Study sheet: Business Strategy Knowledge Map

📋 Course Outline

1. Strategic Statements and Ambition
2. Vision Mission and Values
3. External Environment Analysis
4. Scenarios and Industry Structure
5. Strategic Capabilities and VRIN
6. Business Units and Generic Strategies
7. Competitive Sustainability and Cooperation
8. Strategic Initiatives and Challenges
9. OKRs and Organisational Alignment
10. Growth and Organisational Levers
11. Blue Ocean Strategy
12. Business Models and Innovation

📖 1. Strategic Statements and Ambition

🔑 Key Concepts & Definitions

• Strategic fit : Strategic initiatives should express the best strategic fit by combining clear long-term goals, objective capability appraisal, effective implementation, understanding of the competitive environment, awareness of key success factors, generic strategy decisions, core challenges, and initiatives.
• Level of ambition : The level of ambition translates a company’s long-term vision and mission into measurable values and key performance indicators.

📝 Essential Points

📌 An organisation should define the measurable metrics and associated goals that are sufficient to describe when its vision and mission will be achieved, because words are interpretable whereas numbers provide a common destination.

💡 Memory Hook

Vision → Mission → Values → measurable ambition

📖 2. Vision Mission and Values

🔑 Key Concepts & Definitions

• Vision : Collins and Porras, Building your company’s Vision, Oct 1996 — A vision is a vivid statement describing the future state that an organisation hopes to become and providing its direction as a guiding North Star.
• Mission : A mission describes the core purpose of a company, namely the reason for its existence.
• Organisational values : Organisational values are the fundamental guiding principles that help employees make informed decisions and unify company culture.

📝 Essential Points

• Sony’s 1950 vision described becoming a globally recognised Japanese brand associated with innovation and quality and succeeding in the United States through innovations such as the transistor radio. — Collins and Porras, Building your company’s Vision, Oct 1996

• President John F. Kennedy’s vision was to put a man on the moon before the end of the decade.

💡 Memory Hook

Vision describes the future; mission explains the purpose.

📖 3. External Environment Analysis

🔑 Key Concepts & Definitions

• PESTEL framework : The PESTEL framework categorises environmental influences into political, economic, social, technological, environmental, and legal factors.

📝 Essential Points

• Political factors include government policies, taxation changes, foreign trade regulations, political risk in foreign markets, and changes in trade blocks such as the European Union.

• Economic factors include business cycles, interest rates, personal disposable income, exchange rates, unemployment rates, and GDP trends.

• Social, technological, environmental, and legal factors include population and lifestyle changes, technological developments, environmental protection and waste rules, and competition, health and safety, employment, licensing, and intellectual-property laws.

💡 Memory Hook

PESTEL: Political, Economic, Social, Technological, Environmental, Legal

📖 4. Scenarios and Industry Structure

🔑 Key Concepts & Definitions

• Scenario : A scenario is a detailed and plausible view of how an organisation’s environment might develop in the future, based on uncertain key drivers of change.
• Strategic group : A strategic group is a set of organisations within an industry or sector that have similar strategic characteristics, follow similar strategies, and compete on similar bases.
• Market segment : A market segment is a group of customers with similar needs that differ from the needs of customers in other parts of the market.

📝 Essential Points

• Scenario building identifies drivers of change, selects opposing drivers with high uncertainty, develops scenario stories, and analyses their impacts.

📌 When uncertainty is high, an organisation should develop two to four alternative scenarios rather than one forecast to stress-test strategic options.

💡 Memory Hook

Drivers → uncertainties → scenario stories → impacts

📖 5. Strategic Capabilities and VRIN

🔑 Key Concepts & Definitions

• Strategic capabilities : Strategic capabilities consist of the resources and competences that allow a firm to compete and create value.
• VRIN : A distinctive capability is potentially a source of competitive advantage when it is valuable, rare, difficult to imitate, and non-substitutable.

★ Must-know

📌 Strategic capabilities may be strengths or distinctive capabilities, threshold capabilities that are good enough to compete, or weaknesses that are not good enough and must be improved.

Further detail

• Sources of imitation difficulty include:
  • Complexity
  • Causal ambiguity
  • Culture and history
  • Frequent innovation

💡 Memory Hook

Threshold capabilities let firms compete; distinctive capabilities create advantage.

📖 6. Business Units and Generic Strategies

🔑 Key Concepts & Definitions

• Strategic business unit : A strategic business unit supplies goods or services for a distinct domain of activity and may be identified by similar customers, channels, competitors, or strategic capabilities.
• Competitive strategy : Competitive strategy concerns how a strategic business unit achieves competitive advantage in its domain of activity.
• Cost leadership : Cost leadership consists of becoming the lowest-cost organisation in a domain of activity.

• Differentiation : Differentiation involves uniqueness along a dimension sufficiently valued by customers to allow a price premium.
• Focus strategy : A focus strategy targets a narrow segment or domain and tailors products or services to that segment to the exclusion of others.

💡 Memory Hook

Cost leadership competes through lower cost; differentiation through valued uniqueness.

