MGMT 494BI - Chapter one

Strategy definition
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Terms in this set (11)
Strategy definition
A set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors
Elements of strategy (three elements)
- A diagnosis of the competitive challenge (internal and external environments)
-A guiding policy to address the competitive challenge (Formulation, Results in corporate, business and functional strategy)
- A set of coherent actions to implement the firm's guiding policy (Implementation)
Competitive Advantage definition
- Superior performance relative to other competitors in the same industry or the industry average
- Competitive advantage is relative, not absolute
How to assess competitive advantage?
look for something that your competitors cannot easily replicate or imitate
What is sustainable competitive advantage?
Fall into three categories:
- Size in the targeted market
- Superior access to resources or customers
- Restrictions on competitors' options

Note that these advantages are nonexclusive. They can, and often do, interact. The more of them, the better.
What is competitive disadvantage?
used to describe a business' inability to effectively compete with their competitors.
How to gain competitive advantage
Provide goods or services that:
- Consumers value more highly than those of its competitors, or
- Are similar to the competitors' at a lower price.
(compete price--->Walmart)

The rewards of superior value creation:
- Profitability.
- Market share.
Strategic positioning
A unique position within an industry that allows the firm to provide value to customers, while controlling costs.

- Economic contribution= value creation - costs (V-C)

- The greater, the better.(need to be managed) (keep cost low tradeoff)(high quality, innovation-->loss part of customer who can not afford)

-Enhances the likelihood of competitive advantage.
-Strategic positioning Involves multiple trade-offs
Value creation
Companies with a good strategy are able to provide products or services to consumers:
- At a price point that they can afford.
- That enables the company to make a profit.
The pyramid of corporate social responsibility (State in order)
a model that suggests corporate social responsibility is composed of economic, legal, ethical, and philanthropic responsibilities and that the firm's economic performance supports the entire structure

The pyramid symbolizes the need for firms to carefully balance their social responsibilities. Doing so ensures effective strategy implementation and long-term viability.
Different stages of AFI framework? What does this framework do?Effectively managing the strategy process is the result of: - Analysis (A). - Formulation (F). - Implementation (I) - Explains and predicts differences in firm performance. - Helps leaders formulate and implement a strategy that can result in superior performance.