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 for strategic managers 

    • Usually refers to economies of scale (cost advantages from producing more) and economies of scope (cost advantages from offering multiple products).

  • Sunk vs op. Cost 

    • Sunk: Money already spent and cannot be recovered.

    • Opportunity: 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.

    • Calc 

  • Cost price elasticity 

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

  • Six Segments of the External Environment (PEST + ecological & legal)

    • Political 

    • Economic 

    • S__

    • Technological 

    • Ecological 

    • Legal 

  • Industry environment analysis 

    • Examines competition and profitability within an industry.

  • Five forces model 

    • New entry: Threat of new competitors entering the industry.

    • Substitutes: Threat of alternative products serving the same need. 

    • Suppliers: Bargaining power of suppliers. 

    • Buyers: Bargaining power of customers.

    • Rivalry: Competition among existing firms.

  • Internal analysis 

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

  • Disney 

    • Known for strong brand, intellectual property, and storytelling capabilities.

  • Why success 

    • Strong brand recognition, diversified business model, powerful characters, and innovation.

  • Characters 

    • Mickey Mouse, Marvel heroes, Star Wars, Pixar characters (valuable intellectual property).

  • Overtime resources fade 

    • Competitive advantages can weaken due to imitation, substitution, or environmental change.

  • VRIN: must be…

    • Valuable

    • Rare

    • Inimitable

    • Non-substitutable



  • VRIO: Tool for evaluating firm resource endowments 

    • Valuable

    • Rare

    • Inimitable

    • Organized to capture value

  • Economics foundations of strategy 

    • Game theory

    • ocuses on incentives, competition, cost structures, and profit maximization.

  • Core Registry 

    • When a company’s strengths become weaknesses because it relies too heavily on past successes.

  • System of activities 

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

  • Generic business strategies 

    • Cost Leadership

    • Differentiation

    • Focus (cost focus or differentiation focus)

  • Razor blade

    • Business model where the main product is cheap but complementary goods are expensive (e.g., printers and ink).

  • Platform wars

    • Network affects (social media) 

    • The value of a product increases as more people use it.

  • Core Principles of a Differentiation Strategy

    • Offer unique features

    • Build 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 and Cost Leadership Strategy

    • Scale

    • Learning effects

    • Capacity utilization

    • Input costs

    • Technology
      Managing these effectively supports low-cost leadership.

  • Value Drivers and Differentiation Strategy

    • Product features

    • Quality

    • Brand reputation

    • Customer service

    • Customization