"generic" business-level strategies - ANSWERRelevant to all organizational types
Relevant in different industry environments
Refers to consistent choices of business strategy
Includes broad low-cost, broad differentiation, focused low-cost, focused differentiation
broad low-cost strategy - AN...
Strategy Exam 2 Questions &
Answers(RATED A+)
"generic" business-level strategies - ANSWERRelevant to all organizational types
Relevant in different industry environments
Refers to consistent choices of business strategy
Includes broad low-cost, broad differentiation, focused low-cost, focused differentiation
broad low-cost strategy - ANSWERstrategic position based on producing a good or offering a service
while maintaining total costs that are lower than what it takes competitors to offer the same product
or service (lower prices and still make profit)
broad differentiation - ANSWERstrategic position based on products or services with quality,
reliability, or prestige that is discernibly higher than that of competitors and for which customers are
willing to pay
focused low-cost - ANSWERstrategic potion based on being a low-cost leader in a narrow market
segment (niche), trying to be low-cost player
focused differentiation - ANSWERstrategic position based on distinctiveness in a selected narrow
market segment (niche) offering customized unique products or service offerings
value and cost drivers - ANSWERQuality
Economies of scope
Mass customization
Innovation
Structure, culture, and routines
strategic choices of broad low-cost - ANSWERDoesn't try to be industry innovator
Positions products to appeal to the "average" customer
Goal is to increase efficiency, reliability, and lower costs relative to industry rivals
,how to sustain cost or differentiation advantage - ANSWERdetermine and control cost drivers or
differentiators in value chain, and then refigure the value chain as needed
advantages of low cost strategy - ANSWERProtected from competitors or entrants by cost advantage
Less affected by increased prices of inputs if there are powerful suppliers
Less affected by powerful buyers
Purchase in large quantities to increase bargaining power over suppliers
Ability to reduce price to compete with substitutes
Low costs and prices are barriers to entry
disadvantages of low cost strategy - ANSWERCompetitors may lower their cost structures (ex:
technological changes)
Competitors may imitate cost leader's strategy
Cost reductions may affect demand (ex: by concentrating on efficiency, may overlook customers'
perceptions)
strategic choices of a broad differentiator - ANSWERStrives to differentiate on meaningful dimensions
where customers are willing to pay for the uniqueness
Concentrates on innovation, excellent quality, and extraordinary responsiveness to customers
Builds functional resources and capabilities that provide unique distinct advantages
2 options for exploiting differentiation - ANSWER1) Increase prices more than costs
2) Moderate or no price increase with increased demand and economies of scale for lower costs
advantages of differentiation strategy - ANSWERCustomers develop brand loyalty
Powerful suppliers not necessarily an issue
Pass price increase on to customers
Powerful buyers aren't difficult because the product is distinct
Differentiation and brand loyalty are barriers to entry
Threat of substitute products depends on competitors' abilities to meet customer needs
blue ocean vs. analysis of industry forces - ANSWERUnwise to dismiss competitive strategy
altogether
, Businesses may consider a blend of approaches
Research shows that competition eventually erodes profits (including advantages from innovation)
Slowing down erosion with an effective competitive strategy for an existing market may increase
funds for a blue ocean investment, which provides chances to find possible untapped markets
life cycle considerations - ANSWERDifferent industry environments present different opportunities
and threats at different times
Challenge is to position a company to sustain a competitive advantage over time in different kinds of
industry environments and changes
A company's business model should change or evolve to meet changing environmental conditions
disadvantages of differentiation - ANSWERDifficulty maintaining long-term distinctiveness in
customers' eyes or perceived uniqueness
Competitors could adapt and quickly imitate
Patents and first-mover advantage are limited
Difficulty maintaining premium price
strategic choices for focus business strategy - ANSWERSelect market niche based on (for example):
geography, type of customer group, or segment of a product line or service
Position business as either focus low cost or focus differentiation
advantages of focus strategies - ANSWERProtected from rivals to the extent it provides a product or
service that rivals can't
Power over buyers, if buyers can'y get the same product or service elsewhere
Benefits from customer loyalty such that the threat of new entrants is limited
Customer loyalty lessens threat from substitutes
Stays close to the customers and know the customers' changing needs
disadvantages of focus strategies - ANSWERFocuser disadvantaged with powerful suppliers because
it buys small volume and may not be able to pass cost to customers
Because of low volume, cost may be higher than a low-cost company
Niche could disappear because of technological changes or changes in customers' tastes
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