MBA 520: Corporate Strategy vs. Business-Level Strategy Flashcards

Vocabulary flashcards covering core topics from MBA 520, including corporate strategy, business-level strategy, synergies, strategic positioning, and Porter's generic strategies.

Corporate Strategy

Strategy that determines the overall scope of the organization by deciding which businesses to own, enter, acquire, sell, or leave, and aims to create value beyond the sum of individual business units.

Business-Level Strategy

Strategy that focuses on how an individual business unit creates and sustains competitive advantage and beats competitors in its specific market.

The Better-Off Test

A corporate strategy evaluation tool asking whether an organization creates more value by owning a business unit than it would by not owning it.

Positive Synergy

A condition represented by $1 + 1 > 2$, where business units owned together create more combined value than they would operating separately.

Negative Synergy

A condition represented by $1 + 1 < 2$, where combining business units destroys overall value due to issues such as culture clashes, strategic conflict, and execution failures.

Strategic Positioning

The deliberate choice of target customers, unique activities, and tradeoffs to occupy a distinct position in the market, including explicitly deciding what an organization will NOT do.

Cost Leadership

A generic strategy aimed at becoming the lowest-cost producer in an industry through efficient operations, tight cost controls, scale economies, and process discipline.

Differentiation

A generic strategy aimed at offering something unique that customers value—such as through brand, innovation, design, or service—to increase customer Willingness to Pay ($\text{WTP}$).

Focus Strategy

A generic strategy in which a firm intentionally serves a specific, smaller market segment or niche better than any competitor.

Value Creation

The total economic value generated by a firm, defined as Willingness to Pay minus Supplier Opportunity Cost ($\text{WTP} - \text{Supplier Opportunity Cost}$).