Chapter 6: Strengthening a Company's Competitive Position

Vocabulary flashcards covering offensive and defensive strategies, scope of operations, and strategic alliances from the Chapter 6 Study Guide.

Offensive Strategies

Aggressive moves used to improve a company's market position by offering equal or better products at lower prices, leapfrogging competitors with new technology, or pursuing disruptive product innovations.

Blue-Ocean Strategy

An offensive approach that seeks to gain a dramatic, durable competitive advantage by abandoning efforts to beat out rivals in existing markets and instead inventing a new industry or market segment that renders existing competitors irrelevant and creates new demand (e.g., Etsy).

Preemptive Strike

An offensive move that involves moving first to secure advantageous competitive assets or limited resources that rivals cannot readily match or duplicate.

Guerrilla Warfare (Hit-and-Run)

Surprise tactical moves (such as deep price cuts or promotional bursts) used primarily by small-to-medium-sized challengers to grab sales from complacent or distracted rivals.

Defensive Strategies

Strategies designed to lower the risk of being attacked, weaken the impact of any attack that occurs, and induce challengers to aim their efforts at other rivals.

Signaling Retaliation

A defensive move aimed at deterring challengers by conveying that strong counter-action is likely, such as by committing to match competitor prices or maintaining a war chest of cash and marketable securities.

War Chest

A reserve of cash and marketable securities maintained by a firm to signal defensive strength and the ability to retaliate aggressively if attacked.

Scope of the Firm

The range of activities performed internally, the breadth of product and service offerings, the extent of geographic presence, and the mix of businesses.

Horizontal Scope

The range of product and service segments that a firm serves within its market.

Vertical Scope

The extent to which a firm engages in the various activities that make up the industry's entire value chain system, from raw materials to after-sales service.

Outsourcing

Contracting out certain value chain activities that are normally performed in-house to outside specialists and strategic allies.

Strategic Alliance

A formal agreement between two or more separate companies to work cooperatively toward a common objective, typically being most effective when partners are non-competing and highly selective.