Week 5 Flashcards
Business level strategies:
How a firm intends to compete in individual product
markets on a day-to-day basis.
§ Integrated set of commitments and actions to gain a
Competitive Advantage
Decisions are made on what 3 factors?
Whose needs are served? (Market segmentation)
What needs will be served? (Identify target markets needs that the product can satis`fy-creating value)
How will those needs be served? (Using resources/capabilities/core competencies to develop products that satisfy the target consumer)
4 Types of Business Level Strategies:
Low Cost, Broad Target: Cost-Leadership (Walmart)
Low Cost, Narrow Target: Focused Cost Leadership (Red Box Movies)
Value, Broad Target: Differentiation (Apple)
Value, Narrow Target: Focused Differentiation (Rolls-Royce)
Best-Cost Strategy:
Firms that charge relatively low prices and offer
substantial differentiation.
-Difficult to execute, but it is also potentially very
rewarding.
Competitive Strategies
Competitors:
Competitive rivalry:
Mult Market Competition:
Competitive Dynamics:
Firms operating in the same market, with relatively similar products, and similar customers.
ongoing set of competitive actions and responses that occur among firms while pursuing avdantageous positions.
Firms competing against each other in severeal product/ geographic markets
The total set of competitive actions and responses taken by all firms competing within a market
Competitive Actions:
Being a first mover
Disruptive Innovation
Blue Ocean
Initial move into a market to establish a dominant position
Innovation that threatens/conflicts twith raditional approaches of competing in an industry
Creating a new, untaped market rather than competing in an existing one
Competitor Analysis:
2 ways to predict rivalary extent/nature?
Market Commonality
Resource Similarity
Drivers of Competitive Rivalry?
Awareness
Motivation
Capability
Competitive Rivalry:
Likelihood of Attack:
First-mover benefits:
Organizational size:
Quality:
Aggressively defend first move advantages.
Small firms are more likely to, and quick, but big firm will make a large total number of strategic actions.
If your stuff isnt great, dong anger the other competitors.
Competitive Rivalry:
Likelihood of Response:
Type of Competitive Action
Actors Reputation
Market Dependance
Responses differ based on
the nature of competitive actions. Large strategic actions
elicit fewer responses – resource commitment, time
needed, uncertainty involved
Competitors more likely to respond
to market leaders or credible competitor.
If youre very depdedant on said market, and someone tried to take it, youll fight back.
Cooperative strategies:
2 Kinds
Joint Venture: Cooperative arrangement where two or more firms create a new, legally independent entity.Typically, partners own equal equity percentages and
contribute equally to the venture’s operations.
Strategic Alliance:
A contractual arrangement between two or more organizations to share resources.Does not involve creation of a sperate independent entity, so no equity stakes involved. Less formal, so less likely to foster an intimate relationships between partners
