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MGMT 485W > MGMT 485W: Chapter 4 > Flashcards

MGMT 485W: Chapter 4 Flashcards

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1
Q

The fundamental objective of using any type of strategy is to

A

gain strategic competitiveness and earn above-average returns

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2
Q

Business-level strategy

A

an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets

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3
Q

A key reason firms must satisfy customers with their business-level strategy is that

A

returns earned from relationships with customers are the lifeblood of all organizations

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4
Q

most successful companies try to

A

find new ways to satisfy current customers and/or meet the needs of new customers

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5
Q

Strong interactive relationships with customers often

A

provide the foundation for the firm’s efforts to profitably serve customers’’ unique needs

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6
Q

Reach

A

concerned with the firm’s access and connection to customers

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7
Q

Richness

A

concerned with the depth and detail of the two-way flow of information between the firm and the customer

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8
Q

Affiliation

A

concerned with facilitating useful interactions with customers

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9
Q

Focus on Customer

A

Who, What, When, Where, Why, and How

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10
Q

Who

A

determining the customers to serve

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11
Q

What

A

Determining which customer needs to satisfy

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12
Q

How

A

Determining Core Competencies Necessary to Satisfy Customer Needs

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13
Q

Corporate Strategy concerns

A

what business and how to manage

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14
Q

Business Strategy concerns

A

success in selected business

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15
Q

The purpose of a business-level strategy is to

A

create differences between the firm’s position and those of its competitors

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16
Q

When selecting a business-level strategy firms evaluate two types of potential competitive advantages

A
  • Lower costs than rivals

- The ability to differentiate and command a premium price that exceeds he extra cost of doing so

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17
Q

Two types of target markets

A

Broad Market

Narrow Market

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18
Q

Broad market

A

Firms seek to sue their capabilities to create value for customers on an industry-wide basis

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19
Q

Narrow Market

A

the firm intends to serve the needs of a narrow customer group

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20
Q

It is critical for the firms to select a business-level strategy that is

A

based on a match between the opportunities and threats in its external environment and the strengths of its internal organization as shown by its core competencies

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21
Q

Cost/Broad

A

Cost Leadership

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22
Q

Cost/Narrow

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A

Focused Cost Leadership

23
Q

Uniqueness/Broad

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A

Differentiation

24
Q

Unique/Broad

Study These Flashcards
A

Focused Differentiation

25
Cost/Broad/Narrow/Uniqueness
Integrated Cost Leadership/Differentiation
26
Cost Leadership ABBBREV
LFLSC
27
Cost Leadership
- Low production cost - Features and service acceptable to many - Low price- maybe - Standard/generic products and services - Competitive advantage (economic returns above those of competitors) comes from lower costs
28
Cost Leadership Strategy
an integrated set of actions taken to produce goods or services with features that are acceptable to customers at the lowest cost, relative to those of competitors
29
Effective use of the cost leadership strategy allows
a firm to earn above-average returns in spite of the presence of strong competitive forces
30
Cost Leadership Implication: Rivals
rivals hesitate to compete on the basis of price
31
Cost Leadership Implication: Customers
Powerful customers can force a cost leader to reduce its prices but not below average returns
32
Cost Leadership Implication: Suppliers
May be able to force its suppliers to hold down their prices, which would reduce the suppliers’ margins in the process
33
Cost Leadership Implication: Potential new entrants
New entrants must accept no-better-than-average returns until they gain the experience required to approach the cost leader’s efficiency
34
Cost Leadership Implication: Substitutes
Cost leader holds an attractive position in terms of product substitutes
35
Cost Leadership Risk ABBREV
IODSP
36
Cost Leadership Risk
- Obsolete product - Processes used to produce and distribute could become obsolete because of competitor’s innovations - May allow rivals to produce at costs lower than those of cost leader - Imitation - Do customers benefit - Sustainable strategy - Price competition destructive
37
Differentiation Strategy
an integrated set of actions taken to produce goods or service (at an acceptable cost) that customers perceive as being different in ways that are important to them
38
Differentiation Strategy ABBREV
VCHSPRW
39
Differentiation Strategy
- Value from unique features - Command premium price/loyalty - High customer service - Superior quality - Prestige/exclusivity - Rapid innovation - Whatever customer values
40
Differentiation implications: Rivals
Customers loyal purchasers of differentiated products, ways that are meaningful to them
41
Differentiation implications: Customers
Customers are willing to accept a price increase when product still satisfies their perceived unique needs
42
Differentiation implications: Suppliers
Suppliers must provide high-quality components, driving up the firm’s costs
43
Differentiation implications: New Entrants
Customer loyalty and the need to overcome the uniqueness of a differentiated product present substantial barriers to potential entrants
44
Differentiation implications: Substitutes
Firms selling brand-name goods and services to loyal customers are positioned effectively against product substitutes.
45
Differentiation Risks ABBREV
FCL
46
Differentiation Risks
- Feature worth the cost? - Can others create it? - Lasting Value?
47
Focus Strategy
an integrated set of actions take to produce goods or services that serve the needs of a particular competitive segment.
48
2 Types of Focused Strategy
- Focused Cost Leadership Strategy | - Focused Differentiation Strategy
49
Integrated cost leadership/differentiation strategy Definition
engage in primary value chain activities and support functions that allow them to simultaneously pursue low cost and differentiation
50
Integrated cost leadership/differentiation strategy ABBREV
BSC
51
Integrated cost leadership/differentiation strategy
- Blend – somewhat unique at a relatively low cost - Start as one and move toward the other - Continuous Improvement result
52
Integrated cost leadership/differentiation strategy Risks ABBREV
FSF
53
Integrated cost leadership/differentiation strategy Risks
- Firms find it difficult to perform primary value chain activities and support functions in ways that allow them to produce relatively inexpensive products with levels of differentiation that create value for the target customer - “Stuck in the middle” – firm’s cost structure is not low enough to allow it to attractive price its products and that its products are not sufficiently differentiated to create value for the target customer - Firms may need to make alliances

MGMT 485W (5 decks)

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