Competitive Advantage (CA) (Textbook, Ch. 2): A firm’s ability to consistently outperform competitors by delivering greater value or lower cost in ways that are difficult to copy. Sustainable competitive advantage requires long‑term uniqueness. Example: Apple earns higher profits than most PC manufacturers due to its ecosystem, brand loyalty, and design.
Strategic Positioning (Textbook, Ch. 2): Deliberately choosing a unique set of activities that differentiates a firm from its competitors instead of trying to do everything. Example: Southwest Airlines focuses on low‑cost, short‑haul flights rather than luxury travel.
Operational Effectiveness (Textbook, Ch. 2): Performing the same activities as competitors, but more efficiently. While important, it is easily copied and does not create sustainable advantage. Example: Two fast‑food chains using similar ordering systems, but one operates faster.
Porter’s Five Forces Model (Textbook, Ch. 2): A framework used to analyze industry structure and profitability by examining rivalry, threat of new entrants, substitutes, supplier power, and buyer power. Example: The food truck industry has high rivalry and low profit margins.
Barriers to Entry (Textbook, Ch. 2): Factors that make it difficult for new firms to enter an industry, protecting incumbents from competition. Example: The NFL has massive financial and regulatory barriers.
Capital Intensity (Textbook, Ch. 2): The amount of financial investment required to start and compete in an industry. Example: Airlines require billions of dollars in planes and infrastructure.
Brand (Textbook, Ch. 2): Customer perception and reputation that can create loyalty and discourage new competitors. Example: Customers prefer Nike over generic athletic brands.
Distribution Channels (Textbook, Ch. 2): The pathways through which products reach customers. Control over these channels can limit competition. Example: Coca‑Cola’s exclusive restaurant contracts.
Switching Costs (Textbook, Ch. 2): The time, effort, money, or learning required for customers to switch products or services. Example: Leaving Apple means losing iCloud syncing and iMessage.
Network Effects (Textbook, Ch. 2): When a product or service becomes more valuable as more users join. Example: Social media platforms gain value as more friends use them.
Incumbent (Textbook, Ch. 2): A firm already established in an industry that benefits from scale, experience, and customer base. Example: Netflix in the streaming industry.
Commodity (Textbook, Ch. 2): A product with little differentiation where price competition dominates. Example: Gasoline sold at different stations.
Substitute (Textbook, Ch. 2): An alternative product that satisfies the same customer need. Example: Uber as a substitute for taxis.
Price Transparency (Textbook, Ch. 2): When customers can easily compare prices, increasing competition. Example: Airline comparison websites.
Economies of Scale (Textbook, Ch. 2): Cost advantages gained when producing goods at large volumes. Example: Amazon lowering costs through massive operations.
Fast Follower Problem (Textbook, Ch. 2): When competitors quickly copy innovations, reducing the original firm’s advantage. Example: Instagram copying Snapchat features.
Value Chain (Textbook, Ch. 2): The set of activities through which a product or service is created and delivered. Example: Apple’s design, manufacturing, retail, and service activities.
Inbound Logistics (Textbook, Ch. 2): Activities related to receiving and storing inputs. Example: Apple sourcing components from suppliers.
Operations (Textbook, Ch. 2): Processes that transform inputs into finished products. Example: Assembling iPhones.
Outbound Logistics (Textbook, Ch. 2): Distribution of finished goods to customers. Example: Shipping products to Apple Stores.
Procurement (Textbook, Ch. 2): Acquiring resources and negotiating supplier contracts. Example: Apple securing chip manufacturing agreements.
Human Resource Management (HRM) (Textbook, Ch. 2): Hiring, training, and managing employees to support firm strategy. Example: Training Apple Genius Bar employees.
Business Process (Textbook, Ch. 2): A structured set of activities that produce a specific output. Example: Online checkout and payment process.
Metrics (Textbook, Ch. 2): Measurements used to track performance and strategic success. Example: Daily active users (DAU).
Regulation (Textbook, Ch. 2): Laws or rules that restrict competition or raise entry barriers. Example: FDA approval required for new drugs.