11 - Customizing Your Strategy Map to Your Strategy Flashcards
What is the essence of strategy according to Michael Porter?
The essence of strategy is in the activities—choosing to perform activities differently or to perform different activities than rivals.
This highlights the importance of strategic fit among activities for competitive advantage.
What are the two basic sustainable strategies articulated by Michael Porter?
Low-cost and differentiation.
These strategies have generally stood the test of time.
What are the three generic types of strategies proposed by Michael Treacy and Fred Wiersema?
- Operational excellence
- Customer intimacy
- Product leadership
These strategies build upon Porter’s framework.
What is the fourth generic strategy articulated by Arnoldo Hax and Dean Wilde?
System lock-in.
This strategy involves attracting complementors to enhance the organization’s offerings.
What is value innovation as introduced by W. Chan Kim and Renée Mauborgne?
Achieving superior and sustainable performance by performing well on selected attributes preferred by large customer segments while minimizing costs on non-critical features.
This approach focuses on keeping prices down while delivering outstanding performance.
How is total value creation defined in the context of strategy?
The maximum price that customers are willing to pay less the cost of products and services provided by suppliers.
This considers the distribution of value among suppliers, the company, and customers.
What are the three segments of total value creation?
- Value captured by suppliers
- Value captured by company
- Value captured by customers
These segments depend on the bargaining power of each participant.
What is the role of competitive advantage in the sustainability of a company’s strategy?
Positions built on systems of activities are far more sustainable than those built on individual activities.
This emphasizes the interconnectedness of activities in achieving a competitive edge.
What is a key characteristic of companies employing a low total cost strategy?
Delivering a low total cost buying experience combined with consistent quality, speed of purchase, and excellent service.
Examples include Southwest Airlines and Wal-Mart.
Fill in the blank: Companies following a low total cost strategy must deliver consistent quality to minimize the costs incurred by their customers to detect and remedy _______.
errors.
Consistent quality is crucial for customer satisfaction and retention.
What do low total cost companies do to keep their costs down?
Offer a limited selection of products and services that meet the needs of most targeted customers.
This strategy helps in reducing production and service delivery costs.
What is the primary focus of innovation for low total cost companies?
Process innovations rather than product innovations.
These companies seek to enhance efficiency and reduce costs.
What must product leadership companies excel at to maintain their competitive edge?
Anticipating customers’ needs and discovering new opportunities for superior products and services.
This involves a balance of fundamental research and product development.
What is the main goal of product leadership companies regarding market introduction?
To be first-to-market with innovative or enhanced features and functionality.
This allows them to command high prices from early adopters.
Fill in the blank: The operations management processes for product leadership companies must be robust to accommodate continual _______.
introduction of new products.
This flexibility is essential for adapting to market needs.
What is a critical aspect of the customer management processes for low total cost companies?
Providing convenience and ease of access for customers.
This includes accessible ordering processes and superb post-sales service.
What is the role of electronic relationships in low total cost strategies?
Critical for cost reduction and making ordering and distribution processes error-free.
Electronic interchanges enhance convenience and efficiency.
What do product leadership companies prioritize in their operating processes?
Flexibility and improvement over low-cost production
This allows for rapid ramp-up and minor changes based on marketplace feedback.
Why is flexibility important for product leadership companies?
To accommodate new products and reduce manufacturing costs after stabilization
Inflexible processes can lead to loss of revenue and market share.
What are the two critical processes in customer management objectives for product leadership companies?
- Identifying leading-edge customers
- Educating customers about new product benefits
True or False: Existing customers are always the best source for new product ideas.
False
Innovative capabilities may be too new for advanced customers to appreciate.
What must product leadership companies manage when introducing new products?
Regulatory and social processes
This includes improving product safety and environmental impacts.
What is a key aspect of complete customer solutions?
Building long-lasting relationships with customers
This involves understanding customer needs and providing customized solutions.
What did IBM prioritize between 1960 and 1980?
Complete solutions tailored to customer needs
IBM focused on hardware, software, installation, and consulting.