LO1: Learn the decisions needed to establish a foundation for strategic planning.

• Strategy is the idea and actions that explain how the firm will make its profit.
• Strategic planning for small business is a four-step process.
• Rely on trade and professional associations for information on your industry.
• Choose whether your firm will focus on a mass or niche market.

LO2: Learn the forms of imitative and innovative businesses.

• Imitation is the classic strategy of small businesses.
• An imitative approach lets you build on existing products, services, and markets.
• An innovative approach lets you build a business in your own unique way.

LO3: Articulate the benefits that win over customers.

• Benefits are desirable characteristics of a product or service.
• Benefits can target values, such as quality or style, as well as cost.
• Situations and benefits can help clarify entry wedges that can offer exceptional profits.

LO4: Use SWOT analysis to identify strategic options.

• SWOT stands for strength, weakness, opportunity, and threat.
• SWOT analysis links benefits to the specifics of your firm's situation.
• SWOT analyses lead to the choice of one of four strategic directions: flaunt, fix, fight, or flee.

LO5: Understand the major strategies of business—differentiation, cost, and focus.

• There are three generic business strategies—differentiation, cost, and focus.
• Most small businesses use a focus strategy targeting a niche by combining cost or differentiation approaches.
• Particular combinations of benefits are called supra-strategies.

LO6: Use value chain analyses to apply strategy throughout the firm.

• The value chain is the collection of processes and activities a small business performs to design, produce, market, deliver, and support its product or service.
• Using a value chain to focus on delivering customer benefits is a powerful way to organize a firm.

LO7: Learn how to sustain competitive advantage through attracting customers and discouraging competition.

• Competitive advantage is your firm's edge in meeting and beating the competition.
• Competitive advantage works best when it involves resources that are valuable, rare, and difficult to imitate.
• Evaluate resources using a VRIO (value, rareness, imitability, organization) analysis.
• Business and market life cycles also help identify the kind of strategies most likely to work for a firm at a given time.