Week 2: Competitive Strategy Flashcards
What is a Competitive Advantage?
Core competencies of a firm’s unique skills/capabilities that give it a superior position in the market
What is a Strategy?
The response to an opportunity, the plan of action to achieve the mission and goals
What are the 7 steps for developing a business strategy?
- Develop vision and mission statements, and a business model
- Describe core competencies, customers, and competitive advantage
- Describe industry and context
- Determine strengths and weaknesses
- Determine Opportunities and threats
- Apply 6 forces model to formulate options
- Translate strategy into an action plan
What is the Evolution Cycle? 4 steps
- Emergence - Few competitors, limited sales, slow growth
- Growth - Emergence of “dominant design”, rapid increases in sales and number of competitors
- Maturation - Stability, slow-down in growth,profit margins decline, price becomes key competitive advantage
- Decline - Profit margins erode, demand disappears
What is the 6 Forces Model?
- Firm rivalry
- Threat of entry by new competitors
- Threat of substitute products
- Bargaining power of customers
- Bargaining power of suppliers
- Bargaining power of complementors
What are Barriers to Entry?
Factors that make it costly for new companies to enter an industry (ex. Capital requirements, access to distribution channels, customer knowledge, technological innovation)
What are Complements?
Businesses that sell products or services that complement (adds value) to the venture’s product or service
What is a SWOT Analysis?
Involves specifying objectives of a business venture and identifying the internal and external factors
What does SWOT stand for?
Internal: Strengths and Weaknesses
External: Opportunities and Threats
What is a Matching Approach?
Maximize a competitive advantage by matching strengths to opportunities
What is a Conversion Approach?
Mitigate weaknesses and threats by converting them to strength and opportunities
What are Alliances?
Agreements to exchange knowledge, networks, products, etc based on mutually compatible goals
