Terms Archives - Global Advisors | Quantified Strategy Consulting

Term: Business Model

A business model is a comprehensive framework that explains how an organization creates, delivers, and captures value within a market environment. It serves as the structural backbone for organizing the company’s relationships, resources, processes, and value propositions, tying together various elements such as:

Target customer segments
Value proposition (the unique value offered to these customers)
Channels (how value is delivered)
Customer relationships
Revenue streams
Key resources and activities
Key partnerships
Cost structure

Unlike a business strategy, which is a dynamic plan of action for achieving competitive objectives and responding to market conditions, the business model is more static and foundational: it is the platform on which strategies are executed. The business model articulates the logic of the business, while the strategy outlines how to compete and succeed using that model.

Related theorist: Alexander Osterwalder

Osterwalder is widely recognized for developing the Business Model Canvas, a strategic management tool that systematically lays out how a company creates, delivers, and captures value. His work, together with Yves Pigneur, has been foundational in both academic and practical discussions about business models, making him the leading authority in this area.

“A business model describes the coherence in the strategic choices which facilitates the handling of the processes and relations which create value on both the operational, tactical and strategic levels in the organization. The business model is therefore the platform which connects resources, processes and the supply of a service which results in the fact that the company is profitable in the long term.”

From a strategic perspective, the business model defines how the business system fits together—what markets to serve, what offerings to provide, and how to earn profits. Business models can evolve rapidly and require regular innovation to adapt to changing environments, emerging technologies, and shifting customer needs.

In summary, the business model is a structural representation of how a company operates profitably, sustains itself, and interacts within its ecosystem, enabling effective strategy execution.

Term: Business Unit Strategy

Business Unit Strategy, as described by Richard Koch, focuses on how a single business or division within a larger corporation achieves and sustains competitive advantage within a specific, well-defined market or “arena” (a product-market segment). This level of strategy is about winning in one particular space, rather than deciding which spaces to play in.

Key Elements of Business Unit Strategy (per Koch):

Arena-Specific: Business unit strategy operates within the boundaries of a particular product, service, or customer group—what Koch calls an “arena”.
Competitive Advantage Focus: It is centrally concerned with how a business beats competitors. Koch identifies two principal sources:
- Cost Leadership: Supplying a comparable product at a lower price and cost than rivals.
- Differentiation: Offering a product that is more useful, easier to use, or more aesthetically pleasing than competitors’ products.
Simplicity and Scale: Koch emphasizes that both cost and differentiation advantages are often achieved by having a product that is simpler and produced at a larger scale than rivals.
Market Share in Context: The value of market share is only meaningful when assessed in the context of the specific arena relative to competition, often within highly specialized or niche markets.
Resource Deployment: At the business unit level, strategy dictates how to deploy resources and capabilities to maximize success in the chosen arena.

Business Unit vs. Corporate Strategy (per Koch):

	Business Unit Strategy	Corporate Strategy
Scope	Single market or arena (product-market segment)	Multi-business, deciding “where to play” as an organization
Key Question	How do we win here?	Which arenas/markets should we be in?
Focus	Achieving and sustaining competitive advantage against rivals	Portfolio management; value creation across businesses
Basis	Cost leadership or differentiation within the market	Allocation of resources and synergies across units

Richard Koch asserts that the heart of any firm is the product-market segment(s) where it holds or can hold a distinctive edge, whether through cost or uniqueness, and that “strategy” at this level is about defending and growing that advantage.

In summary, business unit strategy is about how to compete and win within a chosen market, whereas corporate strategy is about deciding which markets or businesses to be in and optimizing the whole portfolio for maximum value. Koch’s work draws on the importance of focusing efforts—guided by the 80/20 principle—on those few arenas where success is most likely and most valuable.

Term: Corporate Strategy

Corporate strategy, as outlined by Richard Koch, refers to the overarching plan and direction for a multi-business organization, focusing on where the firm should compete and what kinds of businesses it should own or enter. This type of strategy is concerned with the selection and management of a portfolio of business units, industries, or product-market segments, and the allocation of resources among them. Koch emphasizes that corporate strategy is about understanding and choosing the arenas in which a firm operates, especially in cases where multiple distinct business areas are involved.

Related theorist: Richard Koch

Corporate strategy asks questions such as:

In which markets or industries should the company operate?
How should resources be allocated among business units?
How should the businesses be structured to maximize overall value and competitiveness?

It focuses on creating value through synergies, developing core competencies shared across units, and ensuring that the whole organization delivers more value than the sum of its parts.

