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MGMT 466 > Chapter 4: Business Level Strategy > Flashcards

Chapter 4: Business Level Strategy Flashcards

1
Q

customers: relationship w/ BLS:

A

satisfy customers w/ BLS: returns from relationship w/ customers = life blood of all organizations

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2
Q

determine 3 things when selecting BLS

A
  1. who (target group)
  2. what (needs)
  3. how (CCs)
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3
Q

market segmentation

A
  • customer markets
  • industrial markets
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4
Q

market segmentation: 6 customer markets

A
  1. demographic
  2. socioeconomic
  3. geographic
  4. psychological
  5. consumption patterns
  6. perceptual
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5
Q

mkt segmentation: customer mkts: demographic

A

age, income, sex, etc.

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6
Q

mkt segmentation: customer mkts: socioeconomic

A

social class, stage in family cycle

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7
Q

mkt segmentation: customer mkts: geographic

A

cultural, regional, national

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8
Q

mkt segmentation: customer mkts: psychological

A

lifestyle, personality traits

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9
Q

mkt segmentation: customer mkts: consumption patterns

A

heavy, moderate, light users

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10
Q

mkt segmentation: customer mkts: perceptual factors

A

benefit segmentation, perceptual mapping

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11
Q

mkt segmentation: 5 industrial markets

A
  1. end-use
  2. product
  3. geographic
  4. common buyer factor
  5. customer size
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12
Q

mkt segmentation: industrial markets: end-use

A

identified by SIC code

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13
Q

mkt segmentation: industrial markets: product

A

based on tech change of production economics

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14
Q

mkt segmentation: industrial markets: geographic

A

country boundaries or regional differences w/in

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15
Q

mkt segmentation: industrial markets: common buyer factor

A

cut across product market & geographic segment

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16
Q

who

A

determining the customer to serve

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17
Q

What:

A

determining which customers needs to satisfy -> needs related to benefits/features of product

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18
Q

how:

A

determining core competencies necessary to satisfy customer needs -> CCs to implement value creating strategies => satisfy needs

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19
Q

What: customers needs/desires have been changing

A
  1. desire experience > simply purchasing G/S
  2. prefer customized G/S
  3. demand fast service
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20
Q

How (CCs) emphasize _____

A

innovation

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21
Q

purpose of BLS

A
  • to create differences between the firm’s position and those of its competitors (position differently)
  • develop activity maps to show how they integrate activities they perform (fit among activities = key to sustain. comp. adv.
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22
Q

assess 2 types of advantages (from internal assets’ nature/quality) => basis for apply BLS

A
  1. cost comp. adv.
  2. distinctiveness comp. adv.
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23
Q

2 types of market segments

A
  1. broad (industry-wide) -> larger & comprehensive
  2. narrow-> special needs and/or in specific region
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24
Q

Basis for customer value

A

see notes

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25
Q

cost leadership strategy

A
  • targets broad customer segment/group
  • effective use allows above avg returns despite strong comp. forces
  • sell stdized G/S to most typical customers
  • process innovation
  • emergine markets
  • logistics
  • value chain
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26
Q

examples of value creating activities associated with cost leadership strategy: Finance

A

manage finc resources to ensure +CF & low debt costs

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27
Q

examples of value-creating activities associated with cost leadership strategy: HR

A

develop policies to ensure sufficient hiring/retention to keep costs low & implement training to ensure high e’ee efficiency

28
Q

examples of value-creating activities associated with cost leadership strategy: MIS

A

develop/maintain cost-effective MIS operations

29
Q

examples of value-creating activities associated with cost leadership strategy: SCMT

A

effective relationships w/ suppliers to maintain efficient flow of goods (supplies) for operations

30
Q

examples of value-creating activities associated with cost leadership strategy: operations

A
  • build economies of scale & efficient ops (ie production processes)
31
Q

examples of value-creating activities associated with cost leadership strategy: distribution

A

use low-cost modes of transport & delivery times

32
Q

examples of value-creating activities associated with cost leadership strategy: MKTG

A

targeted advertising & low prices for high sales volumes

33
Q

examples of value-creating activities associated with cost leadership strategy: follow-up service

A

efficient follow up to reduce return

34
Q

cost leadership: rivalry with existing competitors

A
  • hesistate to compete on $ basis
  • factors: size of rival, mkt dependence, location/prior competitive interactions
  • reduce via joint ventures & guanxi
35
Q

cost leadership: bargaining power of buyers (customers)

