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Strategic Management > Innovation, Growth, Product Differentiation > Flashcards

Innovation, Growth, Product Differentiation Flashcards

1
Q

Schumpeters Creative Destruction

A
  • Essential fact of capitalism and necessity of growth
  • continuous entry and exit of firms and products in dynamic economies
    e. g. zalando vs. quelle, vacuum tube tv vs flat screen, VHS vs dvd
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2
Q

Product Life Cycle Phases

A
  1. Introduction
  2. Growth
  3. Maturity
  4. Decline
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3
Q

Profits by PLC

A
  1. typically losses
  2. increasing profits
  3. very high profits
  4. decreasing profits
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4
Q

Demand by PLC

A
  1. high income buyers
  2. increasing market penetration
  3. mass market replacement
  4. knowledgeable customers
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5
Q

Technology by PLC

A
  1. Competing technologies
  2. Standardization, rapid process innovation
  3. Well-diffused know-how
  4. quest for technological improvements
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6
Q

Products by PLC

A
  1. Poor quality, wide variety
  2. design/quality improvements, dominant design
  3. standardization, avoid commoditization via branding
  4. commodities are norm
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7
Q

Manufacturing/Distribution by PLC

A
  1. short production runs, high skilled labor content
  2. capacity shortages, mass production
  3. overcapacity, deskilling, long production runs
  4. heavy overcapacities, speacialty channels
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8
Q

Trade by PLC

A

Manufacturing shifts from advanced countries to less developed countries

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9
Q

Competition by PLC

A
  1. Few
  2. Entry, mergers and exits
  3. shake out, increasing price competition
  4. price wars, exits
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10
Q

Key Success Factors

A
  1. Product innovation/credible image
  2. design for manufacture, build brand
  3. cost-efficiency, scale, high quality, fast development
  4. reduce overhead, signal commitment, rationalize capacity
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11
Q

Characteristics: Introduction/growth (2)

A

Continuous technological change, high demand growth

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12
Q

Characteristics: Mature industries (3)

A
  • Consumers become more knowledgeable
  • Technological knowledge diffuses
  • demand growth slows
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13
Q

Characteristics: Declining industries

A
  • excess capacity
  • no technical change
  • high average age of resources
  • aggressive price competition
  • capacity demand balance: predictablilty of decline vs exit barriers
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14
Q

Growth: M&A

A

Acquire shares or assets of target/

decide on joint operation and ownership

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15
Q

M&A: Goals buyer side (3 types)

A
  • Horizontal mergers: competition, production (scale/scope), market power
  • Vertical mergers
  • Conglomerate mergers
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16
Q

M&A: Goals target side

A
  • resolve company issues

- management (e.g. exit)

17
Q

Organic growth

A
  • essential in early phase
  • Less risky but slower
  • Ansoff Matrix
18
Q

Ansoff matrix

A

Existing Market + Product: protect/build
Existing market + new product: product development
New market + existing product: Market development
New market + new product: diversification

19
Q

Ansoff matrix: Protect/build

A

Market penetration: Consolidate, stabilize position, leverage existing resources/capabilities

20
Q

Ansoff Matrix: Product Development

A

Build on existing capabilities with new capabilities (higher risk)

21
Q

Ansoff Matrix: Market development

A

Target strategy if core competencies are product related: new segments, territories, use-cases

22
Q

Ansoff Matrix: Diversification

A

develop product and market outside of current core competencies

  • highest risk
  • horizontal and vertical diversification
23
Q

Diversification benefits (6)

A
  • economies of scale/scope
  • exploit/leverage resources
  • enhance knowledge base
  • internal market efficiency (finance, labor)
  • improved market position/bargaining
  • risk diversification
24
Q

Diversification costs

A
  • escalation of coordination costs
  • rising overhead
  • increasing complexity of info/communication
  • organizational diseconomies
  • increasing governance costs
25
Q

Reasons for Product differentiation in general

A
  • Avoid Bertrand competition

- is beneficial for heterogeneous consumer preferences

26
Q

Product differentiation: dimensions of consumer preferences (7)

A
  • Technical features
  • Durability
  • Resale value
  • Taste/image
  • Location
  • Time
  • Delivery duration
27
Q

Horizontal differentiation

A
  • for equal prices, some consumers prefer A over B
28
Q

Vertical differentiation

A
  • for equal prices, all consumers prefer A over B

- typically prices differ, making two levels of quality+price viable

29
Q

Porters Generic Strategies

A
  • Cost leadership
  • Differentiation
  • Focus

-> avoid being stuck in the middle

30
Q

Generic Strategies: Cost leadership

A
  • Main theme: low cost
  • aggressive pricing for high market share
  • achieve scale and avoid complexity
31
Q

Generic Strategies: Differentiation

A

perceived as being unique industry-wide, ideally along multiple dimensions

32
Q

Generic Strategies: focus

A

Focus on particular buyer group, narrow target at lower cost

Strategic Management (6 decks)

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