Strategy Glossary A to Z

An action plan is a formal, written document that lists what steps need to be taken to achieve a particular goal. It details what will be done by whom and by which date and which resources are required.

Alignment is the systematic process of bringing the actions of each business unit and employee into line with the organization's strategic objectives. Strategic alignment is considered to be one of the most important drivers for successful strategy implementation. Key factors for achieving alignment include [...]

The Balanced Scorecard (BSC) is a widely used management framework designed to help an organization monitor its performance and manage the execution of its strategy. Developed in the early 1990s by Robert Kaplan and David Norton, the BSC translates the organization’s mission and strategy into tangible objectives and measures [...]

Benchmarking is the process of comparing a company’s products, services, and practices against those of competitors or other industry leaders. Its objective is to analyze how other companies achieve their high levels of performance, to identify areas and means of performance improvement, and to use the information retrieved to make improvements [...]

Competitive strategies define how a company tries to achieve a competitive advantage in the market. According to Michael E. Porter (1980), three basic types of strategies (“generic strategies”) can be distinguished: cost leadership, differentiation, and focus strategy. Porter argued that in order to ensure long-term profitability, a company needs to make a choice between these three strategies [...]

see competitive strategies

see competitive strategies

The experience curve analysis is a strategic controlling instrument. It forms the connection between sales success and production costs. By repeating the production process, employees gain experience. As their performance improves and they are able to do the jobs and tasks to be done much faster, the amount of time needed to make the product decreases. As a result, the overall production costs fall [...]

Hard (quantitative) data is data in numerical form which can be precisely measured and quantified. Hence, it can be verified objectively. Hard data can be expressed easily in business or financial key figures such as costs, turnover, or capacity utilization [...]

In contrast to generic competitive strategies (Michael E. Porter), hybrid strategies aim to integrate cost and differentiation advantages. Two types of hybrid strategies can be distinguished: sequential or „outpacing“ strategies and simultaneous strategies [...]

Investment planning is closely linked to strategic planning. The investment planning process includes not only identifying and realizing individual investment projects, but above all creating a coherent investment program in order to provide the required resources for a successful implementation of the corporate strategy [...]

Joint ventures are a type of strategic partnership between at least one domestic and one foreign company. They are formed temporarily to achieve a certain goal (e.g., development of a new product or improvement of the market position). The parties remain legally independent and operate under a joint venture agreement.

Key Performance Indicator (KPI) is a type of performance measurement. KPI are used to define and monitor the completion of a company’s strategic objectives. They can be metric (e.g., market share, growth rate) or non-metric (e.g., level of customer satisfaction, employee retention) [...]

The management process is a constant cycle in which executives define and control the business processes in their organizations. It may relate to the management of the entire organization, but also to the management of individual departments or projects. Typically, the management process consists of four phases: setting objectives, planning, implementation, and control [...]

Market segmentation is the process of dividing a large market into clearly distinguishable, homogenous submarkets (segments). Market segmentation can be done by product and customer group applying various criteria. Customer groups, for instance, may be divided according to sociographic... [...]

Coined by the American futurologist John Naisbitt (1982), the term “megatrends” refers to global, long-term, and profound transformation processes which affect not only the economy but also the society, politics, the environment, and technology. Megatrends act slowly and gradually over decades [...]

Nearshoring, or more commonly “nearshore outsourcing,” is derived from the term “offshore outsourcing.” It is the practice of contracting business functions and processes to third party organizations in neighboring low-wage countries (e.g., from the United States to Canada or Mexico) [...]

Offshoring is the process of moving operational functions abroad. A distinction can be made between internal and external offshoring. The former refers to the transferring of functions within an internationally operating organization [...]

The opportunity and threat analysis, also referred to as environmental analysis, is a strategic planning method for identifying and analyzing external opportunities to improve an organization’s performance as well as external risks to the organization’s success. It is part of the SWOT analysis [...]

Outsourcing is the process of contracting operational tasks and processes to third party organizations. By outsourcing services which could also be provided internally to specialized external service providers, resources (financial, labor, production facilities) are freed up and can be re-deployed into the core business activities. This can improve the operational and strategic market position of the organization [...]

Soft (qualitative) data is data that is difficult or impossible to measure, quantify, and express as figures. It is subjective and generally requires interpretation. Therefore, it is often considered to be less reliable than hard data. Soft data is descriptive in character and available in an unstructured manner in the form of text or images [...]

In contrast to the shareholder value approach which focuses inclusively on the interests of the shareholders, the stakeholder value approach aims to maximize the interest of all stakeholder groups (customers, employees, shareholders, suppliers, and the community). The ability of the business to consider, reconcile, and satisfy the interests and needs of all stakeholder groups [...]

In short, strategic intelligence is a systematic, continuous, and IT-supported process to collect, analyze, and disseminate legally accessible, strategically relevant information on the internal and external business environment, thereby helping managers to make more informed decisions about the future strategic direction of the company [...]

SWOT analysis is a popular planning method used to identify and understand the strengths and weaknesses of a company in comparison to the competition, as well as the opportunities and threats that are posed to a company by the external business environment (technological, political, social, and ecological). The results are often presented in the form of a matrix.

The trend analysis is a qualitative method for actively monitoring, analyzing, and interpreting economic, political, social, and technological changes in the business environment. In particular, key drivers and their current and possible future interdependencies are examined. The early detection of discontinuities allows companies to exploit opportunities and minimize risks [...]

The unique selling proposition (USP) is a marketing concept used businesses to point out to the customers what it is that differentiates their products and service from those of the competition.

A value statement tells the employees, customers, and other stakeholders what the company stands for and what it believes in. Examples of core values include excellence in customer service, sustainability, diversity, or empowerment.

A vision is an aspirational description of what an organization intends to become or achieve in the mid-term or long-term future. It answers the question: What do we want our organization to be? Visions serve management and employees as a point of orientation in their daily decision making as well as a source of motivation, inspiration, and identification with the organization.