Business Strategy - Full Summary

Lesson 1:

Factors influencing Industry Rivalry (in English):

1. Concentration number of firms in the industry and market share distribution.

2. Diversity of competitors diversity in size, objectives, strategies.

3. Product differentiation level of product uniqueness.

4. Excess capacities and exit barriers overcapacity and difficulty to leave the market.

5. Cost conditions firms' cost structures.

Mnemonic to memorize Acronym in English: CD-PEC

C Concentration

D Diversity of competitors

P Product differentiation

E Excess capacities and exit barriers

C Cost conditions

Mnemonic phrase in English:

"Competitive Dynamics Play Every Challenge."

Lesson 2:

Industry Analysis Framework in English

Objective:

Understand industry structure to forecast profitability and define strategies.

Porters Five Forces Overview:

1. Industry Rivalry

- competition among existing firms

- influenced by: concentration, diversity, product differentiation, excess capacity, cost structure

2. Threat of New Entrants

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- influenced by: capital requirements, economies of scale, product differentiation, distribution channels, legal

barriers, retaliation risk

3. Threat of Substitutes

- influenced by: buyers willingness to substitute, price-performance trade-off

4. Bargaining Power of Buyers

- price sensitivity, product importance, buyer size/concentration, switching costs, backward integration

5. Bargaining Power of Suppliers

- influence on input price and availability

- affected by: concentration, supply uniqueness, switching costs, threat of forward integration

Mnemonic to memorize the 5 forces: "R-E-S-B-B"

R Rivalry

E Entry

S Substitutes

B Buyers

B Bargaining Power of Suppliers

Steps of Industry Analysis:

1. Identify industry structure

2. Forecast profitability

3. Determine strategic position

Characteristics of Resources & Capabilities (R&C) in Competitive Advantage

1. Establishing Competitive Advantage

- Scarce: rare among competitors

- Relevant: aligned with strategic needs

2. Sustaining Competitive Advantage

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- Durable: lasting

- Non-transferable: hard to buy

- Non-replicable: hard to copy

- Causally ambiguous: source of success unclear

3. Appropriating Competitive Advantage

- Property rights

- Bargaining power

- Embeddedness

Lesson 3:

Brand & Customer-Based Brand Equity

Brand:

- Name, symbol, or sign that identifies and differentiates

- Combines tangible and intangible attributes

Brand Evolution:

- Past: informative

- Then: identity and lifestyle

- Today: content and values

Brand Equity:

- Perceived value by consumers

- Loyalty, purchase frequency, low acquisition cost

Customer-Based Brand Equity (Keller, 1993):

1. Brand Awareness: recognition and recall

2. Brand Image: strong, positive, unique associations

Lesson 4:

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Methods of Funding of Cultural Institutions

1. Public Funding

- Justified by externalities and merit good logic

- Includes subsidies due to cost disease (Baumol & Bowen)

- Government supports preservation and access

2. Private Funding

- Sponsorships, donations, foundations

- Examples: fashion, luxury, family businesses

3. Public-Private Partnerships (PPPs)

- Collaboration in resources or governance

- Outsourcing or co-management of institutions

4. Self-Generated Revenues

- Tickets, services, events, memberships

- Stimulates efficiency and independence

Challenges:

- Need funding diversity

- Barriers: economic, informational, civic, geographic

Lesson 5:

Cultural Products & Consumption

- Value = benefits / costs

- Benefits: functional, hedonic, communicative, identity-based

Customer & Segmentation:

- Buyer != user != decision-maker

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- Two-sided markets (audiences + sponsors)

- CRM is vital

Offer System:

1. Target & Benefits

2. Positioning

3. Product features

4. Distribution

5. Price

Marketing Mix: Product, Price, Place, Promotion

Product Life Cycle: Development, Introduction, Growth, Maturity, Decline

Types of Products:

- Search goods

- Experience goods

- Credence goods

Consumer Behavior Factors:

- Cultural, social, personal, psychological

Key Concepts:

- Conspicuous consumption

- Cultural capital

- Types of buying behavior

Buyer Decision Process:

1. Need recognition

2. Info search

3. Evaluation

4. Decision

5. Post-purchase

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Lesson 6:

Competitive Advantage

Definition:

When a firm earns superior, sustained profits

How it arises:

- External shifts or internal innovations

How to sustain:

- Avoid imitation

- Rely on ambiguous or hard-to-copy resources

Types:

1. Cost Advantage same value, lower cost

2. Differentiation Advantage unique product

3. Focus Strategy serve niche market

Lesson 7:

Organizational Design & People Management

Organizational Structure:

- Tension: specialization vs integration

- Mechanisms: hierarchy, rules, culture, incentives

Structures:

1. Elementary

2. Functional

3. Modified functional

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4. Multidivisional

Cultural Institution Challenges:

- Artistic/admin/technical coexistence

- Human capital reliance

- Leadership complexity

- Flexibility needs

People Management:

- Recruitment: internal vs external

- Careers: flat structures, technical ladders

Director Role:

- Balance artistic and economic goals

Environment:

- Networks and project-based structures

Cultural Event Lifecycle:

1. Conception

2. Initiation

3. Planning

4. Execution

5. Closure

6. Evaluation

Inertia Indicators:

- Strategy vs structure conflict

- Career flattening

- Leadership rigidity

Lesson 8:

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Business Model Canvas

Describes how a firm creates, delivers, captures value

9 Blocks:

1. Customer Segments

2. Value Proposition

3. Channels

4. Customer Relationships

5. Revenue Streams

6. Key Resources

7. Key Activities

8. Key Partners

9. Cost Structure

Lesson 9:

Industry Evolution

What is it:

Gradual or radical changes in structure, tech, competition

Lifecycle:

1. Introduction

2. Growth

3. Maturity

4. Decline

Drivers:

- Technology

- Demographics

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- Regulation

- Culture

Types:

- Incremental vs radical change

Business Model Impact:

- Adjust value, cost, revenue, activities

Innovation

Definition:

Idea + execution = value

Sources:

- Technology, market, internal, environment

Types:

- Product, process, business model, social

Barriers:

- Inertia

- Resources

- Risk aversion

- Skills gap

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