Benefit drivers - Attributes of a product that form the basis on which a firm can differentiate itself. Attributes can include the characteristics of the product itself, service characteristic, characteristics of product sale or delivery, characteristics that shape consumers’ perceptions andcharacteristics that affect the subjective image of the product.
Competitive advantage - What a firm does better than its competitors. Characteristics that allow a firm to outperform its rivals.
• Cost advantage - One of the major strategies to achieve a competitive advantage; When pursuing a cost advantage, firms seek to attain lower costs while maintaining a perceived benefit that is comparableto competitors.
• Differentiation advantage – Achieving a competitive advantage by seeking to offer a product of higher perceived value while maintaining costs that are comparable to competitors.
• Distinctive competence - Special skills and resources that generate strengths that competitors cannot easily match or imitate.
• First mover advantage - The competitive advantage held bya business from being first in a market or first to use a particular strategy.
• Late mover advantage - The competitive advantage held by businesses that are late in entering a market. Late movers often imitate the technological advances of other businesses or reduce risks by waiting until a new market is established.
• Sustainable competitive advantage - A competitive advantage thatcannot easily be imitated and won’t erode over time.
Competitive strategy - How a firm competes within a specific industry or market.
Competitor analysis - The competitive nature of an industry. It determines how a rival will likely react in a given situation.
• Five-forces analysis – An approach that uses economic tools to analyze an industry. The five forces are internal rivalry, entry,substitute and complement products, supplier power, and buyer power.
• Internal rivalry – Competitiveness of firms within an industry.
• Buyer power - The ability of individual customers to negotiate purchase prices that extract profits from sellers.
• Supplier power - The ability of input suppliers to negotiate prices that extract profits from their customers.
• Barriers toentry - Factors that reduce or impede entry into an industry.
o Blockaded entry - A condition where the existing firms in the industry firm need not undertake any entry-deterring strategies to deter entry by outsiders.
o Deterred entry - Occurs when an existing firm in the industry can keep an outside firm out of the industry by employing an entry-deterring strategy.
•Barriers to exit - Factors that impede the exit of a firm from an industry.
Concentration - Focuses the business’s efforts and resources in one industry.
Consumer surplus – The consumer’s perceived value or benefit of a product less the product’s purchase price.
Core business - The central or major business of the company. The core business is formed around the core competency of the company.Management of the company’s core business is central to any decision about strategic direction.
Core competency - What a firm does well. The core competency forms the core business of the firm.
Critical success factors - Those few things that must go well if a company is to succeed. Typically 20 percent of the factors determine 80 percent of the performance. The critical success factorsrepresent the 20 percent. Also called key success factors.
Culture - The collection of beliefs, expectations, and values learned and shared by the company’s members and passed on from one generation to another.
Diversification - The process of a company moving into new products or enterprises.
• Concentric diversification - Diversification into a related industry.