Business Level Strategy Flashcards
How does a competitive advantage emerge?
Changes in external sources and changes in internal sources of change.
What are the internal sources of change?
Some individuals have greater innovation and creativity.
What are examples of external sources of change?
Price, Customer Demand and Technology.
What is a firms success/competitive advantage based on?
Their ability to anticipate change in external environments and how quickly they can adapt to the change.
What are the sources of competitive advantage?
Cost advantage
Differentiation advantage
Technology
Explain Porters Generic (business) Strategies
Applicable to all industries and you need a generic strategy to achieve a competitive advantage and be successful.
Cost leadership: Having lower costs than competitors
Differentiation: The product is different from its competitors.
Focus: Based on a narrow market or product segment.
What is cost leadership and how can it be achieved?
Having lower costs than its competitors
Having low delivery costs but still able to make profits.
How this can be achieved:
Technology advantages: using technology to reduce costs
No fills products: keeping the product to its simplest form.
Location advantage: In terms of distribution.
Government subsidies.
What is differentiation and how can this be achieved?
The product is different from its competitors
If you differentiate your product well, customers will not look for alternatives.
How this can be achieved:
Product features
Product innovation
Service level
What is the focus strategy?
Based on a narrow product or market and can be both cost leadership and differentiation based.
How this can be achieved:
Look at a narrow product line
Geographic segmentation – buying locally not internationally.
Explain No Generic Strategy
Occurs when businesses do not have a low-cost strategy, differentiation, focused low cost, or focused differentiation.
They are stuck in the middle.
Guaranteed low profitability.
