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Strategic Management > L3- Business & Corporate Level Strategy > Flashcards

L3- Business & Corporate Level Strategy Flashcards

1
Q

define business level strategy

A

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

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2
Q

key questions of business-level strategy

A

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

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3
Q

3 methods of managing customer r.ships

A
  1. reach
  2. richness
  3. affiliation
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4
Q

define reach (under business-level)

A

expanding the quantity and scope of connections

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5
Q

define richness (under business-level)

A

enhancing the quality and depth of two-way information exchange

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6
Q

define affiliation (under business-level)

A

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

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7
Q

list consumer markets

A

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

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8
Q

define end use segments under industrial markets

A

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

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9
Q

product segments

A

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

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10
Q

how to divide industrial markets (under business level)

A
  1. end use segments
  2. product segments
  3. geographic
  4. common buying factor
  5. customer size segments
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11
Q

common buying factor (under business level, industrial markets)

A

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

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12
Q

customer size segments

A

sorting customers by the size of their business or purchasing capacity

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13
Q

customer demands

A

wants for specific products backed by willingness and buying power.

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14
Q

Customer wants

A

the form human needs take, shaped by culture and personality

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15
Q

Customer needs

A

human states of felt deprivation

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16
Q

generic strategy

A

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

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17
Q

define cost leadership

A

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

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18
Q

define differentiation

A

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

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19
Q

two axis’s in buisness level strategies

A
  1. competitive scope (broad/ narrow)
  2. competitive advantage (cost/uniqueness)
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20
Q

define competitive scope under generic business level strategies

A

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

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21
Q

define competitive advantage

A

advantages based on low cost or uniqueness

22
Q

drivers of cost leadership (5)

A
  1. economies of scale
  2. learning curve
  3. economies of scope
  4. production tech.
  5. production design
23
Q

economies of scale is when…

A

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

24
Q

economies of scope is when…

A

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

25
Q

drivers of differentiation

A
  1. premium brand image
  2. customization
  3. unique design/ features
  4. rapid product innovation
26
Q

cost leadership x rivalry

A

its hard for rivals to compete with low prices

27
Q

cost leadership x customers

A

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.

28
Q

cost leadership x suppliers

A

they’re in a good position to deal with suppliers

29
Q

cost leadership x threat of new entrants

A

difficult for them to beat cost efficiency.

30
Q

cost leadership x substitute

A

cost leadership companies can deal with it by lowering prices more

31
Q

risks of cost leadership (3)

A
  1. becoming obsolete due to competitor innovations
  2. risk of imitation
  3. not capturing customer perception differentiation
32
Q

risks of differentiation

A
  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
33
Q

differentiation x rivalry

A

unique products that create loyalty make it tough for rivals

34
Q

differentiation x customers

A

uniqueness reduces price sensitivity

35
Q

differentiation x suppliers

A

high profit margins protect the company from rising supplier prices.

36
Q

differentiation x new entrants

A

uniqueness acts as a barier

37
Q

differentiation x substitutes

A

if customer loyalty exists, they’re relatively safe.

38
Q

diversification = ? , and differentiation = ?

A

diversification is CORPORATE
differentiation is BUSINESS

39
Q

corporate level strategy

A

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

40
Q

three types under value creating diversification

A
  1. related linked
  2. related constrained
  3. unrelated
41
Q

value creating - related linked diversification

A

economies of scope
sharing activities, transferring core competencies

42
Q

value creating- related constrained diversification

A

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.

43
Q

value creating - unrelated diversificaiton

A

efficiently allocating resources, or restructuring assets

44
Q

related linked diversification has (…) relatedness

A

corporate

45
Q

related constrained diversification has (…) relatedness

A

operational

46
Q

value reducing diversification

A

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

47
Q

there is a curvelinear relationship between:

A
  1. diversification
  2. performance
48
Q

describe the curvelinear r.ship btw performance and diversification

A

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.

49
Q

how does NEC see itself?

A

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

50
Q

What analogy describes NEC’s structure and core competencies?

A

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.

51
Q

Why is concentrating on core competencies beneficial for a company?

A

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

52
Q

How can a company foster a core-competency mindset?

A

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.

Strategic Management (5 decks)

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