Internal Scanning 2 Flashcards
Corporate Value Chain Analysis
Primary activities
Support activities
Primary activities
Inbound logistics
Operations
Outbound logistics
Support activities
Procurement
Technology development
Human resource management
Firm infrastructure
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graphs
Functional strategy
maximizing resource productivity
Business strategy
competitive and cooperative strategies
corporate strategy
the overall direction of company and management of its business
Business strategy (2)
focuses on improving the competitive position of a company’s or business unit’s products or services within the specific industry or market segment it serves
Business strategy (3)
is extremely important because research shows that business unit effects have double the impact on overall company performance than do either corporate or industry effects
Business and corporate strategy
Just as corporate strategy asks what industry(ies) the company should be in, business strategy asks how the company or its units should compete or cooperate in each industry.
Competitive Strategy – asks these basic questions
P28 is an exam question
very important
Low cost
Differentiation
Focus on niche
Cost focus
Differentiation focus
Lower Cost strategy
Greater efficiencies than competitors
Greater efficiencies than competitors
Lower cost strategy is the ability of a company or a business unit to design, produce and market a comparable product more efficiently than its competitors
Greater efficiencies than competitors (2)
aims at the broad mass market requires efficient scale facilities, cost reductions, cost and overhead control; avoids marginal customers, cost minimization in R&D
Lower Cost strategy
Provides a defense against competitors
Provides a barrier to entry
Generates increased market share
(Wal-Mart, Dell, Southwest Airlines)
Differentiation strategy
Unique/superior value, quality, features, service
Unique/superior value, quality, features, service
Differentiation strategy is the ability of a company or a business unit to provide a unique or superior value to the buyer in terms of product quality, special features, or after-sale service
Differentiation strategy Can be associated with
design, brand image, technology, features, dealer network, or customer service
Differentiation strategy (2)
Lowers customers sensitivity to price Increases buyer loyalty Barrier to entry Can generate higher profits (Nike, Apple Computer, Mercedes-Benz)
Entrepreneurial firms
follow focus strategies where they focus their product or service on customer needs in a market segment and differentiate based on quality and service
Cost Focus- Differentiation Focus-
Cost Focus
low-cost competitive strategy that focuses on a particular buyer group or geographic market and attempts to serve only this niche to the exclusion of others
Differentiation Focus-
concentrates on a particular buyer group, product line segment, or geographic market to serve the needs of a narrow strategic market more effectively than its competitors
Stuck in the middle
when a company has no competitive advantage and is doomed to below-average performance
No competitive advantage
Below-average performance
( HP between IBM and Dell)
Evolutionary cycle of competitive behavior
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