Business Unit Strategy vs. Corporate Strategy (as per Koch)

	Corporate Strategy	Business Unit Strategy
Scope	Multi-business, multi-industry; whole corporation	Single business or product-market segment
Focus	Where to compete (which arenas/businesses)	How to compete (within a chosen arena/business)
Key Questions	What businesses should we own? How do we manage the portfolio? What is the right mix for overall advantage?	How do we win in our chosen market/industry? What is our source of competitive advantage?
Resource Allocation	Allocates capital and resources across business units and functions	Deploys resources to maximize advantage within a specific unit or market
Value Creation	Pursues synergies, portfolio optimization, and leveraging core capabilities across units	Pursues cost leadership, differentiation, or focus strategies for competitive edge in a defined arena

Koch stresses that, at the business unit level, strategy centers on achieving competitive advantage within a specific product-market segment or arena—by either being the lowest-cost producer or by offering a product that is markedly more attractive to customers than competitors’ offerings. In contrast, corporate strategy is about identifying and managing the “few arenas” (businesses) that generate the most value, and ensuring they work together to deliver superior results for the corporation as a whole.

“At the heart of a firm is one or more product-market segments or arenas in which it operates. If the firm operates in several arenas, one of them, or a few, will supply most or all the cash and profit the firm generates… In these few arenas, which are the intersection of the product and a similar group of customers, the firm has competitive advantage.”
— Richard Koch.

In summary, corporate strategy is about the selection and management of a portfolio of businesses to create overall value, whereas business unit strategy is about achieving and sustaining competitive advantage in a chosen market or segment. Koch’s distinction makes it clear: corporate strategy sets the direction for the whole enterprise; business unit strategy wins the battle in each chosen arena.

Term: Change Leadership

Change leadership is the process of driving transformational change by setting direction, building momentum, and inspiring people to achieve a shared vision. In Kotter’s framework, change leadership focuses on the emotional and behavioral aspects of change: motivating people, creating a compelling sense of urgency, aligning stakeholders around a strategic vision, and building the commitment necessary for long-term organizational transformation. Change leadership is proactive and visionary, seeking to shape organizational culture and inspire people to move beyond the status quo.

Related theorist: John P. Kotter

Kotter’s 8-Step Process for Leading Change embodies this approach, emphasizing steps such as:

Creating a sense of urgency
Building a guiding coalition
Forming a strategic vision
Communicating the vision
Empowering broad-based action
Creating short-term wins
Consolidating gains
Anchoring new approaches in the culture

This process requires leaders to guide, motivate, and equip people to embrace and realize the change, making it a leadership-driven, holistic journey.

Change Management (in contrast):

Change management, by comparison, involves the systematic planning, implementation, and monitoring of specific change initiatives within an organization. It is more operational, focusing on process, procedures, and minimizing disruption. Change management covers the coordination of tasks, resource allocation, risk mitigation, and communication to ensure the smooth technical execution of change.

Key Differences Summarized:

Aspect	Change Leadership (Kotter)	Change Management
Focus	Vision, motivation, inspiration, culture	Planning, controlling, executing change projects
Approach	Proactive, people-centered, strategic	Reactive or structured, task-oriented, operational
Key Activities	Creating urgency, coalition-building, vision-casting, empowering people	Scheduling, resource allocation, process control
Outcome Emphasis	Long-term transformation, embedded cultural change	Effective completion of projects/initiatives
Leadership Role	Guide and inspire, remove barriers, anchor change in culture	Plan, organize, monitor

Kotter’s Perspective: Kotter stresses that change leadership is the engine for lasting change—without it, organizations often struggle to move beyond incremental improvements or sustain change over the long term. Strong change leadership is necessary to win hearts and minds, align actions with a bold vision, and anchor new behaviors in the organization’s culture. In Kotter’s view, while change management is necessary for handling logistics, only change leadership can transform an organization for the future.

Term: Vision

A corporate vision is a statement describing the desired future state of an organization. It articulates where the company aspires to be in the long term, usually over a period of 3 to 10 years, in terms of impact, scale, and key achievements. The vision provides a forward-looking, ambitious goal that inspires and aligns stakeholders, guiding both strategic planning and resource allocation.

Related Theorist Gary Hamel

Gary Hamel is widely recognized as the leading strategy theorist associated with the concept of corporate vision. Alongside C.K. Prahalad, Hamel introduced the importance of “strategic intent”—a precursor to modern corporate vision—emphasizing how a compelling future ambition can energize organizations and guide long-term strategy. Their work underscores the idea that a clear, aspirational vision is not just inspirational, but central to driving long-term competitive advantage and organizational alignment.

