CH. 16

cost leadership

A competitive advantage based on a firm's position as the industry's low-cost producer.

strategic intent

A competitive advantage framework developed by strategy experts Gary Hamel and C. K. Prahalad.

factor conditions

A country's endowment with resources

flagship model

A model of competitive advantage developed by Alan Rugman and Joseph D'Cruz that describes how networked business systems can create competitive advantage in global industries.

changing the rules of engagement

A strategy for creating competitive advantage that involves breaking these rules and refusing to play by the rules set by industry leaders.

hypercompetition

A strategy framework developed by Richard D'Aveni that views competition and the quest for competitive advantage in terms of the dynamic maneuvering and strategic interactions by hypercompetitive firms in an industry.

global competition

A success strategy in which a firm takes a global view of competition and sets about maximizing profits worldwide, rather than on a country-by-country basis.

demand conditions

In Michael Porter's framework for national competitive advantage, conditions that determine the rate and nature of improvement and innovations by the firms in the nation.

related and supporting industries

In Michael Porter's framework for national competitive advantage, one of the four determinants of a national "diamond."

nature of firm strategy, structure, and rivalry

In Michael Porter's framework for national competitive advantage, the fourth determinant of a national "diamond."

focused-differentiation

In Michael Porter's generic strategies framework, one of four options for building competitive advantage. When a firm serves a small (niche) market and its products are perceived as unique, the firm can charge premium prices.

cost focus

In Michael Porter's generic strategies framework, one of four options for building competitive advantage. When a firm that serves a small (niche) market has a lower cost structure than its competitors, it can offer customers the lowest prices in the industry.

differentiation

In Porter's generic strategies framework, one of four options for building competitive advantage. Differentiation advantage is present when a firm serves a broad market and its products are perceived as unique; this allows the firm to charge premium prices compared with the competition.

generic strategies

Michael Porter's model describing four different options for achieving competitive advantage: cost leadership, product differentiation, cost focus, focused differentiation.

five forces model

Model developed by Michael Porter that explains competition in an industry: the threat of new entrants, the threat of substitute products or services, the bargaining power of buyers, the bargaining power of suppliers, and the competitive rivalry among current members of the industry.

national advantage

Strategy guru Michael Porter's competitive advantage framework for analysis at the nation-state level. The degree to which a nation develops competitive advantage depends on four elements: factor conditions, demand conditions, the presence of related and supporting industries, and the nature of firm strategy

economies of scale

The decline in per-unit product costs as the absolute volume of production per period increases

competitive advantage

The result of a match between a firm's distinctive competencies and the factors critical for creating superior customer value in an industry.