L3- Business & Corporate Level Strategy

Question 1

define business level strategy

Answer 1

an integrated and coordinated set of commitments a firm uses to gain a competitive advantage by exploiting core competencies in specific product markets

Question 2

key questions of business-level strategy

Answer 2

Who will be served?
What needs do those target customers have?
How can those needs be satisfied?

Question 3

3 methods of managing customer r.ships

Answer 3

1. reach
2. richness
3. affiliation

Question 4

define reach (under business-level)

Answer 4

expanding the quantity and scope of connections

Question 5

define richness (under business-level)

Answer 5

enhancing the quality and depth of two-way information exchange

Question 6

define affiliation (under business-level)

Answer 6

creating meaningful connections by understanding and meeting customer needs
About viewing the world from the perspective of the customer and grasping their needs.

Question 7

list consumer markets

Answer 7

Demographic factors (age, income, sex)
Socioeconomic factors (social class)
Geographic
Psychological
Consumption pattern
Perceptual factors

Question 8

define end use segments under industrial markets

Answer 8

when business marketers figure out how their products will be used in final products, and then they split the market based on these uses.

Question 9

product segments

Answer 9

a group of similar products that share common characteristics and target a specific market.

Question 10

how to divide industrial markets (under business level)

Answer 10

1. end use segments
2. product segments
3. geographic
4. common buying factor
5. customer size segments

Question 11

common buying factor (under business level, industrial markets)

Answer 11

things that affect why people buy stuff. these factors are the same no matter product market/ geographic segment.

Question 12

customer size segments

Answer 12

sorting customers by the size of their business or purchasing capacity

Question 13

customer demands

Answer 13

wants for specific products backed by willingness and buying power.

Question 14

Customer wants

Answer 14

the form human needs take, shaped by culture and personality

Question 15

Customer needs

Answer 15

human states of felt deprivation

Question 16

generic strategy

Answer 16

a strategy that can be used by any organization competing in any industry.

Question 17

define cost leadership

Answer 17

Cost Leadership is offering an essentially equivalent product at a lower cost.

Question 18

define differentiation

Answer 18

Differentiation is offering a differentiated product and charging a premium price for it.

Question 19

two axis’s in buisness level strategies

Answer 19

1. competitive scope (broad/ narrow)
2. competitive advantage (cost/uniqueness)

Question 20

define competitive scope under generic business level strategies

Answer 20

the extent to which a firm serves a narrow or broad target group

Question 21

define competitive advantage

Answer 21

advantages based on low cost or uniqueness

Question 22

drivers of cost leadership (5)

Answer 22

1. economies of scale
2. learning curve
3. economies of scope
4. production tech.
5. production design

Question 23

economies of scale is when…

Answer 23

Making a lot of something helps spread the fixed costs, so each unit becomes cheaper to produce.

Question 24

economies of scope is when…

Answer 24

companies share some resources to make different products which makes everything cost less.

Question 25

drivers of differentiation

Answer 25

1. premium brand image 2. customization 3. unique design/ features 4. rapid product innovation

Question 26

cost leadership x rivalry

Answer 26

its hard for rivals to compete with low prices

Question 27

cost leadership x customers

Answer 27

they don't usually try to bargain a lot because it's already low. however, if they do it, and the company does discounts, this can make it hard to make profits.

Question 28

cost leadership x suppliers

Answer 28

they're in a good position to deal with suppliers

Question 29

cost leadership x threat of new entrants

Answer 29

difficult for them to beat cost efficiency.

Question 30

cost leadership x substitute

Answer 30

cost leadership companies can deal with it by lowering prices more

Question 31

risks of cost leadership (3)

Answer 31

1. becoming obsolete due to competitor innovations 2. risk of imitation 3. not capturing customer perception differentiation

Question 32

risks of differentiation

Answer 32

1. too much differentiation can mean customers are not into it 2. affected by changing economic conditions 3. customers not wanting to pay if there are imitations

Question 33

differentiation x rivalry

Answer 33

unique products that create loyalty make it tough for rivals

Question 34

differentiation x customers

Answer 34

uniqueness reduces price sensitivity

Question 35

differentiation x suppliers

Answer 35

high profit margins protect the company from rising supplier prices.

Question 36

differentiation x new entrants

Answer 36

uniqueness acts as a barier

Question 37

differentiation x substitutes

Answer 37

if customer loyalty exists, they're relatively safe.

Question 38

diversification = ? , and differentiation = ?

Answer 38

diversification is CORPORATE differentiation is BUSINESS

Question 39

corporate level strategy

Answer 39

selecting and managing a group of different businesses competing in different product markets. -> parent company structure, which product markets to be in, company structure, how do businesses fit together, entry/ exit decision

Question 40

three types under value creating diversification

Answer 40

1. related linked 2. related constrained 3. unrelated

Question 41

value creating - related linked diversification

Answer 41

economies of scope sharing activities, transferring core competencies

Question 42

value creating- related constrained diversification

Answer 42

market power -> firm can sell above existing prices diversifying into a business with some commonalities to create synergy. multi-point competing in some product or geographic market.

Question 43

value creating - unrelated diversificaiton

Answer 43

efficiently allocating resources, or restructuring assets

Question 44

related linked diversification has (...) relatedness

Answer 44

corporate

Question 45

related constrained diversification has (...) relatedness

Answer 45

operational

Question 46

value reducing diversification

Answer 46

usually motivated by executives wanting to increase employment opportunities, governance mechanisms try to prevent it

Question 47

there is a curvelinear relationship between:

Answer 47

1. diversification 2. performance

Question 48

describe the curvelinear r.ship btw performance and diversification

Answer 48

Good Start: When a company starts diversifying a bit (not too much), it usually sees positive results. This is because it reduces risks and opens up new opportunities. Perfect Balance: Yet, there's a sweet spot. When the company diversifies too much, the positive effects slow down. There's an ideal level of diversification where the company performs its best. Too Much Can Hurt: If a company goes too far and diversifies excessively, it can end up with more problems than benefits. Things get complicated, and performance might even go down. So, there's a point where too much diversification is not a good idea.

Question 49

how does NEC see itself?

Answer 49

NEC sees itself through carefully chosen core competencies, not just as a collection of business units.

Question 50

What analogy describes NEC's structure and core competencies?

Answer 50

NEC is compared to a tree, with the trunk as core products, branches as business units, and leaves/fruits as end products, while the roots represent core competencies.

Question 51

Why is concentrating on core competencies beneficial for a company?

Answer 51

Focusing on core competencies creates a unique, integrated system, aligning various skills, providing a hard-to-copy advantage over competitors.

Question 52

How can a company foster a core-competency mindset?

Answer 52

By not seeing business units as rigid, showcasing core competency projects, encouraging collaboration among managers for future competencies, and aligning these efforts with strategic goals.