Key characteristics of an effective corporate vision:

Aspirational and Forward-Looking: Outlines an inspiring, ambitious future, often beyond current capabilities.
Directional: Sets the general direction for the company’s strategic planning and long-term objectives.
Purpose-Driven: Conveys the broader impact the company aims to have on customers, industries, or communities.
Clarity: Easily communicated and understood across all organizational levels.
Motivational: Rallies employees and stakeholders toward a shared goal.

For example, Microsoft’s vision statement is, “to empower every person and every organization on the planet to achieve more.” This statement is forward-looking and reflects the company’s broad ambition and values.

Vision vs. Mission vs. Purpose

Term	Definition	Focus
Vision	Describes the desired future state or ultimate goal the company aims to achieve in the long-term.	What the organization wants to become or accomplish.
Mission	Defines the organization’s core purpose, its present reason for existence, and how it serves stakeholders.	What the organization does, whom it serves, and how.
Purpose	Explains the fundamental reason the organization exists, often rooted in core values or social good.	Why the organization exists at the most fundamental level.

Key Contrasts:

Vision is future-oriented, providing inspiration and long-term direction—where the organization wants to go.
Mission is present-oriented, describing what the organization does, for whom, and how.
Purpose is existential, expressing the underlying reason for the organization’s existence, often tied to values and societal impact.

Summary:
A corporate vision sets a compelling, long-term destination for the organization, guiding strategy and inspiring action. It differs from the mission, which describes current operations, and purpose, which roots the company’s existence in broader meaning and values. Gary Hamel is the theorist most closely linked to the transformative power of vision in strategy.

Term: Strategic Fit

“Strategic Fit” refers to the alignment between an organization’s internal capabilities (resources, structure, and processes) and the external environment (market demands, competition, and industry trends). Achieving strategic fit ensures that a company can effectively execute its strategy by leveraging its strengths to capitalize on opportunities and mitigate threats.

Related Theorist: Henry Mintzberg

The concept of “Strategic Fit” sits at the heart of effective business strategy, yet its significance has deep roots in the evolving landscape of management thought. In the mid-20th century, as organizations grew more complex and global, leaders recognized that simply having a strategy was not enough—what mattered was how well a company’s internal strengths aligned with external market realities.

As strategic management matured, early approaches favored rigorous planning and analysis, treating strategy as a linear exercise: survey the environment, select your objectives, and systematically deploy resources. However, as thinkers like Henry Mintzberg observed, such structured approaches often fell short when faced with the unpredictable and dynamic nature of real-world markets.

Mintzberg, known for his influential work on strategy and organizational design, challenged the prevailing orthodoxy. He argued that successful strategies do not emerge from rigid plans but rather from a synthesis of deliberate intent and emergent, adaptive learning. In his view, “Strategic Fit” is not a static achievement but a continuous process of aligning an organization’s resources, structures, and processes with changing market demands, competitive pressures, and broader industry trends.

Mintzberg’s research into organizational forms—ranging from the entrepreneurial “personal enterprise” to the decentralized “project organization”—demonstrated that there is no one-size-fits-all structure. Instead, organizations must adapt, blending vision with learning and analysis with intuition, always seeking a fit between what they do well and what the world requires. His famous “5 Ps of Strategy” and work on emergent strategy highlight the creative, often non-linear interplay between an organization’s internal realities and its external environment.

Today, “Strategic Fit” remains a guiding principle for organizations navigating complexity. Its roots in Mintzberg’s work remind us that true strategic advantage lies not just in having a plan, but in mastering the ongoing, dynamic alignment between inside capabilities and outside demands. By continuously seeking strategic fit, organizations maintain their relevance, resilience, and capacity for sustained success across ever-shifting global landscapes

Term: Price Elasticity

Price elasticity measures how sensitive customer demand is to changes in price. By understanding whether demand for a product is elastic (highly responsive to price changes) or inelastic (less responsive), businesses can optimize pricing to maximize revenue, profit and market share. Effective use of price elasticity enables data-driven pricing decisions, supports dynamic and value-based pricing models, and helps forecast the impact of price adjustments on sales and profitability.

Comprehensive Outline of Pricing Elasticity in Pricing Strategy

1. Definition and Core Concept

Price elasticity of demand quantifies the responsiveness of quantity demanded to a change in price.
Expressed as:

$Price Elasticity of Demand = \frac{% Change in Quantity Demanded}{% Change in Price}$
Elastic demand: Large change in quantity for a small price change.
Inelastic demand: Little change in quantity for a price change.

