Chapter 1
What is the AFI Strategy Framework?
This structured framework guides firms through Analysis, Formulation, and Implementation in strategic management.
What is power?
This term describes the ability of strategic leaders to influence organizations to achieve competitive advantage.
What is Political? (PESTEL)
This external factor in the PESTEL framework includes government regulations, tax policies, and trade restrictions.
What are firm-specific resources and capabilities?
While companies in the same industry face similar external forces, their performance differences come from these internal factors.
What is Creating Shared Value (CSV)?
Unlike Corporate Social Responsibility (CSR), this approach integrates economic and social benefits directly into a company’s strategy for long-term sustainability.
What is business-level strategy?
This type of strategy involves key decisions on how a firm competes based on value and cost considerations.
What is sustainable competitive advantage?
A firm achieves this when it outperforms its rivals in profitability or market share over an extended period
This component of an organization's strategic direction defines its long-term aspirations.
What is vision?
What is the Threat of New Entrants?
This competitive force determines how easy or difficult it is for new firms to enter an industry.
What are core competencies?
These unique strengths, embedded within a firm, allow it to differentiate its offerings or achieve cost leadership.
What is competitive advantage?
This occurs when a firm consistently outperforms rivals in profitability and market position.
What is differentiation strategy?
This strategy allows firms to charge premium prices by increasing the perceived value of their products or services through product features, customer service, and complements.
Who are stakeholders?
Companies must create value for these groups, including employees, customers, suppliers, and shareholders, to achieve long-term success.
What is top-down strategic planning?
This strategy approach involves executives creating a structured, linear plan for the organization’s future.
What are market entry considerations?
Before entering a market, firms must evaluate these five key factors: who, when, how, what, and where.
What is a sustainable competitive advantage?
A resource must be Valuable, Rare, Costly to Imitate, and Organized to provide this.
What is the Triple Bottom Line (TBL)?
This framework evaluates company performance in three areas: Profit (economic), People (social), and Planet (environmental).
What is cost-leadership strategy?
A company pursuing this strategy focuses on minimizing costs while maintaining acceptable product quality to offer lower prices than competitors.
Who are strategic leaders?
These leaders shape a firm's vision, mission, and values while balancing short-term performance with long-term sustainability
This decision-making mode relies on fast, intuitive thinking rather than a logical, analytical approach.
What is System 1 Thinking?
What are mobility barriers?
These barriers prevent firms from easily changing competitive strategies within an industry.
What are dynamic capabilities?
This concept explains how firms continuously modify and adapt their resources to maintain a competitive edge.
What is the Shared Value Creation Framework?
This framework suggests that businesses should align their success with societal progress rather than treating economic and social goals as trade-offs.
What is Blue Ocean Strategy?
This strategy seeks to create an uncontested market space by combining elements of differentiation and cost leadership.
What are Analysis, Formulation, and Implementation?
A good strategy consists of these three elements: diagnosing the competitive challenge, developing a guiding policy, and implementing coherent actions.
What is Devil’s Advocacy?
This technique involves assigning a team to challenge ideas in order to minimize biases in decision-making.
What are external threats and opportunities?
To maintain a successful strategy, firms must regularly analyze these external factors that present both risks and opportunities.
What is value chain analysis?
This strategic tool helps firms analyze how they create value through primary and support activities.
What are cost leadership and differentiation?
These two traditional business strategies help firms gain a competitive edge by either minimizing costs or offering unique products.
What is cost-leadership strategy?
This strategy focuses on minimizing costs and offering lower prices than competitors while maintaining acceptable product quality.