Chapter 1 Flashcards
Strategy
explains why the company matters in the marketplace by specifying an approach to creating superior value for customers and determining how capabilities and resources will be utilized to deliver the desired value to customers.
Business Model
sets forth how its strategy and operating approaches will create value for customers while at the same time generating ample revenue to cover costs and realizing a profit. The two elements of a company’s business model are it’s 1.) customer value proposition and 2.) its profit formula
Customer value proposition
established by a company’s overall strategy and layout the company’s approach to satisfying buyers wants and needs at a price customer will consider a good value. The greater the value provided and the lower the price , the more attractive the value proposition is to customers.
Profit Formula
describe the company’s approach to determining a cost structure that will allow for acceptable profits given the pricing tied to its customers value proposition. The lower the costs given the customer value propositions, the greater the ability of the business model to be a moneymaker.
A low-cost provider strategy
achieving a cost-based advantage over rivals. Low-cost providers strategies can produce a durable competitive edge when rivals find it hard to match the low-cost leader’s approach to driving costs out of the business.
A broad differentiation strategy
seeking to differentiate the company’s product or service from rivals’ in ways that will appeal to a broad spectrum of buyers. Differentiation strategies can be powerful so long as the company is sufficiently innovative to thwart rivals’ attempt to copy or closely imitate its product offerings
A focused low-cost strategy
concentrating on a narrow buyer segment or market niche and outcompeting rivals by having lower costs than rivals and thus being able to service niche members at a lower price.
A focused differentiation strategy
concentrating on a narrow buyer segment or market niche and outcompeting rivals by offering niche members customization attributes that meet their tastes and requirements better than rivals’ products.
A best-cost provider strategy
giving customer more value for the money by satisfying buyers’ expectations on key quality/features/ performance/service attributes, while beating their price expectations. This approach is a hybrid strategy that blends elements of low-cost provider and differentiation strategies; the aim is to have the lower (best) cost and price among sellers offering products with comparable differentiating attributes.
Sustainable competitive advantage:
when an attractively large number of buyers develop a durable preference for its products or service over the offerings of competitors, despite the efforts of competitors to overcome or erode its advantage
Deliberate Strategy
Planned new initiative plus ongoing strategies continued from prior periods. Is one that arises from conscious, thoughtful, and organized action on the part of a business and its leadership.
Abandoned strategy elements
certain components of a company’s deliberate strategy which fail in the market place. It has not been successful and no possibility of success within time and budget constraints. Resource have been withdrawn or shift to a higher priority activities, new leadership has set new priorities and no longer sees it continuance as fitting within the new way of doing things.
Emergent strategy
Unplanned reactive response to changing circumstances by management. Internally consistent patterns of competitive actions and reactions that spontaneously arise over time as organization navigate within their operating environments.
Realized strategy
is a combinations liberated planned elements and unplanned emergent elements. Some components of a company’s deliberate strategy will fail in the marketplace and become abandoned strategy elements.
