Strategy Summary

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CHAPTER 1. What is strategy and why is it important.

Strategic management: analysis, formulation and implementation in the search for competitive advantage.

What strategy is : Gaining & Sustaining Competitive Advantage.
There has always been a desire to outperform our competitors. In most of the situations, the winners are generally those with the better strategy in which strategy is formulated as the planned and realized set of actions a firm takes to achieve its goals.
A firm that outperforms competitors has a competitive advantage compared to those competitors. If a firm can keep this comparative advantage up for a long time we name this a sustainable competitive advantage. For example Google, although keep in mind that todays successes will not guarantee future successes.
Where competitive advantage means, outperforming your competitors, competitive disadvantage, means the opposite, underperforming its rivals or the industry average. To ‘get/earn’ competitive advantage a firm has to provide goods or services which a consumer values more highly than the products/services of one of the competitors. The essence of a strategy is being different from rivals and thus unique. If two firms approximately perform at the same ‘level’, they have a competitive parity.
When a company is able to imitate easily the firm’s source of competitive advantage, the firm is short-lived. However, if the advantage is difficult to imitate/understand, the firm is able to sustain over time. For example, patents often protect products from direct imitation for a limited period of time. Medicine of Pfizer, which had patent for example.

Strategy describes the goal-directed actions a firm intends to take in its quest to gain and sustain competitive advantage. A firm with competitive advantage possesses superior value to customers. If the difference between the superior value and the costs is larger, the greater the economic contribution the firm makes, and thus the greater

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