Part 2 strategic choices

Question 1

What is a strategic business units?

Answer 1

a strategic business unit supplies goods or services for a distinct domain of activity

Question 2

What the purpose of SBUs ?

Answer 2

• To decentralize initiative to smaller units within the corporation so SBUs can purse their own distinct strategy
• To allow large corporation to vary their business strategies according to the different need of external markets.
• To encourage accountability: each SBU can be held responsible for the success or failure of its own strategy.

Question 3

What is competitive strategy ?

Answer 3

Is concerned with how a company, business unit or organisation achieves competitive advantage in its domain of activity.

Question 4

What is competitive advantage ?

Answer 4

Is abut how a company, business unit or organisation creates value for its users, both greater than the costs of supplying them and superior to that of rivals.

Question 5

What are three generic strategies ?

Answer 5

• cost leadership
• differentiation
• cost focus / differentiation focus

Question 6

What is the cost leadership strategy ?

Answer 6

cost leadership strategy involves becoming the lowest-cost organisation in a domain of activity

Question 7

What are the four key cost drivers that can help deliver cost leadership ?

Answer 7

• lower input cost
• economies of scale
• experience
• product/process design

Question 8

What are the key drivers for differentiation strategy ?

Answer 8

• product and services attributes : providing better or unique features
• customer relationships : customer service and responsiveness; customization or marketing and reputation.
• complements : building on linkages with other products/service

Question 9

What is the focus strategy ?

Answer 9

A focus strategy targets a narrow segment or domain of activity and tailors its products or services to the needs of that specific segment to the exclusion of others.

Question 10

What are two types of focus strategy ?

Answer 10

cost focus strategy

differentiation focus strategy

Question 11

What is the hybrid strategy ?

Answer 11

A hybrid strategy combines different generic strategies.

Question 12

What is a strategic lock-in ?

Answer 12

strategic lock-in is where users become dependent on a supplier and are unable to use another supplier without substantial switching cost.

Question 13

Lock-in can be achieved in two main ways ?

Answer 13

Controlling complementary products or services.

creating a proprietary industry standard

Question 14

What is the cooperative strategy ?

Answer 14

Collaboration with some competitors may give competitive advantage over other competitors

Question 15

What is the business model ?

Answer 15

A business model describes a value proposition for customers and other participants an arrangements of activities that produces this value and associated revenue and cost structure.

Question 16

What are the three typical business model ?

Answer 16

razor and blade : strategy of selling razors cheaply and profiting from sales of high priced blades
freemium: basic services are free to attract customers who then upgrade to expensive premium services.
Peer to peer : brings together people and or businesses without having to go through a middle man

Question 17

What is business model canvas ?

Answer 17

A business model canvas is a strategic management and lean startup template for developing new or documenting existing business model.

Question 18

What is a multi-sided platform ?

Answer 18

A multi-sided platform is a business model that brings together two or more distinct but interdependent groups of participants to interact on a platform.