Chapter 1

What is Strategy?

long term action plan for outperforming competitors, pleasing customers, and achieving superior profitability

What is a proactive strategy?

a deliberate strategy. strategy elements of both continued and new initiatives

What is a Reactive strategy?

a emergent strategy. strategy elements that are required due to unanticipated competitive developments and market conditions

How do firms create a SUSTAINABLE competitive advantage?

Differentiate. Make constant quest for sustainable competitive advantage the center of your strategy

What 3 tests must a strategy pass for it to be considered a winning strategy?

Fit Test Competitive Advantage Test Performance Test

Business Model = ?

Good Strategy + Good Strategic Execution = Good Management

What does the Fit Test test?

How well the strategy fits in the company's situation

What does the Competitive Advantage Test test?

If the strategy can achieve sustainable advantage

What does the Performance Test test?

If the strategy is producing good company performance (e.g. Profitability and Financial Standing)

Sustainability = ..... ?

LASTING REASONS to prefer a firms products/services over competitors

What are the 4 most commonly used strategies?

Low-Cost Provider Differentiating Features Best-Cost Provider Narrow Market Niche

According to Michael Porter, what is the most common strategy misunderstanding?

Managers thinking that competition is competing to be the BEST. There is no BEST way. It depends on the NEEDS you are trying to serve and delivering something UNIQUE that your competitors can't.

What is needed to craft a competitive strategy?

Must compete DIFFERENTLY. Either be more effective or efficient

Strategy should answer what 4 questions?

1. Where do we compete? 2. What unique value do we bring? 3. What resources & capabilities do we utilize to deliver that value? 4. How do we sustain unique value?

What is the Realized strategy?

A firms Current Strategy