📖 7. Competitive Sustainability and Cooperation

🔑 Key Concepts & Definitions

• Strategic lock-in : Strategic lock-in occurs when users become dependent on a supplier and cannot change suppliers without substantial switching costs.
• Hypercompetition : Richard D’Aveni, Hypercompetition: Managing the Dynamics of Strategic Manoeuvring, 1994 — Hypercompetition requires fast decision making and action, including cannibalising bases of success, making a series of small moves, being unpredictable, and misleading competitors.

★ Must-know

• Lock-in can be achieved by controlling complementary products or services or by creating a proprietary industry standard.

Further detail

📌 Cooperation may strengthen competitive advantage through increased supplier or buyer power, standardisation benefits, improved costs, reduced substitution or entry threats, and coordinated retaliation.

💡 Memory Hook

Switching costs and standards → strategic lock-in → sustainable advantage

📖 8. Strategic Initiatives and Challenges

🔑 Key Concepts & Definitions

• Core challenge : A core challenge is one of the minimum number of challenges that must be overcome to reach the level of ambition.

📝 Essential Points

📌 Strategic initiatives pursue complex transformational goals through temporary dedicated teams, transversal organisation, dedicated budgets, project planning, and potentially additional investment, whereas continuous improvement initiatives use existing teams, structures, and budgets for incremental change.

• 🔄 Core challenges are developed by:
  1. Connecting opportunities and threats with strengths and weaknesses
  2. Formulating a challenge question
  3. Defining a From-to direction

💡 Memory Hook

Strategic initiatives transform; continuous improvement incrementally enhances.

📖 9. OKRs and Organisational Alignment

🔑 Key Concepts & Definitions

• OKR : An OKR is a goal-setting system used to create alignment and engagement around measurable and ambitious objectives and key results.

★ Must-know

• 🔄 OKR alignment proceeds from:
  1. Company OKRs
  2. Department OKRs
  3. Team OKRs
  4. Individual OKRs

Further detail

📌 An objective is normally intended to be achieved within one quarter, or three months.

• At the beginning of the year the executive board communicates company OKRs, departments define and confirm their OKRs, monthly progress is evaluated, and quarterly reviews define new OKRs.

💡 Memory Hook

Company → department → team → individual OKRs

📖 10. Growth and Organisational Levers

🔑 Key Concepts & Definitions

• Business efficiency levers : Business efficiency levers streamline operations and minimise costs by eliminating, modifying, or reevaluating processes and activities.
• People levers : People levers optimise the value and contribution of human capital by securing future talent, improving existing talent, and strengthening company culture.

★ Must-know

• The four levers are:
  • Growth
  • Business efficiency
  • People
  • Organisation

Further detail

• Growth levers explore selling more, gaining new customers, using new channels, and entering new industries.

💡 Memory Hook

Growth, efficiency, people, organisation

📖 11. Blue Ocean Strategy

🔑 Key Concepts & Definitions

• Blue Ocean strategy : Blue Ocean strategy seeks a new market space where competition is minimised by spotting non-users and creating new demand.

📝 Essential Points

📌 Red ocean strategy competes in existing markets, beats competitors, exploits existing demand, accepts the value-cost trade-off, and aligns activities around differentiation or low cost, whereas Blue Ocean strategy creates new market space and demand, makes competition irrelevant, breaks the value-cost trade-off, and pursues differentiation and low cost together.

• The four Blue Ocean questions ask which industry factors should be eliminated, reduced below the standard, raised above the standard, or created for the first time. — Kim & Mauborgne

💡 Memory Hook

Eliminate → reduce → raise → create

📖 12. Business Models and Innovation

🔑 Key Concepts & Definitions

• Business model : Alexander Osterwalder, 2008 — A business model describes the rationale of how an organisation creates, delivers, and captures value.
• Innovation : Innovation involves converting knowledge into a new product, process, or service and putting that product, process, or service into actual use.

★ Must-know

• The nine building blocks are (Alexander Osterwalder, 2008):
  • Customer segments
  • Value propositions
  • Channels
  • Customer relationships
  • Revenue streams
  • Key resources
  • Key activities
  • Key partnerships
  • Cost structure

Further detail

📌 Innovation may involve technology push or market pull, open or closed development, product or process change, and technological or business-model change, so strategists should adopt a situational approach.

• The diffusion S-curve is influenced by supply-side factors such as improvement, compatibility, complexity, experimentation, and relationship management, and demand-side factors such as market awareness, network effects, and customer innovativeness.

📌 First-mover advantage can arise from experience, scale, pre-emption of scarce resources, reputation, and buyer switching costs, whereas a fast-second posture depends on profit capture, complementary assets, and fast-moving arenas.

💡 Memory Hook

The business model links CS, VP, CH, CR, R$, KR, KA, KP, and C$

📊 Synthesis Tables

Generic Strategy Comparison

Strategy	Competitive basis	Target
Cost leadership	Lowest cost	Broad or focused domain
Differentiation	Uniqueness valued by customers	Customers willing to pay a premium
Focus	Tailored offer	Narrow segment or domain

Initiative Comparison

Dimension	Strategic initiative	Continuous improvement
Purpose	Complex transformational goals	Incremental enhancement
Resources	Dedicated teams and budget	Existing teams and budgets
Investment	Additional investment may be required	No investment beyond business as usual
Organisation	Transversal temporary structure	Existing organisational structure