Exam 2 Flashcards
Business Level Strategy
Firm’s efforts to position itself in the marketplace, please customers, ward off competitive threats, and achieve competitive advantage.
2 factors that distinguish one strategy from another:
A) Is the firm’s market target broad or narrow?
B) Is the competitive advantage pursued linked to low costs or product differentiation?
Best Cost Provider Strategies
Low-cost provider strategy, broad differentiation strategy, focused low-cost strategy, focused differentiation strategy
Low-cost provider strategy
Has lower costs and a broad cross-section of buyers
Broad differentiation strategy
Has differentiation and a broad cross-section of buyers
Focused low-cost strategy
Has a lower cost and a narrow buyer segment (market niche)
Focused differentiation strategy
Has differentiation and a narrow buyer segment (market niche)
Blue-ocean Strategy
Offers growth in revenues and profits by discovering or inventing new industry segments that create altogether new demand
Strategic alliance
A formal agreement between two or more separate companies in which they agree to work cooperatively toward some common objective
Merger
The joining of two independent companies
Acquisition
Purchase of one company by another
Horizontal integration
Merging with a competitor
3 main benefits of merging
- Reduction in competitive intensity
- Lower costs
- Increased differentiation
Why do firms acquire other firms?
To access new markets & distribution channels and to preempt rivals
Vertical integration
One that performs value chain activities along more than one stage of an industry’s value chain system
