Term Definition Example Page in
summary
Capabilities A business capability defines what a Product design (a design team designs 1
company is able to do, independent products).
of how and why.
Lost baggage claims (an airline processes lost
baggage claims).
Comparative A business’ ability to produce a Bolt provides cheaper rides than Uber. 1
advantage cheaper product compared to the
competition.
Competitive A firm’s ability to differentiate itself Brand reputation (Google), design (Apple), 1
advantage over competitors. It’s the wedge price (Dirk vd Broek)
between Willingness to Pay and the
costs.
Value proposition Statement that summarizes why a Uber: The smartest way to get around 1
consumer should buy a product or
service.
SWOT analysis A framework to evaluate a See summary for example with Google 1-2
company’s competitive position and Glasses
develop strategic planning.
Willingness to Pay How much consumers are willing to Willingness to pay for an iPhone is high, due 2
(WTP) pay for a product or service. to its design, brand, and compatibility with
other Apple devices
Economy of scale The more units produced, the A large retail store can buy in bulk and lower 2
cheaper the cost per unit. their cost per unit. They can then choose to
keep the savings to increase the business’
profits or to use the savings as a competitive
advantage by passing the savings on to the
consumer and offering lower prices than their
competitors.
Economy of scope Simultaneous manufacturing of Let's say that you're a shoe manufacturer 2
different products is more producing men's and women's sneakers.
cost-effective than manufacturing Adding a children's line of sneakers would
them on their own. increase economies of scope because you can
use your existing production process,
equipment, supply chain, storage facilities,
and distribution channels to create a new line
of products. The resulting cost to produce
multiple products is lower than if three
different companies each produced a line of
men's shoes, a line of women's shoes, and a
children's line.
Porter’s Five Forces A framework that assesses factors See summary for example with the PC 3
that shape an industry’s industry
profitability:
1. Existing competition in the
, industry
2. Threat of new entrants
3. Power of suppliers
4. Power of customers
5. Threat of substitute
products
Firm value chain The sequence of activities a firm Internal company practices and their 5
performs to design, produce, sell, optimization (infrastructure, HR, R&D,
deliver, and support its products marketing & sales, service).
Industry value system The larger set of activities involved Entire supply chain, from raw materials to end 5
in creating value for the end user, product. The value chain includes profits and
regardless of who performs those cost considerations for each step of the
activities. product’s lifecycle.
Value Chain Analysis A process in which a firm identifies https://online.hbs.edu/blog/post/what-is-value- 5
(VCA) and analyzes its primary and chain-analysis
secondary activities that add value
to its final product to reduce costs By evaluating each of the activities in a
or increase differentiation. company’s value chain you can understand
where opportunities for improvement lie
Differentiation An approach to provide your Apple’s unique operating system. 6
strategy customers with a unique product to
increase competitive advantage Emirates’ exceptional customer service.
Birkin’s exclusivity.
Incumbent An established company in a certain Android phone operating system. 7
industry
Google’s search engine.
Disruptive innovation An innovation that displaces the Smartphones (People using smartphones 7
existing market leaders and instead of laptops and desktops for their
eventually replaces them. It computing needs, including web browsing and
transforms expensive or high-end streaming)
products to products that are more
accessible to a broader population.
Sustaining innovation Small, incremental innovations that Updated smartphones 7
evolve a product in the market
naturally.
RPV framework A framework to understand why big Resources: things or assets an organization can 8
companies fail in responding to buy, sell, build, or destroy.
disruption.
Processes: established ways companies turn
resources into products or services.
Values: standards that determine how
employees prioritize their decisions.
Coordination How are the activities of a firm best Coordination is the key to building structured 12
problem organized? systems and unity between different
(organizational departments so everyone can efficiently work
design) towards achieving the desired
summary
Capabilities A business capability defines what a Product design (a design team designs 1
company is able to do, independent products).
of how and why.
Lost baggage claims (an airline processes lost
baggage claims).
Comparative A business’ ability to produce a Bolt provides cheaper rides than Uber. 1
advantage cheaper product compared to the
competition.
Competitive A firm’s ability to differentiate itself Brand reputation (Google), design (Apple), 1
advantage over competitors. It’s the wedge price (Dirk vd Broek)
between Willingness to Pay and the
costs.
Value proposition Statement that summarizes why a Uber: The smartest way to get around 1
consumer should buy a product or
service.
SWOT analysis A framework to evaluate a See summary for example with Google 1-2
company’s competitive position and Glasses
develop strategic planning.
Willingness to Pay How much consumers are willing to Willingness to pay for an iPhone is high, due 2
(WTP) pay for a product or service. to its design, brand, and compatibility with
other Apple devices
Economy of scale The more units produced, the A large retail store can buy in bulk and lower 2
cheaper the cost per unit. their cost per unit. They can then choose to
keep the savings to increase the business’
profits or to use the savings as a competitive
advantage by passing the savings on to the
consumer and offering lower prices than their
competitors.
Economy of scope Simultaneous manufacturing of Let's say that you're a shoe manufacturer 2
different products is more producing men's and women's sneakers.
cost-effective than manufacturing Adding a children's line of sneakers would
them on their own. increase economies of scope because you can
use your existing production process,
equipment, supply chain, storage facilities,
and distribution channels to create a new line
of products. The resulting cost to produce
multiple products is lower than if three
different companies each produced a line of
men's shoes, a line of women's shoes, and a
children's line.
Porter’s Five Forces A framework that assesses factors See summary for example with the PC 3
that shape an industry’s industry
profitability:
1. Existing competition in the
, industry
2. Threat of new entrants
3. Power of suppliers
4. Power of customers
5. Threat of substitute
products
Firm value chain The sequence of activities a firm Internal company practices and their 5
performs to design, produce, sell, optimization (infrastructure, HR, R&D,
deliver, and support its products marketing & sales, service).
Industry value system The larger set of activities involved Entire supply chain, from raw materials to end 5
in creating value for the end user, product. The value chain includes profits and
regardless of who performs those cost considerations for each step of the
activities. product’s lifecycle.
Value Chain Analysis A process in which a firm identifies https://online.hbs.edu/blog/post/what-is-value- 5
(VCA) and analyzes its primary and chain-analysis
secondary activities that add value
to its final product to reduce costs By evaluating each of the activities in a
or increase differentiation. company’s value chain you can understand
where opportunities for improvement lie
Differentiation An approach to provide your Apple’s unique operating system. 6
strategy customers with a unique product to
increase competitive advantage Emirates’ exceptional customer service.
Birkin’s exclusivity.
Incumbent An established company in a certain Android phone operating system. 7
industry
Google’s search engine.
Disruptive innovation An innovation that displaces the Smartphones (People using smartphones 7
existing market leaders and instead of laptops and desktops for their
eventually replaces them. It computing needs, including web browsing and
transforms expensive or high-end streaming)
products to products that are more
accessible to a broader population.
Sustaining innovation Small, incremental innovations that Updated smartphones 7
evolve a product in the market
naturally.
RPV framework A framework to understand why big Resources: things or assets an organization can 8
companies fail in responding to buy, sell, build, or destroy.
disruption.
Processes: established ways companies turn
resources into products or services.
Values: standards that determine how
employees prioritize their decisions.
Coordination How are the activities of a firm best Coordination is the key to building structured 12
problem organized? systems and unity between different
(organizational departments so everyone can efficiently work
design) towards achieving the desired