A
  • cant force below comp or regain power & incr $
  • pressure innovative products
  • counterbalance w/ part.
36
Q

cost leadership: bargaining power of suppliers

A
  • higher margins -> can absorb $ incrs
  • some hold down supplier $
  • incr w/ outsourcing
37
Q

cost leadership: potential entrants

A

highly efficient (economies of scale)

38
Q

cost leadership: substitutes

A

flexibility: decr $ / incr diff w/o changing $

39
Q

competitive risks of the cost leadership strategy

A
  1. processes -> obsolete
  2. too much focus on decr costs
  3. imitation
40
Q

differentiation

A
  • nonstand./dist -> (unique needs) premium $ (value>cost @ comp. lvls)
  • product innovation = critical to success
  • apply its knowledge capital
  • offer a portfolio of products that complement each other
  • less similar => more buffered from rivals
41
Q

differentiation strategy: effective when firm has thorough understanding of:

A
  1. what customers value
  2. relative importance they attech to satisfaction
  3. for what they are willing to pay a premium
42
Q

6 ways to differentiate

A
  1. features
  2. customer service
  3. prestige/status
  4. diff. tastes
  5. design/pref.
  6. innov./lead
43
Q

differentiation: rivalry

A

incr loyalty => decr $ sensitivity

44
Q

differentiation: buyer power

A

distinct => decr. $ sensitivity (no alternatives)

45
Q

differentiation: supplier power

A
  • high quality (bc premium) => incr costs
  • high margin -> ~insulates %
  • pass on to customer
  • incr w/ outsourcing
46
Q

differentiation: entrants - 2 barriers

A
  1. loyalty
  2. need to overcome uniqueness
47
Q

differentiation: substitutes

A
  • brand name => loyalty
48
Q

competitive risks of the differentiation strategy

A
  1. $ change too large (features>needs; recession (luxury goods suffer))
  2. stop providing value (dont see diff.)
  3. generic experience > feature’s $
  4. counterfeiting
49
Q

examples of value creating activities assoiciated wth the differentiation strategy: finance

A
  • lt investment (i.e. R&D)
50
Q

examples of value creating activities assoiciated wth the differentiation strategy: HR

A
  • high skilled e’ees w? latest training
51
Q

examples of value creating activities assoiciated wth the differentiation strategy: MIS

A
  • real-time info
52
Q

examples of value creating activities assoiciated wth the differentiation strategy: SCMT

A
  • high quality supplies
53
Q

examples of value creating activities assoiciated wth the differentiation strategy: ops

A
  • high-quality goods & flexibile => change w/ demands
54
Q

examples of value creating activities assoiciated wth the differentiation strategy: dist

A
  • accurate/timely
55
Q

examples of value creating activities assoiciated wth the differentiation strategy: MKTG

A
  • promotion & ads
56
Q

examples of value creating activities assoiciated wth the differentiation strategy: follow-up service

A
  • ensure satisfaction
57
Q

focus strategies

A
  • CCs to serve needs of particular niche
58
Q

focus strategies: 3 specific target segments

A
  1. partiular buyer group
  2. different segment of product line
  3. different geographic market
59
Q

focus strategies: serve

A

serve more efficiently than broad (industry)

=> entrepreneur firms (“below radar”)

=> not served or served poorly

60
Q

example: ikea

A

focused cost leadership strategy

61
Q

example: food trucks - green trucks in LA

A

focused differentiation strategy

62
Q

difference between focus CL and focus D

A

competitive scope

  • industry forces often favor one over the other (CL v. D)
63
Q

Competitive risks of focus strategies

A

1-3) general

4) “out-focus” - ikea
5) industry -> enter
6) unique needs ->(change) industry (similar)

64
Q

integrated cost leadership/differentiation strategy

A
  • simultaneous concentration => incr flexibility
  • adapt quickly & strong networks
65
Q

integrated CL/D: 3 sources of flexibility to balance objectives of both strategies

A
  1. flexible manufacturing systems (FMS) -> eliminate cost-variety tradeoff
  2. info. networks - customer relationship management (CRM) -> understand customer (predict willingness exp)
  3. total quality mgmt systems (TQM) -> incr satisfaction, decr costs, decr time to intro product
66
Q

competitive risks of the integrated cost leadership/differentiation strategy:

A
  1. difficult to perform
  2. “stuck in the middle” - not optimal or dont successfully implement either (CL or D)
  3. costly to pursue
  4. alliances for diff but may extract $s
  5. “pure” outperform “hybrid”

MGMT 466 (12 decks)

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