1 Entering the field

Question 1

Describe the competitive environment / 5 Forces

• what is it for
• define forces

Answer 1

A strategic framework, that assesses the specific industry structure (competitive forces). These forces include:

THREAT

• of new entrants
• of substitute products or services

BARGAINING POWER

• of buyers,
• of suppliers,

RIVALRY

• among existing competitors

Question 2

Identify different forces of the competitive environment.

• Diskuss how each force can be leveraged (value chain perspective)

(3)

Answer 2

Porters Five Forces:

1. Threat of ..
   New Entrants
   Substitutes
2. Bargaining Power of ..
   Suppliers
   Buyers
3. Competitive Rivalry

Leverage through strategies like ..

1. Cost leadership
2. Differentiation
3. Fokus
   Innovation
   Supply Chain Management

Question 3

What are Michael Porter’s Five Forces? (Examples)

• What is it used for?

Answer 3

Gaining knowledge about
the competitive environment (determine industry structure)

Question 4

Name two major sources of entry barrier which restrict new entrants!

Answer 4

• Capital requirements
• Economies of scale

(“Skaliere die Produktion, Kosten werden kleiner – Economy of Scale, das merk’ ich mir feiner!”)

Question 5

Name 2 examples of when a buyer group is powerful!

Answer 5

• Low switching costs
• Low profits earnings

Question 6

Name 2 examples of when a supplier group is powerful!

Answer 6

• Low amount of suppliers to choose from
• Low share of profit

Question 7

Name two major sources of entry barriers which restrict new entrants!

Answer 7

● Economies of scale
● Capital requirements

Question 8

Name two examples of when a buyer group is powerful!

Answer 8

● Low switching costs
● Low profits earnings

Question 9

What is the difference between business and corporate strategy?

Answer 9

• Business strategy
  How should we compete?
• Corporate strategy
  What businesses should we be in?

Question 10

What are the three business-level strategies?

• Explain each strategy!

Answer 10

• Differentiation
  Uniqueness perceived by the customer (e.g.technology, customer service etc. ..)
• Cost leadership
  Low cost position
• Focus
  Focus on specific segment only
  (niche product)

Question 11

How do you call a strategy, which employs

• differentiation
• cost leadership
• focus

Answer 11

Hybrid strategy

Question 12

Name 2 key words associated with strategy?

Answer 12

• Detailed plan
• Long-term

Question 13

What is the difference between strategy and strategy making?

Answer 13

• Strategy:
  Outcome/Product
• Strategy making:
  Process

Question 14

Name 2 dangers of an overall cost leadership strategy!

Answer 14

• Easy imitation
• Same raw materials (cost increase!)

Question 15

Name two dangers of a focus strategy!

Answer 15

• Cost advantage may be 0 overtime
• Competition

Question 16

Michael Porter’s Generic Competitive Strategies
(Definition) (2)

Answer 16

Basic types of business-level strategies based on ..

• breath of target market
  (industrywide vs narrow market segment)
• type of competetive advantage
  (low cost vs uniqueness)

Question 17

Cost Leadership
(Definition) (3)

Answer 17

• A firm`s generic strategy
• based on appeal to the industrywide market
• using a competetive advantage based on low cost.

Question 18

What Is The Experience Curve

• And Why It Matters In Business

Answer 18

Economies of Scale

• Decline in unit costs of production
• as cumulative output & experience increases.

Question 19

Competitive Parity Pricing
(Definition) (2)

Answer 19

• A firm`s achievement of similarity, or being “on par,” with competitors
• with respect to strategic product characteristic low cost,
  differentiation, or other, ..

Question 20

What is a focus strategy? (2)

Answer 20

• A firm’s generic strategy based on appealing to a narrow market segment within an industry,
• aiming to serve the needs of a specific group of customers more effectively than competitors who target a broader market.

Question 21

Differentiation Strategy
(Definition) (2)

Answer 21

• A firms generic strategy based on creating differences in the firms product or service offering
• by creating something that is perceived industrywide as unique and valued by customers.

Question 22

Describe the role
of competitive advantage
in Management (3)

Answer 22

set of unique attributes or capabilities, ..

• that allow a company to outperform its competitors
• essential for long-term success

Question 23

Differentiation Strategy:

• 3 approaches
• 2 examples, each

Answer 23

Prestige or brand image
BMW automobiles, ..

Quality

• Innovation
  Apple, ..
• Features
  Ducati motorcycles, ..

Technology

• Customer service
  North Face camping Equipment, ..
• Dealer network
  Caterpillar earthming equipment, ..

Question 24

Focus Strategy

• Key Characteristics (4)

Answer 24

Niche Targeting
(specific group within the branch)

• Deep Understanding
• Limited Scope
• Cost Leadership or Differentiation

Question 25

Cost Leadership Strategy

• Key Characteristics (2)
• Advantages (2)

Answer 25

Key Characteristics:

• Standardization (Operational Efficiency)
• Economies of Scale (Supplier Negotiations)

Advantages:
Potential for higher profit margins despite lower prices.

• Competitive pricing attracts price-sensitive customers.
• Enhanced bargaining power in the industry.