business strategy

Question 1

what are generic competitive strategies?

Answer 1

‘generic strategy’ = basic types of competitive strategy that hold across many kind of business situations

Question 2

what is competitive strategy?

Answer 2

concerned with how a company, business unit or organisation achieves competitive advantage in its domain of activity

Question 3

what is competitive advantage?

Answer 3

how a company, business unit or organisation creates value for its users, both greater than the costs of supplying them and superior to that of rivals

Question 4

what elements are included in michael porter’s generic strategies?

Answer 4

competitive advantage:
- lower cost
- differentiation

competitive scope:
- broad target
- narrow target

Question 5

what is cost leadership on MP’s generic strategies?

Answer 5

• lower cost
• broad target

Question 6

what is differentiation on MP’s generic strategies?

Answer 6

• differentiation
• broad target

Question 7

what is cost focus on MP’s generic strategies?

Answer 7

• lower cost
• narrow target

Question 8

what is differentiation focus on MP’s generic strategies?

Answer 8

• differentiation
• narrow target

Question 9

explain a cost leadership strategy

Answer 9

involves becoming the lowest-cost organisation in a domain of activity

Question 10

what are 4 key cost drivers that can help deliver cost leadership?

Answer 10

• lower input costs
• economies of scale
• experience
• product/process design

Question 11

explain the differentiation strategy

Answer 11

involves uniqueness along some dimension that is sufficiently valued by customers to allow a price premium

Question 12

what are 2 key issues of the differentiation strategy?

Answer 12

• the strategic customer on whose needs the differentiation is based
• key competitors: who are the rivals and who may become a rival

Question 13

what are the key drivers of differentiation?

Answer 13

• product and service attributes: providing better or unique features (e.g. Apple iphone)
• complements: building on linkages with other products/services (e.g. Apple and App store)
• customer relationships: customer services, customisation or marketing and reputation

Question 14

what 4 strategies are included in Porter’s generic strategies?

Answer 14

• cost leadership
• differentiation
• cost focus
• differentiation focus

Question 15

explain the focus strategy

Answer 15

targets a narrow segment of domain of an activity and tailors its products/services to the needs of that specific segment to the exclusion of others

Question 16

what are the two types of focus strategy?

Answer 16

• cost-focus strategy
• differentiation focus strategy

Question 17

stuck in the middle?

Answer 17

Michael Porter argues:
there is a fundamental trade-off between a cost-leadership strategy and a differentiation strategy. thus, firms need to adopt and stick to one single generic strategy
- failure to do this leads to a danger of being ‘stuck in the middle’ - doing no strategy well

Question 18

what is the strategy clock?

Answer 18

allows for a dynamic approach for examining alternative generic strategies and gives more scope for hybrid strategies
- has 2 distinct features

Question 19

what are the 2 distinct features of the strategy clock?

Answer 19

• it is focused on the prices to customers rather than the costs to organisations
• the circular design allows for incremental adjustments in strategy rather than stark choices

Question 20

what strategies are included in the strategy clock?

Answer 20

• differentiation strategies
• low price strategies
• hybrid strategies
• non-competitive strategies

Question 21

what are differentiation strategies (strategy clock)?

Answer 21

strategies in this zone seeks to provide products that offer benefits that differ from those offered by competitors

there are a range of alternative strategies from:
- differentiation without price premium (12 o clock) = used to increase market share
- differentiation with price premium (1 o clock) = used to increase profit margins
- focused differentiation (2 o clock) = used for customers that demand top quality and will pay a big premium