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Definition
| Seen when an organization is very clear about its mission and vision, and has a coherent, well-articulated strategy for achieving them |
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| Answers strategy questions related to "What business or businesses should we be in?" Considers an organization to be a portfolio of businesses, resources, capabilities, or activities. |
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| "How should we compete?" Focuses on how a given business needs to compete to be effective |
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| Take advantage of strengths; minimize disadvantages posed by weaknesses |
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| Sustainable Competitive Advantage |
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| The organization's strengths cannot be easily duplicated or imitated by other firms |
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| Factors which undermine a strategy |
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| 1. Plan is poorly constructed 2. Competitors undermine advantages 3. Good strategy, poor execution |
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| Top Down - Strategy as conceived by top management |
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| Actual strategy that is implemented (only partly related to intended strategy) |
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| Bottom Up - Decisions that emerge from the complex processes in which individual managers interpret the intended strategy and adapt to changing external circumstances |
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| A plan of action, flowing from the intended strategy, that an organization chooses and implements to support its vision, mission, and goals |
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| An assessment of strengths, weaknesses, opportunities and threats |
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| Value Chain Analysis, VRIO |
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| PESTEL, Industry Analysis; Help answer the question, "what opportunities can we exploit?" |
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| Asks you, in effect, to take the organization apart and identify the important constituent parts; might suggest internal areas of strength |
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| Valuable, Rare, Inimitable, Organization. This framework helps to understand whether strengths will give a competitive advantage |
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| External analysis tool - Political, Economic, Sociocultural, Technological, Environmental, Legal |
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| External, industry-level analysis; maps out relationships an organization might have with suppliers, customers, and competitors |
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| Operational Excellence, Product Leadership, Customer Intimacy, Only One Discipline |
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| Elements of an Organization's Micro-Environment |
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| 1. Industry 2. Upstream Markets 3. Downstream Markets |
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| A group of firms producing products that are close substitutes |
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| Industries that provide the raw material or inputs for the focal industry |
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| Industries that consume the industry outputs |
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| New Entrants, Buyers, Substitutes, Suppliers, Rivalry |
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| Porter's Challenges to Profitability |
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Definition
| Easy entry, rivalry between firms, strong buyers, strong suppliers, ease of switching to alternatives |
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| Porter's Attractiveness Criteria |
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Definition
| Difficult to enter, limited rivalry, weak buyers, weak suppliers, few substitutes |
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| Arenas, Vehicles, Differentiators, Staging, Economic Logic |
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| Where will we be active (and with how much emphasis?) Product categories, channels, market segments, geographic areas, core technologies |
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| How will we get there? Internal development, joint ventures, licensing/ranchising, alliances, acquisitions |
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| How will we win? Image, customization, price, styling, product reliability, speed to market |
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| What will be our speed and sequence of moves? Speed of expansion, sequence of initiatives |
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| How will returns be obtained? Lowest costs through scale, or through scope? Unmatched service, or proprietary product features? |
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| Exists when the interaction of two or more activities create a combined effect greater than the sum of their individual effects |
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| An organization participates in multiple businesses that are in some way distinct from each other; spread out risk and opportunities over a larger set of businesses. |
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| Concentric Diversification |
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Definition
| The new business produces products that are technically similar to the company's current product but that appeal to a new consumer group |
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| Horizontal Diversification |
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| The new business produces products that are totally unrelated to the company's current product but that appeal to the same consumer group |
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| Conglomerate Diversification |
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| The new business produces products that are totally unrelated to the company's current products that are totally unrelated to the company's current product and that appeal to an entirely new consumer group. |
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| Overall cost-leadership strategy |
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| The organization attempts to gain a competitive advantage by reducing its costs below the costs of competing firms |
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| Competitive advantage is based on superior products or service |
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| An organization seeks to distinguish itself from competitors through the perceived quality of its products or services |
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| An organization concentrates on a specific regional market, product line, or group of buyers in combination with its pursuit of either an overall cost leadership or differentiation strategy. |
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