Exam Flashcards
Strategic Business Unit Definition
Distinct businesses set up as a unit in a larger company to ensure that a certain product or product line is promoted and handled as though it were and independent business.
Sustainable Competitive Advantage Definition
The long term advantage that an organization has over its competitors by offering superior value that is difficult or impossible to duplicate or exceed.
4 Prerequisites for SCA
💜Basis of Competition:Skills and Assets
💛Where You Compete:Product/Market Selection
💚Who You Compete Against: Competitor Selection
💙The Way You Compete
4 Criteria for SCA
💜Valuable
💛Rare
💚Costly to Imitate: Unique/Ambiguous/Socially Complex
💙Non-Substitutable
3 Basic Strategies for SCA
💜Operational Excellence
💛Product Leadership
💚Customer Intimacy
Three Steps in Competitor Analysis
💜 Identifying Customers 💛 Analyzing Strategic Groups 💙 Analyzing Key Competitors - Objectives - Strategies - Strengths and Weaknesses - Forecasting Likely Response Strategies
Differentiation Strategy Definition
When a retailer adapts its products in a way that customers view them as different from those of the competitor and are prepared to pay more.
Options for Differentiation
💙 By Brand
💛 By Unique Product or Store Characteristic
💜 By Distribution
💚 By Consumer Orientation
Sustainability of Differentiation - Two Factors
💜 Consumers must continue to perceive value of differentiation.
💛Longer the time before competitors imitate, the more sustainable.
Conditions That Make It Easier to Sustain Differentiation
💜 Uniqueness as a barrier to competition.
💙Cost advantage.
💚 Switching cost for consumers.
Common Pitfalls of Differentiation
💜 Uniqueness that is not valuable only to the retailer.
💚Overelaborating
💛 Too big a price difference
💙 Ignoring need to signal value to consumer
💜 Not knowing the cost of differentiation
💚 Focusing on product only and not whole value chain
💛 Failing to recognize different segments.
Low Cost Strategy Definition
Concentrate on lowering costs of production with the aim of lowering prices to customers.
Two Alternatives in Implementing Low Cost Strategy
💛 Lower Margins/ Higher Share
💙 Lower Costs/ Higher Margins
Cost Drivers
💙 Economies of Scale 💚 No Frills Products/Stores 💜 Low- Cost Distribution 💛 Location- Cost Advantage 💙 Institutional Factors
Pitfalls of Low Cost Strategy
💙 Concentrating only on product/store costs.
💚 Ignoring purchasing/procurement function.
💛 Overlooking smaller activities.
💜 Having false perception of cost drivers.
💙 Failing to exploit linkages.
💚 Contradicting a cost-reduction exercise.
💛 Entry of low-cost competitors.
