S13: Business Strategy

Question 1

What is the purpose of a business-level strategy?

Answer 1

To bring value to consumers and gain competitive advantage by exploiting the firm’s core competencies

Question 2

What is the purpose of a business model?

Answer 2

It describes what a firm does to create, deliver, and capture value for its stakeholders

Question 3

What are some business-level strategies? (5)

Answer 3

• Cost leadership
• Differentiation
• Focused cost leadership
• Focused differentiation
• Integrated cost leadership/integration

Question 4

What are 3 factors needed to implement the integrated cost leadership/differentiation strategy successfully?

Answer 4

• Flexible manufacturing system (FMS): producing moderate, flexible quantities with a minimum of manual intervention
• Information networks: if used effectively, help the firm satisfy customer expectations in terms of product quality & delivery speed
• Total quality management systems (TQM): helps the firm develop the flexibility to identify opportunities to simultaneously increase its products differentiated features & reduce costs

Question 5

Potential risks of the integrated cost leadership/differentiation strategy?

Answer 5

Stuck in the middle -> compete at a disadvantage, unable to earn more than average returns