Strategic Management Concepts

The process of removing intermediaries (like wholesalers or retailers) from a supply chain, allowing businesses to sell directly to consumers.

The benefit gained by being the first company to enter a new market or industry. This can involve establishing brand recognition, securing customer loyalty, and creating barriers for competitors.

A crucial moment in a company's life where the competitive landscape changes significantly, requiring a reevaluation and adaptation of its strategy.

Reduced costs, increased efficiency, and improved customer relationships are key benefits of disintermediation.

Companies can gain better control over pricing and distribution by bypassing intermediaries.

First-mover advantage can lead to early access to resources, customer insights, and market share, potentially resulting in sustained profitability.

Later entrants into the market can learn from the mistakes of first movers, potentially challenging their advantage.

Identifying and reacting to strategic inflection points is crucial for companies to maintain competitiveness.

Comparing a company's operations and performance to industry standards or best practices.

Helps identify areas for improvement, sets performance goals, and enhances efficiency.

A financial strategy to reduce potential losses by taking an opposite position in a related asset.

Used in markets like commodities, currencies, and stocks to protect against price fluctuations.

A transaction where a company is acquired using mainly borrowed funds.

The acquired company's assets often serve as collateral for the loans.

The company's existing management team is often replaced with a new management team to increase efficiency.

An LBO can provide an opportunity for a company to restructure its debt and become more financially sound.

When a company introduces a new product that negatively affects the sales of its existing products.

Cannibalization can be a positive sign of innovation and responsiveness to market demands, but it can also lead to lower overall revenue if the new product doesn't sell enough to offset the losses from the older product.

Companies should carefully analyze their products to balance innovation with the potential risks of cannibalization.

A growth strategy where a company acquires or merges with its competitors within the same industry.

This strategy can increase market share, reduce competition, and improve operational efficiency by combining resources and capabilities.

Companies can also expand their product offerings and reach more customers by combining their resources.

A well-planned horizontal integration strategy can lead to a stronger market position and a more competitive advantage.

A growth strategy where a company takes control of its supply chain by acquiring suppliers or distributors, leading to streamlined operations, reduced costs, and improved product quality.

Vertical Integration allows companies to have greater oversight of production and distribution, enhancing their bargaining power and mitigating supply chain risks.

Unique skills or expertise that give a company a competitive edge. It's a combination of resources, skills, and knowledge difficult for competitors to replicate.

Core competencies allow companies to differentiate themselves, create value for customers, and drive innovation, leading to long-term success and sustainability in the marketplace.

Companies can enhance their bargaining power by controlling their supply chain through vertical integration, giving them more leverage in negotiations with suppliers and customers.

Vertical integration allows for better mitigation of supply chain risks, as companies have more control over the production and distribution of their products.

Vertical integration ensures a more consistent supply of materials, minimizing disruptions and delays, leading to improved competitiveness in the marketplace.

Identifying and nurturing core competencies is crucial for companies to differentiate themselves, create value for customers, and drive innovation, leading to a competitive advantage.

A metric that estimates the total revenue a business can expect from a single customer over their entire relationship with the company.

Understanding CLV allows businesses to make better decisions about marketing budgets, customer acquisition strategies, and retention efforts.

A widely used metric that measures customer loyalty by asking customers how likely they are to recommend a product or service to others.

Customers are categorized into promoters, passives, and detractors based on their NPS score, providing insights into customer sentiment and areas for improvement.

A weakening of a brand's value and identity often caused by overextension, inconsistent product offerings, or ineffective marketing strategies.

Overextending a brand by offering too many products or services can confuse customers and diminish the brand's image.

Inconsistent product offerings or poor marketing execution can create a negative perception of the brand, leading to a decline in its value.

By understanding brand dilution, businesses can take steps to protect their brand's value and ensure sustainable growth.

A type of short-term debt issued by startups that converts into equity under specific conditions, like a future financing round.

Early investors in startups can receive shares at a lower price than later investors, rewarding them for taking on higher risk.

A financial strategy used by private equity firms to buy companies, improve their operations, and sell them for a higher profit.

Expenses that have already been incurred and cannot be recovered. These should be ignored when making future business decisions.

Focusing on potential future benefits and costs, not past expenditures. Sunk costs should not influence decision-making.

The process of improving a company's operations and strategies to increase its value before selling it off.

The practice of determining a company's worth based on its market value.

Investing in a startup or company with the expectation of achieving a positive return on investment.