Study sheet: Business Strategy Knowledge Map

📋 Course Outline

1. Vision Mission and Values
2. Strategic Ambition and Alignment
3. External Environment Analysis
4. Industry Competition and Segmentation
5. Strategic Capabilities and VRIN
6. Business Units and Generic Strategies
7. Sustaining Competitive Advantage
8. Strategic Initiatives and Core Challenges
9. OKRs and Organizational Alignment
10. Growth and Efficiency Levers
11. Blue Ocean and Business Models
12. Innovation Strategy and Diffusion

📖 1. Vision Mission and Values

🔑 Key Concepts & Definitions

• Vision : a vivid statement describing the future state that an organization hopes to become
• Mission : the core purpose of a company, namely its reason for existence
• Values : the fundamental guiding principles of an organization that help employees make informed decisions and unify company culture

📝 Essential Points

• Sony’s 1950 vision described becoming a globally recognized brand associated with innovation and quality and making “Made in Japan” signify excellence. — Collins and Porras, Building your company’s Vision, Oct 1996

💡 Memory Hook

Vision points to the future, mission explains purpose, and values guide behavior.

📖 2. Strategic Ambition and Alignment

🔑 Key Concepts & Definitions

• Level of Ambition : translates a company’s long-term vision and mission into measurable values and key performance indicators

★ Must-know

📌 The Level of Ambition should identify the measurable metrics and associated goals sufficient to describe when the vision and mission have been achieved.

Further detail

• At Poste Italiane, the target was to reduce customer service time during peak periods from 30 minutes to 10 minutes, while the average queuing time later fell below five minutes after 24 months.

• In the Additive Manufacturing example, the strategic goals included increasing patents from 30 to 100, reducing employee turnover from 10% to 5%, and increasing global market share from 0% to 30%.

💡 Memory Hook

Measurable ambition turns ambiguous words into aligned organizational action.

📖 3. External Environment Analysis

🔑 Key Concepts & Definitions

• PESTEL : PESTEL categorizes environmental influences into Political, Economic, Social, Technological, Environmental, and Legal factors.

★ Must-know

• Scenario building develops a few alternative and plausible views of how an organization’s environment may develop under uncertain drivers of change.

Further detail

• Organizations should develop two to four alternative scenarios rather than a single forecast when environmental uncertainty is high.

📌 Scenarios help organizations stress-test strategy, prepare teams to react to environmental changes, and develop a strategy for each key scenario.

💡 Memory Hook

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

📖 4. Industry Competition and Segmentation

🔑 Key Concepts & Definitions

• Strategic Group : a set of organizations in an industry with similar strategic characteristics, strategies, and bases of competition
• Market Segment : a group of customers with similar needs that differ from the needs of customers in other parts of the market

★ Must-know

• Porter’s five forces help identify industry attractiveness and support the choice or redesign of industry structures.

Further detail

📌 Industry analysis identifies key success factors by examining how customers choose and what an organization needs to survive competition.

📖 5. Strategic Capabilities and VRIN

🔑 Key Concepts & Definitions

• Strategic Capabilities : the resources and competences that support a firm’s strategy
• VRIN : A distinctive capability is VRIN when it is valuable, rare, difficult to imitate, and non-substitutable.

★ Must-know

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

Further detail

• VRIN value means meeting customer needs, taking advantage of opportunities, neutralizing threats, and providing potential competitive advantage at reasonable cost.

💡 Memory Hook

Threshold capabilities let a firm compete; distinctive VRIN capabilities create advantage.

📖 6. Business Units and Generic Strategies

🔑 Key Concepts & Definitions

• Strategic Business Unit : supplies goods or services for a distinct domain of activity and may be organized as a division or profit centre
• Competitive Advantage : how an SBU creates value for users greater than its costs and superior to the value created by rival SBUs

★ Must-know

📌 The two generic strategies are cost leadership and differentiation, while focus strategies apply either approach to a narrow target segment or domain. — Porter

Further detail

📌 SBUs can be identified using market-based criteria such as customers, channels, and competitors, or capability-based criteria such as similar strategic capabilities.

📖 7. Sustaining Competitive Advantage

🔑 Key Concepts & Definitions

• Cost Leadership : becoming the lowest-cost organization in a domain of activity
• Differentiation : uniqueness along a dimension sufficiently valued by customers to allow a price premium

📝 Essential Points

• Key cost drivers include:
  • lower input costs
  • economies of scale
  • experience
  • product, process, and design choices

📌 Organizations should avoid being stuck in the middle by choosing and maintaining a generic strategy or by creating separate business units for different strategies.

