the lecture notes.

Operational Effectiveness

Performing the same everyday business activities better, faster, or cheaper than competitors; a race where everyone eventually ties.

Strategic Positioning

Choosing a unique set of services to deliver a mix of value that sets your company apart from others, creating a choice rivals will have a hard time copying.

Trade-offs

Choosing what not to do in an activity; requires sacrifice and creates incompatibility that blocks imitation.

Active Fit

An interlocking, reinforcing system of activities where business strategies combine to strengthen each other, making it hard for competitors to copy the whole chain.

Supplier Power

A Porter's 5 Force where one or a few suppliers set prices and bargaining power because a business needs their item and is beholden to them.

Buyer Power

A Porter's 5 Force representing the buyer's ability to set price when switching costs are low and alternative options exist.

Threat of Substitutes

A Porter's 5 Force measuring how easily customers can replace an entire type of product.

Threat of New Entrants

A Porter's 5 Force measuring how easy it is for competitors to get into a market or industry.

Competitive Rivalry

A Porter's 5 Force measuring how intense direct competition is among existing businesses.

Direct Rivals

Direct competitors that sell the same type of product with slight variation or branding differences (e.g., Pepsi vs. cola).

Substitutes

Completely different alternative products that satisfy the same underlying customer need (e.g., water vs. soda).

Blue Ocean Strategy

A strategy focused on making competition irrelevant by creating a new market space instead of battling rivals for share in a crowded red market.

Value Disciplines Framework

A strategic business framework asserting that a company cannot be everything to everyone; to excel, a business must dominate in one area and remain good in the other two.

Operational Excellence

A value discipline delivering reliable products or services at the lowest cost with maximum convenience and efficient delivery (e.g., Walmart, IKEA, McDonald's).

Product Leadership

A value discipline offering the most cutting-edge, high-performing products on the market through creativity and risk-taking (e.g., Apple, Tesla, Nike).

Customer Intimacy

A value discipline providing tailored solutions, deep relationships, personal service, and customer loyalty (e.g., Nordstrom).

Strategic Failure (Value Disciplines)

The outcome resulting from attempting to chase all three value disciplines simultaneously rather than excelling in one and being good enough in the other two.

Causation

A goal-oriented management logic appropriate for predictable markets that starts with a fixed goal, relies on market research, and analyzes the best way to achieve it.

Effectuation

A disciplined entrepreneurial logic suited for uncertain markets that starts with available resources, creates new opportunities evolving through partnerships, and acts without predictive data.

Bird in Hand Principle

An effectuation principle that means starting with who you are, what you know, and who you know, rather than waiting for missing resources.

Affordable Loss Principle

An effectuation principle that dictates committing only what you can afford to lose in terms of money, time, or other resources.

Crazy Quilt Principle

An effectuation principle centered on bringing people together to figure things out through shared time, expertise, and knowledge.

Lemonade Principle

An effectuation principle focused on treating unexpected surprises and setbacks as creative opportunities to make something nice.

Pilot-in-Plane Principle

An effectuation principle that focuses on taking actions within your control rather than trying to predict the future.

System Sustainability

The outcome achieved when trade-offs make an activity system coherent and active fit makes it inimitable, working together to keep it sustainable.