(1) Strategy explains how a company, faced with competition, will generate superior performance

(2) Porter's Five Forces

• Buyer power
• Supplier power
• Threat of new entrants
• Rivalry with competitors
• Threat of substitutes

6th force is complements

(3) Industry structure is sticky and remains unchanged over time. Industry structure determines profits over time.

(4) RoIC (Return on Invested Capital) is the ideal measure of competitive advantage since it measures value capture from customers and suppliers

• RoIC superior to RoS because takes capital efficiency into account
• Superior to Growth because profits aren't guaranteed from growth
• Superior to share price because price moves with external factors (PE Ratio)

(5) Competitive advantage explains how a firm, faced with competition generates superior financial returns from a difference in relative price and relative cost from a different set of activities being performed

(6) Operational Excellence (OE) is not equivalent to strategy

• OE benefits get competed away over time due to dissipation of news
• You need sustainable competitive advantage

(7) Test for having a corporate strategy?

• Having a clear value proposition