💡 Memory Hook

Lock-in and switching costs make competitive advantage harder for customers to leave.

📖 8. Strategic Initiatives and Core Challenges

🔑 Key Concepts & Definitions

• Strategic Initiative : a critical project aimed at achieving a complex transformational goal based on the organization’s future vision
• Core Challenge : one of the minimum number of fundamental challenges that must be overcome to reach the Level of Ambition

★ Must-know

📌 Strategic initiatives use temporary dedicated teams, dedicated budgets, specific project planning, and potentially additional investment, whereas continuous improvement uses existing teams, structures, and budgets.

Further detail

• Core challenges are developed by connecting external opportunities and threats with internal strengths and weaknesses and expressing the required change as a question plus a clear “From…To…” direction.

💡 Memory Hook

Strategic initiatives transform the organization; continuous improvement optimizes business as usual.

📖 9. OKRs and Organizational Alignment

🔑 Key Concepts & Definitions

• OKR : a goal-setting system that creates alignment and engagement around measurable and ambitious objectives and key results

★ Must-know

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

Further detail

• Long-term key results are broken into quarterly OKRs, updated after each quarter, and continued until all long-term key results have been achieved.

• Company OKRs cascade to departments, teams, and individual employees, with progress evaluated monthly and OKR status reviewed and new quarterly OKRs defined every quarter.

💡 Memory Hook

Company OKRs cascade to departments, teams, and individuals.

📖 10. Growth and Efficiency Levers

🔑 Key Concepts & Definitions

• Growth Levers : explore expansion through selling more, gaining new customers, using new channels, or entering new industries
• Business Efficiency Levers : streamline operations by minimizing costs and eliminating, modifying, or reevaluating business processes and activities

★ Must-know

• The four strategic initiative levers are:
  • Growth
  • Business Efficiency
  • People
  • Organisation

Further detail

• People levers optimize human capital by securing future talent, improving existing talent, and strengthening company culture, while organisation levers align roles, structures, policies, procedures, and collaboration with objectives.

📖 11. Blue Ocean and Business Models

🔑 Key Concepts & Definitions

• Blue Ocean Strategy : seeks new market spaces where competition is minimized by spotting non-users and creating new demand
• Business Model : Alexander Osterwalder, 2008 — the rationale of how an organization creates, delivers, and captures value

📝 Essential Points

📌 Red Ocean strategy competes in existing market space, exploits existing demand, and accepts the value-cost trade-off, whereas Blue Ocean strategy creates uncontested space, new demand, and simultaneous differentiation and low cost.

• The Four Actions Framework asks what to (Kim & Mauborgne):

  • Eliminate
  • Reduce
  • Raise
  • Create

• The nine Business Model Canvas building blocks are (Alexander Osterwalder, 2008):

  • Customer Segments
  • Value Propositions
  • Channels
  • Customer Relationships
  • Revenue Streams
  • Key Resources
  • Key Activities
  • Key Partnerships
  • Cost Structure

💡 Memory Hook

Red oceans fight for existing demand; blue oceans create new demand and reduce competition.

📖 12. Innovation Strategy and Diffusion

🔑 Key Concepts & Definitions

• Innovation : converting knowledge into a new product, process, or service and putting that product, process, or service into actual use
• Disruptive Innovation : changes the basis of competition by addressing a different performance proposition or market opportunity than sustaining innovation

★ Must-know

📌 Technology push starts from technological development, whereas market pull starts from identified customer or market demand; strategists should adopt a situational approach.

Further detail

• The innovation dilemmas include: technology push versus market pull, open versus closed innovation, product versus process innovation, technological versus business-model innovation

• Innovation diffusion follows an S-curve influenced by supply-side factors such as compatibility, complexity, experimentation, and relationship management and demand-side factors such as market awareness, network effects, and customer innovativeness. — J. Abernathy and W. Utterback, A dynamic model of process and product innovation, 1975

📌 First-mover advantages include experience, scale, pre-emption of scarce resources, reputation, and buyer switching costs, whereas a fast-second posture depends on profit-capture capacity, complementary assets, and fast-moving arenas. — C. Christensen and M.E. Raynor, The Innovator’s Solution, 2003

💡 Memory Hook

Sustaining innovation improves existing performance; disruptive innovation changes the basis of competition.

📊 Synthesis Tables

Strategic Statements Compared

Element	Main question	Role
Vision	What do we hope to become?	Defines the vivid future direction
Mission	Why do we exist?	Defines the core purpose
Values	How should we behave?	Guides decisions and culture
Level of Ambition	How will achievement be measured?	Translates direction into KPIs and targets