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Low-cost Leadership
Sells products/services at lower prices than competitors enabled by more efficient operations.
Differentiation
Charging a premium price for high-quality products/services.
The Five Competitive Forces
Rivalry among existing competitors聽
Bargaining power of suppliers聽
Bargaining power of customers聽
Threat of new entrants聽
Threat of substitute products/services
Zero-sum Game
A situation where one party's gain is equivalent to another's loss.
Positive-sum Game
A scenario where all parties can benefit simultaneously.
Strategy Formulation
Plan based on industry analysis.
Mission Statement
A declaration of a firm's purpose, clear and comprehensive.
Unique Value Proposition
A promise made to a target audience that distinguishes a firm from competitors.
Benefits
Can be functional, economic, or emotional.
Claims of Differentiation
Assertions made to a specific target audience based on contextual value.
Evidence for Claims
Support for differentiation claims through objective features, customer testimony, third-party ratings, and internal evidence.
SCOR Model
Identifies basic management practices for benchmarking and strategy deployment at different operations levels.
Maximum Capacity
Highest achievable level under ideal conditions for a limited time
Effective Capacity
The output achievable under normal operating conditions for an extended amount of time.
Capacity Utilization
Capacity actually being used.
Idle Capacity
Capacity not being utilized.
Market Opportunity
Potential for sales based on customer needs and wants with a disposable income.
Productive Assets
Builds infrastructure needed to produce product/service
Investment Decisions
When, how much, and what to invest in.
Bottleneck
An activity that slows down a process or where demand exceeds capacity.
Serial Structure
Processes occur one after another
Parallel Structure
Two or more processes occur simultaneously
Variability
Wastes capacity by increasing costs, changeovers, causes downtime and more
Business Process Reengineering (BPR)
Everything that should be changed, will be changed all at once.
Kaizen
Small incremental improvements over time.
Process Mapping
Decide your goal, Identify the critical process, Document the existing process, Analyze improvements, Recommend changes, and Implement changes
Critical Process
Bottleneck, Visible to the customer, Consumes the largest amount of resources, shared process
Firms Compete for:
Market Share, Revenue, Profits