Chp 5: Generating strategic options

Question 1

What are the four strategies determined by competitive scope and competitive basis?

Answer 1

1. Cost leadership - cost driven, broad scope
2. Differentiation - differentiation driven, broad scope
3. Cost focus - cost driven, narrow focus
4. Differentiated focus - differentiated driven, narrow focus

Question 2

Which three situations could a hybrid strategy (Bowman’s Strategy Clock) be successful?

Answer 2

1. Greater sales volume - yielding economies of scale
2. Differentiation may lie in the core competency - eg. IKEA getting customers to build furniture
3. Market entry - charging lower prices can buy market chare and customer loyalty which can then be increased (prices) after

Question 3

What are the five methods of growth according to the World Economic Forum?

Answer 3

1. Build
2. Buy
3. Partner
4. Invest
5. Incubate

Question 4

What are six reasons for international growth?

Answer 4

1. Product Life Cycle - a mature market in one country could be an intorductory market in another
2. Competition
3. Reduce dependence
4. Economies of Scale - could push organisations into needing to increase sales by going abroad
5. Cheaper sources of raw materials/labour
6. Financial opportunities - corporate tax benefits or lucrative emerging markets

Question 5

What are the four methods of divestment?

Answer 5

1. Sale as a going conern
2. Assets are liquidated - company closes
3. Demerger - into two or more separate companies
4. Management Buy-Out