Chapter #5 Flashcards
Basic types of business-level strategies based on breadth of target market (industrywide versus narrow market segment) and type of competitive advantage (low cost versus uniqueness).
Generic Strategies
A firm’s generic strategy based on appeal to the industrywide market using a competitive advantage based on low cost.
Overall Cost Leadership
The decline in unit costs of production as cumulative output increases.
Experience Curve
A firm’s achievement of similarity, or being “on par”, with competitors with respect to low cost, differentiation, or strategic product characteristic.
Competitive Parity
A firm’s generic strategy based on creating differences in the firm’s product or service offering by creating something that is perceived industrywide as unique and valued by customers.
Differentiation Strategy
A firm’s generic strategy based on appeal to a narrow market segment within an industry.
Focus Strategy
A firm’s ability to manufacture unique products in small quantities at low cost.
Mass Customization
The total profits in an industry at all points along the industry’s value chain.
Profit Pool
Firm’s integrations of various strategies to provide multiple types of value to customers.
Combination Strategies
The stages of introduction, growth, maturity, and decline that typically occur over the life of an industry.
Industry Life Cycle
The first stage of the industry life cycle, characterized by (1) new products that are not known to customers, (2) poorly defined market segments, (3) unspecified product features, (4) low sales growth, (5) rapid technological change, (6) operating losses, and (7) a need for financial support.
Introduction Stage
The second stage of the product life cycle, characterized by (1) strong increases in sales; (2) growing competition; (3) developing brand recognition; and (4) a need for financing complementary value-chain activities such as marketing, sales, customer service, and R&D.
Growth Stage
The third stage of the product life cycle, characterized by (1) slowing demand growth, (2) saturated markets, (3) direct competition, (4) price competition, and (5) strategic emphasis on efficient operations.
Maturity Stage
A break in the industry tendency to continuously augment products, characteristic of the product life-cycle, by offering products that are still in the industry but are perceived by customers as being different.
Reverse Positioning
A break in the industry tendency to incrementally improve products along specific dimensions, characteristic of the product life cycle, by offering products that are still in the industry but are perceived by customers as being different.
Breakaway Positioning
The fourth stage of the product life cycle, characterized by (1) falling sales and profits, (2) increasing price competition, and (3) industry consolidation.
Decline Stage
A strategy of wringing as much profit as possible out of a business in the short to medium term by reducing costs.
Harvesting Strategy
A firm’s acquiring or merging with other firms in an industry in order to enhance market power and gain valuable assets.
Consolidation Strategy
A strategy that reverses a firm’s decline in performance and returns it to growth and profitability.
Turnaround Strategy
