Glossary – Key Terms of Strategy
Ansoff Matrix used to categorise generic prod-
uct and market growth options available to the
organisation (market penetration; product de-
velopment; market development; diversifica-
tion).
BCG Matrix uses relative market share and
market growth criteria to determine the attrac-
tiveness and balance of a business portfolio
(question marks; stars; dog; cows).*
Blue Ocean new market spaces where compe-
tition is minimised.
Business model a business enterprise’s essen-
tial value creation and value capturing activi-
ties represented in reduced and abstract form.
Business Model Canvas tool to analysis or de-
velop a business model based on 9 distinctive
key elements.
Business-level strategy is concerned with the
individual business competition in its particular
markets.
Buyers are the organisation’s immediate cus-
tomers, not necessarily the ultimate consum-
ers.
Capabilities the ways in which an organisation
may deploy its assets effectively.*
Competition when at least two or more com-
panies strive for the same or similar goals and
objectives in a market segment trying to be su-
perior to one another.
Competitive advantage how a company, busi-
ness unit or organisation creates value for its
users both greater than the costs of supplying
them and superior to that of rivals.*
Competitive strategy how a company, busi-
ness unit or organisation achieves competitive
advantage in its domain of activity.*
Conglomerate diversification (or unrelated di-
versification) involves diversifying into prod-
ucts or services with no relationships to exist-
ing businesses*
*Source: Johnson et al., 2017. Exploring Strategy, 11th Edition. Harlow: Pearson
Conglomerate Discount is when conglomerate
share prices are suffering due to doubts of ob-
servers of additional value generation by two
or more unrelated businesses*
Corporate-level strategy is concerned with the
overall scope of an organisation and how value
is added to the constituent businesses of the
organisation as a whole.*
Cost-leadership strategy involves becoming
the lowest-cost organisation in a domain of ac-
tivity.*
Cultural web shows the behavioural, physical
and symbolic manifestations of a culture that
inform and are informed by the taken-for-
granted assumptions of an organisation.*
Culture shared norms, values, routines and set
of beliefs within a group or society.
Differentiation strategy involves uniqueness
along some dimension that is sufficiently val-
ued by customers to allow a price premium.*
Disruptive innovation creates substantial
growth by offering a new performance trajec-
tory that, even if initially inferior to the perfor-
mance of existing technologies, has the poten-
tial to become markedly superior.*
Diversification development of products and
services beyond the organisation’s current ca-
pabilities or value networks.
Economies of scale the increase in quantity
leads to a decreasing average unit cost.
Economic cycles economic growth rates have
an underlying tendency to rise and fall in regu-
lar cycles.
Focus strategy targets a narrow segment or do-
main of activity and tailors its products or ser-
vices to the needs of that specific segment to
the exclusion of others.*
Generic Strategies describe how an organisa-
tion gains competitive advantage in relation to
its market scope.
Hybrid strategy is a combination of different
generic strategies.*
Glossary – Key Terms of Strategy
Industry group of firms producing the same Porter’s Five Forces Framework helps to iden-
principal product or service – or a group of tify the attractiveness of an industry in term of
firms producing close substitutes to each five competitive forces the threat of entry; the
other. threat of substitutes; the power of buyers; the
power of suppliers; and the extent of rivalry be-
Macro-environment are broad environmental
tween competitors.*
factors that affect to a greater or lesser extent
many organisations, sectors and industries.* PUV Analysis (Strategy Canvas) compares
competitors according to their performance on
Market (segment) a group of customers who
key success factors in order to establish the ex-
have similar needs that are different from cus-
tent of differentiation.*
tomer needs in other parts of the market.*
Red Ocean is when industries are already well
Megatrends large-scale changes that are slow
defined and rivalry is intense.
to form but influence many other activities
over decades to come. Resource-based view firms perform well if
they have distinctive resources and capabilities
Mission provides employees and stakeholders
that are source of competitive advantage.
with clarity about the purpose of the organisa-
tion (What business is it in?). SAFe Framework way to evaluate the suitabil-
ity (addressing key opportunities and threats),
Monopolistic industry is an industry with one
acceptability (expected performance) and fea-
firm or a firm with a strong dominant market
sibility (can it work in practice) of a strategic op-
position and therefore no competitive rivalry.
tion.
Oligopolistic industry is an industry dominated
Scenario Analysis designing plausible views of
by a few firms with limited rivalry and in which
how the environment of an organisation might
firms have power over buyers and suppliers.
develop in the future based on key drivers of
Operation level Strategy is concerned with in- change about which there is a high level of un-
dividual departments within a business and certainty.
their specific tasks.
Sector is a broad industry group (or a group of
Organisational Ambidexterity ability to handle markets) especially in the public sector (e.g.
the trade-off between exploration of new ideas health sector).
or solutions and the exploitation of existing ca-
Shareholder is any person, company or institu-
pabilities.
tion that owns at least one share of a com-
Perfectly competitive industry where barriers pany’s stock.
to entry are low, there are many equal rivals
Stakeholders are those individuals or groups
each with very similar products and infor-
that depend on an organisation to fulfil their
mation about competitors is freely available
own goals and on whom, in turn, the organisa-
(few markets are perfect, but many may have
tion depends.*
features of highly competitive markets).
Strategic drift the tendency for strategies to
Organisational ambidexterity is the capacity
develop incrementally on the basis of historical
both to exploit existing capabilities and to
and cultural influences, but fail to keep pace
search for new capabilities.*
with a changing environment.*
PESTEL analysis categorises environmental fac-
Strategic Groups are organisations within an
tors into six key types (political; economical; so-
industry or sector with similar strategic charac-
cial; technological; environmental; legal).
teristics, following similar strategies or compet-
ing on similar bases.
*Source: Johnson et al., 2017. Exploring Strategy, 11th Edition. Harlow: Pearson
Glossary – Key Terms of Strategy
Strategic options creative alternatives action-
oriented responses to the external and internal
situation that an organisation faces.
Strategic planning systematic analysis and ex-
ploration to develop an organisation’s strategy.
VRIO analysis helps to evaluate if, how and to
what extent and organisation or company has
resources and capabilities that are valuable,
rare, inimitable and supported by the organisa-
tion.*

Strategic position the impact on strategy of the

external environment, the organisation’s stra-
tegic capability (resources and competences),
and the organisation’s goals and culture.*

Strategy is the long-term direction and scope

of an organisation.

Strategy clock maps out the competitive posi-

tion of a company compared to other compa-
nies.

Substitutes products or services that offer a

similar benefit to an industry’s products or ser-
vices, but have a different nature, e.g. they are
coming from a different industry.

SWOT tool that analysis internal strength &

weaknesses and external opportunities &
threats.

TOWS Matrix used categorise internal strength

& weaknesses and external opportunities &
threats to generate strategic options.

Value chain (analysis) describes the categories

of activities within an organisation which, to-
gether, create a product or service. It consists
of five primary activities and four support activ-
ities.*

Values are the underlying and enduring core

‘principles’ that guide and organisation’s strat-
egy and define the way the organisation should
operate.

Vision is concerned with the desired future

state of the organisation.

Vertical (forward and backward) integration

entering into activities where the organisation
is its own supplier or customer.*

*Source: Johnson et al., 2017. Exploring Strategy, 11th Edition. Harlow: Pearson