Sevi Vocab

STRATEGY

A firm's long-term plan of action designed to achieve competitive advantage and create value by aligning resources with opportunities in the environment.

STRATEGIC MANAGEMENT

The process of analyzing, formulating, and implementing decisions that allow a company to achieve and sustain competitive advantage.

COMPETITIVE ADVANTAGE

A condition where a firm creates more economic value than rivals, allowing it to outperform them.

COMPETITIVE PARITY

When two or more firms create the same level of value, leading to similar performance.

COMPETITIVE DISADVANTAGE

When a firm creates less value than its rivals, resulting in underperformance.

STRATEGIC POSITIONING

The unique placement of a firm in its industry, determined by how it competes on cost, differentiation, or focus.

STAKEHOLDERS (INTERNAL AND EXTERNAL)

Internal stakeholders: Employees, managers, owners—directly involved in the organization.

External stakeholders: Customers, suppliers, government, communities—affected by or affecting the organization.

PYRAMID OF SOCIAL RESPONSIBILITY

A framework (Carroll's CSR Pyramid) showing that businesses have four levels of responsibility: economic (be profitable), legal (obey the law), ethical (do what's right), and philanthropic (contribute to society).

STAKEHOLDER IMPACT ANALYSIS

A process to evaluate the potential effects of business decisions on different stakeholder groups.

VALUE CREATION

The process of delivering products/services that are worth more to customers than the costs of production, generating profits and satisfaction.

EDGE FRAMEWORK

A model for strategy emphasizing Ethical, Dynamic, Global, and Entrepreneurial practices for sustainable advantage.

PROFIT POOL

The total profits earned in an industry at all points in the value chain, not just revenues.

WTP VS WTS

Willingness to Pay (maximum a customer is ready to pay) vs. Willingness to Sell (minimum a supplier/firm will accept). The gap represents potential value creation.

BUSINESS LEVEL STRATEGY

How a firm competes within a specific industry or market (cost leadership, differentiation, or focus).

DIFFERENTIATION

Strategy of providing unique products or services that customers perceive as superior and are willing to pay more for.

OVERALL COST LEADERSHIP

Strategy of being the lowest-cost producer in the industry while maintaining acceptable quality.

FOCUS COST

Strategy of pursuing cost leadership within a specific niche market.

FOCUS DIFFERENTIATION

Strategy of offering unique features to a narrow target segment.

EXPERIENCE CURVE

The idea that costs decline with cumulative production experience, as firms become more efficient.

ECONOMIES OF SCALE

Cost advantages achieved when production volume increases, spreading fixed costs over more units.

"STUCK IN THE MIDDLE"

A firm's poor strategic position when it fails to achieve either cost leadership or differentiation, leading to weak performance.

INDUSTRY LIFE CYCLE

The stages of an industry's evolution: introduction, growth, shakeout, maturity, and decline.

DECLINE STAGE STRATEGIES

Strategic responses to industry decline, including exit, harvesting, consolidation, or retrenchment.

HARVESTING

Gradually reducing investment in a product or business to maximize short-term profits or cash flow.

CONSOLIDATING

Strengthening market position by acquiring rivals or increasing efficiency during industry decline.

RETRENCHMENT STRATEGY

Reducing scope, cutting costs, or divesting assets to stabilize and recover during financial difficulties.