Alternatives to traditional strategy concepts

Question 1

Profit maximisation

Answer 1

aim to position the company at an energy monomer where forces acting on the company are least destructive

Question 2

competitive forces on oganisations

Answer 2

threat of new entrants, bargaining power of supplies, bargaining power of customers, position amount current competitors, threat of substitutes

Question 3

threat of entry

Answer 3

new entrant bring new capacity

1. economic scale
2. product differentiation
3. capital cost
4. capital disadvantage
5. access to distribution channels
6. government policy

Question 4

supplier power

Answer 4

• supply can be 1 or 2 companies
• supply has high switching costs
• no threat of substitution
• material is unique
• supplier can integrate up supply chain

Question 5

customer power

Answer 5

• take a large fraction of your production
• your product is not differentiated
• you produce cost a lot
• you are not cost effective

who the company buys from and who it sells to are major strategic decisions

Question 6

jockeying for position

Answer 6

degree of rivalry depends on:

• no of companies in the sector
• rate of growth (slow increases rivalry)
• little differentiation increases rivalry
• high fixed costs increase rivalry

Question 7

positioning the company

Answer 7

• match companies strengths and weaknesses to industry standard
• build defences where industry forces allow
• process will identify where you should take on competition
• you are a low cost supplied, look at powerful buyers but watch for substitutes
• company should try influence the forces or the balance of forces

Question 8

generic strategies

Answer 8

• cost leadership
• differentiation
• focus

Question 9

cost leadership

Answer 9

• aiming at being a lower cost producer that the competition
• the way you achieve low cost leadership will depend on the sector: economies of scale, proprietary technology, preferential access to raw materials, no frills standard materials supply
• to maintain cost advantage/ leadership: sell at or above industry average at lower price than competitors and cant’t supply rubbish

Question 10

differentiation

Answer 10

• aim to satisfy needs of buyer

- differentiate: product, delivery and after sales service

Question 11

focus

Answer 11

• company specialised in narrow activity developing distinct corporate advantage
• can focus in terms of cost or differentiation
• careful consideration required
• if target segment not sufficiently different from others then its unlikely to work

industries must have a favourable industrial position and no of industry leaders

Question 12

how to get competitive advantage

Answer 12

• need superior performance in one of your systems activities
• need creative or innovative combinations of activities

-have an internally logical system, high perceived value an low cost

Question 13

identifying competitors

Answer 13

-strategic grouping
-each activity you do should add value to the product/ service
value = perceived benefit to/ by customer
price= cost in terms of money