Competitive Strategy and Innovation Lecture Flashcards

Flashcards covering core concepts of strategic management, innovation strategy, digital transformation, and international clusters based on lecture notes.

Competitive Advantage

A relative performance measure determined by comparing a company’s performance against its competitors or the industry average.

Sustainable Competitive Advantage

A condition where a firm consistently outperforms its competitors or the industry average over an extended period.

Competitive Disadvantage

A situation occurring when a firm performs below its competitors or the industry average.

Strategy (Porter’s Definition)

A deliberate choice of a different set of activities to deliver a unique mix of values, centered on being different.

Good Strategy Core Elements

Consists of three elements: 1. Diagnosis of competitive challenges (Analysis), 2. Guiding policy to address challenges (Formulation), and 3. Coherent actions (Implementation).

Corporate Governance

A framework for managing and controlling a company, providing coordination, controlling, and leading functions while defining relationships between boards, owners, and stakeholders.

Stakeholder

Any individual or group that can affect or is affected by the achievement of an organization’s objectives.

Primary Stakeholders

Groups directly involved in the business and essential for the company’s survival, such as customers, employees, suppliers, and investors.

Corporate Strategy

The level of strategy that answers "Where to compete?" by focusing on industries, markets, and geographic areas.

Business Strategy

The level of strategy that answers "How to compete?" using approaches like Cost leadership, Differentiation, or Value innovation.

Scenario Planning

A method where management develops different what-if scenarios, such as trend, best-case ($A$), and worst-case ($A1$), to prepare for possible future developments.

Porter’s Five Forces

A framework used to analyze the competitive environment and identify industry opportunities and threats to understand industry attractiveness and profitability.

Innovation

The successful exploitation of new ideas or the implementation of new combinations by doing new things or doing existing things in a new way.

4 Ps of Innovation

A framework categorizing innovation into Product (changes in offerings), Process (changes in delivery), Position (changes in context), and Paradigm (changes in underlying mental models).

Incremental Innovation

Small improvements to existing products, services, or processes that build on existing knowledge with lower risk.

Radical Innovation

Fundamental changes that create something significantly new, often involving high risk and the potential to transform industries.

First-Mover Strategy

An innovation strategy where a company is the first to enter a market, such as Apple with the iPhone in $2007$.

Business Model Innovation (BMI)

A dynamic capability that enables companies to adapt, renew, or build new resources and competences and recombine them in novel ways.

Dynamic Capabilities (Teece)

A framework consisting of three steps—Sensing (identifying opportunities), Seizing (designing new models), and Transforming (reconfiguring resources)—to maintain competitive advantage.

Blue Ocean Strategy

A strategy that combines differentiation and cost leadership through value innovation, creating uncontested market space where competition becomes irrelevant.

Twin Transition

The integration of digital capabilities (like AI and platforms) with circular and regenerative sustainability to create long-term value.

Platform Economy

An economic shift from "Hardware-first" to "Software-and-AI-first," driven by data, ecosystems, and network effects from companies like GAFA.

Pure Data-Driven Business Model (PDDBM)

A model that uses data as the key resource for digital services like aggregation and analytics, exemplified by Google and OpenAI.

EU AI Act

The world’s first comprehensive legal framework for regulating AI using a risk-based approach (Unacceptable, High, Limited, and Minimal risks).

Transnational Strategy

An international strategy characterized by high global integration and high local responsiveness, aiming for the "best of both worlds."

Wholly Owned Subsidiary (FDI)

A high-control foreign market entry strategy where a company owns $100\%$ of the foreign operation.

The Paradox of Location

The observation that despite globalization, enduring competitive advantages increasingly arise from local knowledge and relationships that distant competitors cannot replicate.

Co-opetition

The dual nature of clusters where firms simultaneously compete for customers and cooperate with suppliers and institutions.

Porter’s Diamond Model

A model explaining national competitive advantage through four determinants: Factor Conditions, Demand Conditions, Related and Supporting Industries, and Firm Strategy, Structure & Rivalry.

Silicon Saxony

Europe’s largest microelectronics and ICT cluster located in Dresden, serving as a practical example of the Diamond Model.