2. Importance in Pricing Strategy

Guides businesses on how much they can raise or lower prices without significantly affecting demand.
Helps forecast revenue and profit impacts of pricing decisions.
Enables segmentation and tailored pricing for different products or customer groups.

3. Factors Influencing Price Elasticity

Availability of Substitutes: More substitutes increase elasticity.
Necessity vs. Luxury: Essentials tend to be inelastic; luxuries are more elastic.
Proportion of Income: Expensive items relative to income are more elastic.
Time Horizon: Elasticity increases over time as consumers adjust.
Brand Loyalty and Differentiation: Strong brands can reduce elasticity.

4. Pricing Strategies Based on Elasticity

Strategy	When to Use	Elasticity Context
Penetration Pricing	To gain market share quickly	High elasticity
Skimming Pricing	To maximize early profits	Low elasticity
Dynamic Pricing	To respond to real-time demand	High elasticity
Value-Based Pricing	To reflect perceived value	Low elasticity
Cost-Plus Pricing	To cover costs with a markup	Often inelastic markets
Competitive Pricing	To match or beat competitors	High elasticity

5. Practical Applications

Dynamic Pricing: Companies like Uber use elasticity to adjust prices in real time, balancing supply and demand.
Revenue Optimization: Lowering prices in elastic markets can boost sales volume and revenue; raising prices in inelastic markets can increase margins.
Product Segmentation: Essential goods (e.g., food, fuel) are priced with less sensitivity to demand drops, while luxury goods require careful price setting due to high elasticity.

6. Measurement and Data Requirements

Requires historical sales and pricing data for accurate calculation.
Quantitative methods: Statistical analysis, A/B testing, econometric modeling.
Qualitative insights: Customer surveys, market research.

7. Strategic Implications

Informs optimal price points for new and existing products.
Supports competitive positioning and differentiation.
Enables businesses to anticipate and react to market changes, competitor moves, and shifts in consumer preferences.

Summary:
Price elasticity is foundational to effective pricing strategy. By quantifying how demand responds to price changes, companies can make informed, data-driven decisions to optimize revenue, profit, and market position. Understanding elasticity enables the use of advanced pricing models, supports market segmentation, and helps businesses adapt to competitive and economic dynamics.

Term: Nash Equilibrium

Nash equilibrium is a foundational concept in game theory describing a situation in which, in a game involving two or more players, no participant can improve their own outcome by changing their strategy as long as all other players keep theirs unchanged. In other words, each player’s strategy is optimal in light of the strategies chosen by others. This leads to a stable outcome where no individual has an incentive to deviate.

Related Theorist: John Nash

The concept was developed by American mathematician John Nash, who proved that every finite game has at least one Nash equilibrium (possibly involving mixed or randomized strategies). He was awarded the Nobel Prize in Economics in 1994 for this work.

Significance:
Nash equilibrium is widely used to analyze competitive and cooperative interactions in economics, business, and other fields. It provides a way to predict the decisions of players in scenarios where their choices are interdependent, such as pricing strategies between firms, negotiations, or even military standoffs. The well-known “prisoner’s dilemma” is a classic example, illustrating how rational decision-making can sometimes lead to outcomes that are not optimal for all players involved.

Key Takeaway:
In Nash equilibrium, every player’s choice is the best they can do, considering what others are doing—making it a powerful tool for analyzing strategy and competition in complex environments

Term: Core Competence

Core Competence refers to a unique set of skills, knowledge, or capabilities that a company possesses, which allows it to deliver unique value to customers and achieve a competitive advantage in the marketplace. This concept was introduced by C.K. Prahalad and Gary Hamel in their seminal 1990 Harvard Business Review article, “The Core Competence of the Corporation.” They argued that companies should focus on identifying and nurturing their core competencies to build long-term strategic advantage, rather than just focusing on individual products or markets.

Related Theorist: C.K. Prahalad and Gary Hamel

In the landscape of business strategy, few ideas have had as lasting an impact as “core competence.” This concept, articulated by C.K. Prahalad and Gary Hamel in their influential 1990 Harvard Business Review article, arose from the observation that many companies struggled to achieve sustained growth and innovation despite restructuring and cost-cutting throughout the 1980s. Prahalad and Hamel recognized that the real engine of long-term competitive advantage was not in organizational charts or product portfolios, but in the unique knowledge, skills, and capabilities embedded deep within an organization.

They argued that the most successful companies were those able to identify, nurture, and leverage these core competencies—essentially, the things a company could do uniquely well, often difficult for competitors to imitate. Rather than pursuing a broad range of activities or simply reacting to market pressures, companies that focused on their core competencies could create new markets, deliver exceptional customer value, and withstand shifts in the competitive landscape.

