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Blue Ocean Strategy
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Business-level strategy that successfully combines differentiation and cost-leadership activities using value innovation to reconcile the inherent trade-offs.
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Business-Level Strategy
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The goal-directed actions managers take in their quest for competitive advantage when competing in a single product market.
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cost leadership strategy
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generic business strategy that seeks to create the same or similar value for customers at a lower cost
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differentiation strategy
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Generic business strategy that seeks to create higher value for customers than the value that competitors create, while containing costs.
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diseconomies of scale
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increases in cost per unit when output increases
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economies of scale
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decreases in cost per unit as output increases
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Economies of Sope
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Savings that come from producing two (or more) outputs at less cost than producing each output individually, despite using the same resources and technology.
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focused cost leadership strategy
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same as the cost-leadership strategy except with a narrow focus on a niche market
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focused differentiation strategy
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same as the differentiation strategy except with a narrow focus on a niche market
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minimum efficient scale
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output range needed to bring down the cost per unit as much as possible, allowing a firm to stake out the lowest-cost position that is achievable through economies of scale
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scope of competition
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the size - narrow or broad - of the market in which a firm chooses to compete
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strategic trade-offs
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Choices between a cost or value position. Such choices are necessary because higher value creation tends to generate higher cost.
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strategy canvas
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graphical depiction of a company's relative performance vis-a-vis its competitors across the industry's key success factors
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value curve
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horizontal connection of the points of each value on the strategy canvas that helps strategists diagnose and determine courses of action
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value innovation
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the simultaneous pursuit of differentiation and low cost in a way that creates a leap in value for both the firm and the consumers; considered a cornerstone of blue ocean strategy
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