Business Strategy & Models Flashcards
What are the 3 types of Strategic Changes?
- Business Strategy – business positioning to competitors.
- Strategic Direction - of products, industries and markets to pursue.
- Strategic Methods - how to pursue strategies (alliance, acquisition, etc…)
What is Competitive Strategy?
Concerned with how company achieves competitive advantage in its domain of activity.
What is Competitive Advantage?
How company creates value for its users.
Michael Porter’s Generic Strategy encompasses relationship between competitive advantage and competitive scope.
What is the Differentiation Strategy?
Product is unique in some dimension which is sufficiently valued by customers to allow a price minimum.
Issues with the Differentiation Strategy:
- Must identify customer in market and what needs product can be differentiated to accommodate for.
- Who are/can be the competitors?
Key Drivers for Differentiation Strategy:
- Product attributes (better/unique).
- Complements (linkages with other products)
- Customer relationships
What is the Focus Strategy?
Focus on niche market to develop product value and create a loyal client base. Re-occurring purchases.
Targets a narrow segment.
* Cost-focus strategy (easy jet)
* Differentiation focus strategy
Must choose one else “stuck in the middle”.
What are the Generic strategies in Porter’s Model?
- Cost Leadership (Low CA & Broad CS)
- Differentiation (High CA & Broad CS)
- Cost Focus (Low CA & Narrow CS)
- Differentiation Focus (High CA & Narrow CS)
What is the Strategic Clock?
Strategic tool that categorizes a company’s strategy based on price and perceived value.
What Strategies are Presented in the Strategy Clock?
- Differentiated Strategies
- Low-price Strategies
- Hybrid Strategies
- Non-competitive Strategies
What are Differentiated Strategies?
Product provides benefits that differ from competitors products. Alternative Strategies:
* Differentiation without price premium, increase market share
* Differentiation with price premium, increase profit margins
* Focussed differentiation, customers that demand top quality and will pay a big premium.
What are Low-Price Strategies?
Low prices + similar quality to competitors = increase market share. Requires cost advantage (EoS) to be sustainable. (Aldi/Lidl).
A “no-frills” strategy, focus on price sensitive market segments. (Ryanair & EasyJet).
What are Hybrid Strategies?
Achieve low prices and higher benefits simultaneously. Aims to:
* Enter markets and build position quickly
* Aggressive attempt to win market share
* Build volume sales & gain form mass production
What are Non-Competitive Strategies?
Only feasible where there is a near monopoly position. Increases prices with low perceived product/service benefits.
What is a Business Model Describe?
Describes business logic of an organisation including domains of value creation, value configuration, and value capture.
What are the Components of the Business Model?
Value Creation -
What is offered to what customer segment?
Value Configuration -
How value proposition structured.
Value Capture -
How model generates a margin.
What are the Business Model Patterns?
- Razor & Blade,
Gillette strategy of selling razors cheaply and profiting from sales of priced blades. - Freemium,
Basic services free to attract customers, who then upgrade to expensive premium services. (YouTube). - Peer-to-peer,
Brings together people and/or businesses without having to go through a middleman. (Airbnb, Uber).
What are Multi-Sided Platforms and Strategies?
Business model that brings together 2 or more distinct but interdependent groups to interact on a platform.
Examples of Multi-Sided Platforms and Strategies:
Technology (apple’s iOS system)
A product (Nintendo’s video game console)
A service (Uber’s transportation service)
Can have 2 or more sides.
What are 3 Important Factors of Multi-sided Platforms and Strategies?
- Platform distinctiveness and size -
Platform must have distinctive features in competition with other platforms to attract participants and being sufficiently large to attract diverse sides. - Choosing platform sides,
Decide what sides to include and how many is crucial for generating value for diverse sides and growth in network effects. - Multi-homing costs,
Platforms participants is multi-homing when it is possible to use more than one platform at the same time.
