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Flashcards in Ch. 5 Deck (22)
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1
Q

Both causal observation and research support the

A

notion that firms that identify with one or more of the forms of competitive advantage outperform those that do not

2
Q

overall cost leaderships set of interrelated tactics:

A
  • aggressive construction of efficient-scale facilities
  • Vigorous pursuit of cost reductions from experience
  • tight cost and overhead control
  • avoidance of marginal customer accounts
  • cost minimization in all actives in the firms value chain, such as R&D, service, sales force, and advertising
3
Q

Differentiation strategy

A

creating differences in the firms product or service offering by creating something that is perceived industrywide as unique and valued by customers

4
Q

overall cost leadership

A

appeal to industrywide market using a competitive advantage based on low-cost

5
Q

differentiation strategy forms:

A
  • prestige or brand image
  • quality
  • tech
  • innovation
  • features
  • customer service
  • dealer network
6
Q

potential pitfalls of differentiation strategies

A
  • too high a price premium
  • differentiation that is easily imitated
  • dilution of brand identification through product-line extensions
  • perceptions of differentiation that vary between buyers and sellers
7
Q

focus strategy

A

on the choice of a narrow competitive scope within an industry

  • selects a segment or group of segments and tailors its strategy to serve them
8
Q

combination strategies

A

firms that integrate low-cost and differentiation strategies is the difficulty for rivals to duplicate or imitate

  • two types of value to customers: differentiated attributes and lower prices
9
Q

A type of approach to combining overall low cost and differentiation

A
  • adopting automated and flexible manufacturing systems: mass customization
10
Q

integrated overall low-cost and differentiation strategies: improving competitive position via the Five Forces

A

firms that successfully integrate both differentiation and cost advantages create an enviable position

11
Q

Pitfalls of integrated overall cost leadership and differentiation strategies

A
  • filling to attain both strategies and possible ending up with neither, leaving the firm “stuck in the middle”
  • underestimating the challenges and expenses associated with coordinating value-creating activities in the extended value chain
  • miscalculating sources o revenue and profit pools in the firms industry
12
Q

competitive advantage

A
  • declining, especially in tech industries
  • nothing is forever

due to changes in tech, globalization, and actions by rivals can quickly erode a firms advantage

13
Q

strategies for platform markets

A
  • firms act as intermediaries between two sets of platform users: buyers and sellers
  • often do not produce the product
  • create a business that attracts a large range of suppliers and a wide population of customers

ex: amazon, Airbnb, Spotify

14
Q

industry life cycle

A

refers to the stages of introduction, growth, maturity, and decline that occur over the life of an industry

15
Q

introduction stage

A

products are unfamiliar to consumers

  • market segments are not well defined, and product features are not clearly specified
  • early development involves low sales growth , rapid tech change, operating losses
    challenges: developing product and finding a way for users to try it and generating enough exposure so the product emerges as the standard
16
Q

growth stage

A

characterized by strong increases in sales

  • build consumer preferences for specific brands
  • strong brand recognition, differentiated products, and the financial resources to support a variety of value chain activities such as marketing and sales and R&D
17
Q

maturity stage

A

aggregate industry demand softens

  • few new adopters
  • existing rivals intensifies
18
Q

breakaway positioning

A

product escapes its category by deliberately associating with a different one

  • consumers perceive the product as altogether different
  • able to redefine its competition

this strategy permits the product to shift backward on the life cycle curve, moving forms he rather dismal maturity phase to a thriving growth opportunity

19
Q

decline stage

A
  • changes in business environment, taste, or tech innovation
  • consumer. large share of management time and financial resources relative tot heir potential worth
  • sales and profit decline
20
Q

four basic strategies in decline phase

A

-maintaining: keep product going without significantly reducing marketing support, technological development, or other investments, in the hope that competitors will eventually exit the market

  • harvesting
  • exiting the market

-consolidation: involves one firm acquiring at a reasonable price the best of the serving firms in an industry. this enables firms to enhance market power and acquire valuable assets

21
Q

turnaround strategy

A

involves reversing performance decline and reinvigorating growth toward profitability

  • occurs usually in maturity or decline stage
22
Q

turnaround: three strategies

A
  • asset and cost surgery
  • selective product and market pruning
  • piecemeal productivity improvements: firm can eliminate costs and improve productivity ; improving business by reengineering them, benchmarking specific activities against industry leaders, encouraging employee input to identify excess costs…