Prahalad and Hamel’s insight placed a premium on the human side of organizations: expertise, collective learning, and collaborative problem-solving became strategic assets. Their work challenged executives to think beyond products and divisions, asking instead what underlying capabilities could be stretched across markets and geographies to fuel growth. For example, a firm known for its supply chain expertise or brand power could use those competencies to move into new industries or create entirely new product categories.

Today, the idea of core competence is foundational in both academic strategy literature and practical management. It guides leaders as they assess strengths, build cross-functional teams, and prioritize investments, all in pursuit of sustainable competitive advantage. By understanding and harnessing what they do best, organizations can define their identity, differentiate themselves in crowded markets, and deliver unique value that stands the test of time

Term: Strategic Positioning

Strategic Positioning refers to the process of creating a distinct image and identity for a company or its products/services in the minds of the target market, differentiating it from competitors. Michael Porter, a leading authority on competitive strategy, introduced this concept as part of his framework for achieving sustainable competitive advantage. Porter emphasized that strategic positioning involves making deliberate choices about which activities to perform and how to configure them to deliver unique value. This can be achieved through cost leadership, differentiation, or focus strategies (as outlined in his “Generic Strategies” model).

Related Theorist: Michael Porter

In the evolving landscape of business strategy during the late 20th century, companies grappled with the challenge of standing out in increasingly competitive and globalized markets. It was in this context that Michael E. Porter, a Harvard Business School professor, introduced the powerful concept of strategic positioning—a pivotal shift from simply competing to truly differentiating.

Porter’s work drew upon microeconomics and industrial organization theory to analyze not just the structure of industries, but also how companies could outperform their rivals by making clear, deliberate choices about the value they create and how they deliver it differently than others. Prior to Porter, much of strategic thinking centered on participating in attractive industries and responding reactively to market pressures. Porter, however, reframed the discussion: firms should proactively define their position by deciding what unique combination of activities they would pursue—and, crucially, what they would not.

This insight led to the articulation of the now-classic “Generic Strategies” model: cost leadership, differentiation, and focus. Porter’s research revealed that companies seeking to occupy a strong, defensible competitive position should commit to one of these strategies. Firms that failed to do so—who tried to “straddle” between methods—often found themselves “stuck in the middle,” lacking a clear identity or advantage. His frameworks, such as the Value Chain and the Five Forces, provided analytical tools to guide these strategic choices, moving beyond intuition to systematic, evidence-based decision making.

Strategic positioning, as Porter defined it, is more than branding or marketing spin. It is about the underlying choices that shape a firm’s identity in the marketplace: the mix of products, the nature of customer relationships, and the configuration of activities that together create distinct value. Through this lens, competitive advantage is not a product of luck or circumstance, but of intentional differentiation and operational effectiveness.

This approach transformed management thinking and remains foundational for firms seeking sustainable success. Strategic positioning continues to inform how organizations choose where to compete and how to win—emphasizing that in a crowded world, clarity of purpose, distinctiveness, and the courage to make trade-offs are the bedrock of lasting advantage

Term: Market Segmentation

Market Segmentation:
Market segmentation is a marketing strategy that involves dividing a broad target market into subsets of consumers who have common needs, interests, or characteristics. The purpose of segmentation is to better understand and meet the specific needs of different customer groups, thereby improving targeting, product development, and overall marketing effectiveness….

Read more – https://globaladvisors.biz/2024/02/28/term-market-segmentation/

News and Tools

Term: Business Model

Term: Business Unit Strategy

Key Elements of Business Unit Strategy (per Koch):

Business Unit vs. Corporate Strategy (per Koch):

Term: Corporate Strategy

Business Unit Strategy vs. Corporate Strategy (as per Koch)

Term: Change Leadership

Term: Vision

Vision vs. Mission vs. Purpose

Term: Strategic Fit

Term: Price Elasticity

Comprehensive Outline of Pricing Elasticity in Pricing Strategy

Term: Nash Equilibrium

Term: Core Competence

Term: Strategic Positioning

Term: Market Segmentation

Download brochure

Sign up for our newsletters - free

News and Tools

Share this:

Key Elements of Business Unit Strategy (per Koch):

Business Unit vs. Corporate Strategy (per Koch):

Share this:

Business Unit Strategy vs. Corporate Strategy (as per Koch)

Share this:

Share this:

Vision vs. Mission vs. Purpose

Share this:

Share this:

Comprehensive Outline of Pricing Elasticity in Pricing Strategy

Share this:

Share this:

Share this:

Share this:

Share this:

Download brochure

Sign up for our newsletters - free