what does “generic” mean in terms of generic business-level strategies?
the framework can be applied to all industries
what does “business-level” mean in terms of generic business-level strategies?
how a business competes in selling a product to a market
business strategies answer the question of?
how should we compete
corporate strategies answer the questions of?
what business should we be in
what do cost leaders do
try to minimize cost so they can set a relatively low price in the market to attract customers
cost drivers
things and activities that make up the cost of operating a business
drivers of cost leadership (EVML)
+ economies of scale
+ value chain linkages
+ minimal product features, variety, service levels
+ low wages and efficient hiring, training, motivation
what is an example of cost leadership strategy with food?
fast-food companies
the experience curve
By gaining experience, and performing activities more efficiently, firms are able to reduce costs.
differentiators
features added to a product to make it more unique than other offerings, at a higher cost
premium
Compared with cost leaders, differentiators charge a premium. The premium (“added price”) covers the cost of the added features.
Drivers of differentiation (BUSTIECCG)
+ brand image (prestige)
+ unusually high quality
+ technology
+ customization
+ innovation
+ generous or unique features
+ superior customer service
+ extensive dealer network
+ convinient access
cost leadership risks (3)
+ percieved as being “cheap”
+ hard to quickly adapt to change
+ overlooks key industry shifts
differentiation risks (5)
+ not all features are valuable
+ too much differentiation
+ premium price is too high
+ can be immitated
+ dilution of brand identification
what is the best cost strategy?
integrated cost eadership/ differentiation strategy.
Advantages of focus (5)
+ large firms overlook small niches
+ Overcome lack resources to compete industry wide
+ serve the market segment effectively
+ minimize R&D costs by copying innovaters
+ leverage spinoff assests
risks of focus
+ may be outfocused by competitors
+ large firm may enter niche
+ Preferences of niche market may change to match broad market
remember:
you can not be all things to all people
economies of scale
buying/selling in bulk
how is cost leadership achieved
Reducing costs by selling in bulk, reducing labor costs, and offering products that are not that expensive to make.
there is only one way to achieve ____ ___ _______, but there are many ways to achieve _______.
low-cost leadership; differentiation
what is the scope of the strategy
broad market or narrow focused market
what is the source of competitive advantage
low cost leader or differentiation
-
Chapter 2: leading strategically36
-
Chapter 3: External Environment41
-
Chapter 4: Resources (internal environment)52
-
Chapter 5: Business Level Strategy23
-
Chapter 6: Competitive and Cooperative Moves28
-
Chapter 7: International Strategy27
-
Chapter 8: Corporate Level Strategies13
-
Chapter 9: Executing Strategy through Organizational Design31
-
Chapter 10: Corporate Governance, Corporate Ethics, and Social Responsibility42
