Business Unit Strategy Flashcards
What is business-level strategy?
A focus on competing within particular product markets
What is market segmentation?
Dividing customers into groups
What are consumer markets?
Individuals using their own incomes to make purchases (end users)
What are industrial markets?
Organizations using their incomes to make purchases (B2B)
Name 2 sources of competitive advantage
- Cost: Achieve cost lower than rivals
- Uniqueness: offer distinct features, often based on quality
Name 2 different scopes of markets
- Broad: Compete in many segments
- Narrow: Selects one or a few segments and excludes others
What is cost leadership?
Competing based on price; small profit margins. Requires large scale and tight financial controls; suited for standardized offerings and large volumes. Basic quality is necessary, despite low prices.
What is differentiation?
Premium pricing based on quality. Often based on superior technology, features, and customer service; suited for luxury items. Price is not irrelevant; subject to economic downturns and counterfeits.
What is Integrated cost leadership/differentiation?
Combines both. Firms are competitive on each dimension, but they might not be the absolute cost leader or the most differentiated firm.
What are focus strategies?
Producing product offerings for narrow segments or niches. Can be used with cost leadership and differentiation.
Name the factors driving focus strategies
- Large firms may overlook small niches
- Firms may lack resources to target broader markets
- Focusing may help firms excel in specific activities
Name the disadvantages of focus strategies
- Vulnerable to adverse conditions in targeted segments
- Narrow focus may limit growth opportunities
- Large firms may enter fast growing segments
