5. Business-level strategy Flashcards
What is a Business Level Strategy?
Integrated and coordinated actions to gain competitive advantage by exploiting core competencies in specific markets.
Basically how to perform primary and secondary value chain activities.
What are the three questions asked when forming a business level strategy?
1) Who will be served?
2) Which customer needs must be satisfied?
3) How will those needs be satisfied?
Define a generic strategy.
A strategy that can be used by any firm in any industry.
Define reach.
A firm’s access/connection with customers.
Define richness.
Detail of two-way information flow between firms and customers.
Define affiliation.
Facilitating useful interactions with customers.
Define market segmentation.
Clustering customers with similar needs into groups.
What is a basic customer need?
Product that creates value.
What is the purpose of a business level strategy?
To create differences between firm’s position in industry and competitors.
List the five types of business level strategies.
1) Cost leadership
2) Differentiation
3) Focused cost leadership
4) Focused differentiation
5) Integrated cost leadership/differentiation
What are the two types of competitive scope?
1) Broad target (broad customer group)
2) Narrow target (narrow customer group)
Define cost leadership strategy.
Integrated actions to produce goods/services at the lowest cost acceptable to customers.
What are the risks of cost leadership strategy?
1) Competitor innovations can lower costs or add differentiated features without increasing costs.
2) Too much focus on cost reductions.
3) Competitors can imitate.
Define differentiation strategy.
Integrated actions to produce goods/services that are important to customers.
What are the risks of differentiation strategy?
1) Customers find price differentiation too high.
2) Differentiation does not create enough value for customers.
3) Counterfeit goods
