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?
Targets a narrow segment of domain of an activity and tailors products to the needs.
* 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 & High 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?
A standard low-price strategy, low prices + similar quality to competitors aimed at increasing 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.
