BUS 345

Strategy

A long-term plan of action designed to achieve a specific goal or competitive advantage.

Competitive advantage

A condition that allows a company to outperform competitors by creating more value (through lower cost or differentiation).

Strategic management

The process of analyzing, planning, implementing, and controlling strategies to achieve organizational goals.

Vision

A statement describing what an organization wants to become in the future.

Product oriented

Focuses primarily on improving and selling the product itself rather than on customer needs.

Customer oriented

Focuses on understanding and satisfying customer needs and preferences.

External vs. Internal environment

External: Factors outside the firm that affect it (economy, competitors, laws). Internal: Resources and capabilities inside the firm (employees, culture, finances).

Elasticity

A measure of how much one variable responds to changes in another (often price and demand).

Strategic intent

A long-term ambition that drives the company’s strategy and resource allocation.

Mission

Defines the organization’s purpose—what it does, for whom, and how.

Values

Core beliefs and principles that guide behavior and decision-making.

Economies of scale and scope

Cost advantages from producing more products or offering multiple products.

Sunk cost

Money already spent and cannot be recovered.

Opportunity cost

The value of the next best alternative given up.

Purpose of External Environment Analysis

To identify opportunities and threats in the macro-environment that affect strategy.

Game theory

The study of strategic interactions where the outcome depends on the actions of multiple decision-makers.

Cost price elasticity

Measures how demand for one product changes when the price of another product changes.

Six Segments of the External Environment

Political, Economic, Social, Technological, Ecological, and Legal.

Industry environment analysis

Examines competition and profitability within an industry.

Five forces model

Analyzes new entry, substitutes, suppliers, buyers, and rivalry to understand industry dynamics.

Internal analysis

Evaluates a firm’s resources, capabilities, and core competencies.

VRIN

Must be Valuable, Rare, Inimitable, Non-substitutable for maintaining competitive advantages.

VRIO

A tool for evaluating firm resource endowments: Valuable, Rare, Inimitable, Organized to capture value.

Core Rigidity

When a company’s strengths become weaknesses due to over-reliance on past successes.

System of activities

How a company’s activities fit together to support its strategy, important in differentiation.

Generic business strategies

Including Cost Leadership, Differentiation, and Focus (cost focus or differentiation focus).

Razor blade business model

A business model where the main product is cheap but complementary goods are expensive.

Platform wars

Network effects where the value of a product increases as more people use it.

Core Principles of a Differentiation Strategy

Offer unique features, build a strong brand, invest in innovation, provide superior service, charge premium prices.

Core Principles of a Low-Cost Strategy

Efficient operations, tight cost control, standardized products, economies of scale.

Cost Drivers in Cost Leadership Strategy

Including scale, learning effects, capacity utilization, input costs, and technology.

Value Drivers in Differentiation Strategy

Including product features, quality, brand reputation, customer service, and customization.