Strategy Flashcards
What is Strategy
Pursuit of a sustainable competitive advantage
What is Positioning
A set of activities and characteristics that work together to bring value to people by doing something the competitors won’t
Positioning is based on
First Order Fit, Second Order Fit and 3rd order fit
First Order Fit
consistency across activities
Second Oder Fit
mutual enhancement of activities
Third-order fit
Optimizing activities
Importance of tradeoffs
If other firms can do what you are doing without having to abandon their current position it would not be a competitive advantage ( not sustainable )
“all running in the same direction to stay in the same place”
Michael porter reflection on how operational effectiveness is not enough
Risk of new entrants
High barries to enter is good ( protects the profits from being eaten out )
Market Power of Buyers
when high = company has to choose between decreasing profit margin or volume of sales
Risk of substitution
people are able to satisfy that need in another market
Market Power of Suppliers
high: suppliers are able to charge more ( costs increase and margin of profit decreases )
Industry Analysis Tool
Porter 5 sources
Firm analysis Tool
VRIO
VRIO meaning
Valuable, Rare, Imitable, Organized
VRIO what analysis
Internal environment: what resources we have to build and sustain a competitive advantage ( Tangible or Intangible )
Tactical analysis
How people are going to react
Game theory
nash equilibrium ( 5 years )
Running as fast as it can and just stay in place ( 5 forces )
when rivalry is high
Rivalry
lower prospects for profitable and sustainable competitor advantages when positioning yourself
Effectiveness trap
Running as fast as it can and just stay in place ( 5 forces )
