20. Strategic Objectives and Generic Strategy

Question 1

What are the three generic strategic approaches to sustaining a competitive advantage that can result in above-average profits over the long run?

Answer 1

1. Cost Leadership Strategy
2. Differentiation Strategy
3. Focus Strategy (Lower Cost or Differentiation)

Question 2

Describe a Cost Leadership strategy.

Answer 2

A Cost Leadership strategy involves establishing a position across the industry as a lower-cost producer or provider by developing certain cost advantages

Question 3

Describe a Differentiation strategy.

Answer 3

In a Differentiation strategy, the organization identifies what customers in the industry value with respect to unique product or service characteristics, and then establishes a position to provide those unique needs.

Question 4

Describe a Focus strategy.

Answer 4

A Focus strategy is based on identifying a certain segment or niche within the industry, and then establishing either a lower-cost advantage or a differentiation advantage in serving that particular industry segment.

Question 5

What are characteristics of successful strategic planning?

Answer 5

• Based on a clear statement of the organization’s vision and mission
• Based on realities in the environment
• Plan building is inclusive
• Serves as a reference point for decision making
• Compels managers to align their planning and decision making
• Improves communication and aids coordination
• Performance evaluation and incentive compensation tied to plan