Strategy and Competitive Analysis Lecture Review

Vocabulary flashcards covering key strategic management concepts, frameworks, and examples referenced in the lecture.

Strategy

A company’s choice about where to play and how to win in the market.

Standardization Strategy

Offering the same product or service across all markets to achieve global consistency and efficiency.

Localization Strategy

Adapting products or services to meet specific local customer preferences and conditions.

Taobao vs. eBay (China, 2003-2005)

Case where Taobao won by localizing for Chinese consumers while eBay stuck to a standardized model.

“Quarter-inch Drill” Quote

People don’t buy a quarter-inch drill; they buy a quarter-inch hole—focus on the customer need, not the product feature.

Mission Statement

Declares a firm’s current purpose and the customer need it fulfills.

Vision Statement

Describes what the firm aspires to become in the future.

Entry Barrier

Obstacle that makes it difficult for new firms to enter an industry (e.g., high capital needs, regulation).

Threat of New Entrants

The likelihood that potential competitors can easily enter an industry; high when entry barriers are low.

Product Differentiation

Creating unique product attributes valued by customers to stand out from rivals.

Cost Leadership

Achieving the lowest cost of production or delivery in the industry to compete primarily on price.

Five Forces Model

Framework that analyzes industry competitiveness: rivalry, new entrants, substitutes, supplier power, buyer power.

Industry Rivalry

The intensity of competition among current competitors in the market.

Supplier Power

The ability of suppliers to influence the price or terms of supply.

Buyer Power

The ability of customers to influence the price or terms of purchase.

Substitute Products

Alternative goods or services that satisfy the same customer need and can cap industry profitability.

VRIO Framework

Tool to assess resources: Valuable, Rare, Inimitable, Organized to capture value.

Valuable (VRIO)

A resource that helps exploit opportunities or neutralize threats.

Rare (VRIO)

A resource not widely possessed by competitors.

Inimitable (VRIO)

A resource difficult or costly for competitors to copy.

Organization (VRIO)

The firm’s ability to deploy resources effectively to gain advantage.

PEST Analysis

Macro-environmental scan of Political, Economic, Social, and Technological factors.

Political Factors (PEST)

Government actions—laws, taxes, trade policies—that affect business.

Economic Factors (PEST)

Macroeconomic conditions such as growth, inflation, and exchange rates.

Social Factors (PEST)

Cultural trends, demographics, and consumer attitudes that influence demand.

Technological Factors (PEST)

Innovations and technological changes shaping products and processes.

Vertical Integration

A firm’s expansion into different stages of its value chain.

Backward Integration

Moving upstream to control or acquire suppliers.

Forward Integration

Moving downstream to control distribution channels or customers.

Intangible Capabilities

Non-physical assets like brand reputation, customer relationships, or know-how.

Hard-to-Copy Capabilities

Unique competencies competitors find difficult to replicate, yielding sustainable advantage.

Escrow Service (E-commerce)

Third-party payment mechanism that holds buyer funds until goods are received, increasing trust online.