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Baylor Norris
Terms in this set (30)
business-level strategy
an integrated set of actions to gain a competitive advantage by exploiting core competencies (in specific product markets.)
market segmentation
dividing a market into meaningful, relatively similar, and identifiable segments or groups
cost leadership strategy
produce goods or services with features that are acceptable to customers at the lowest relative cost
differentiation strategy
to produce goods or services (at an acceptable cost) that customers view as being different and important.
focus strategy
actions taken to produce goods or services that serve the needs of a particular competitive segment
integrated cost leadership/ differentiation strategy
engaging in primary & support activities that allow a firm to pursue both
low cost &
differentiation
total quality management (TQM)
an organizations total commitment to the customer and to continuous improvement of every process
-through the use of data-driven, problem-solving approaches based on empowerment of employee groups and teams.
What is the purpose of a business level strategy?
-to create
differences between a firms position and its competitors.
-a firm has to decide on whether it is going to "choose to perform activities differently" or whether they are going to "perform different activities"
5 business-level strategies
1) Cost Leadership
2) differentiation
3) Focus cost leadership
4) Focused differentiation
5) Integrated cost leadership/differentiation
Firms that seek competitive advantage through Cost Leadership Strat...
produce standardized products for an industry's typical consumer at low cost.
--must be offered with a competitive level of differentiation
3 Competitive risks with Cost Leadership strategy
1) Loss of competitive advantage by new tech.
2) Failure to detect a change in
customer needs
3) Competitors imitating strategy
Competitive Adv. through Differentiation Strat.
firms provide products with different (and valued) features
--sold at a premium
--the less similar=the more buffered from comp.
4 Risks with Differentiation Strategy
1) Customers decide the differentiation is no longer
unique compared to the comp. thus not worth the premium price.
2) The differentiation does not create enough value for customers to pay the premium price
3) ability of comp's to make products that have similar features at lower cost.
4) counterfeiting- firms produce a cheap imitation of a differentiated good or service.
3 Competitive Risks with Focus Strategies
1) Comp's ability to use core
competencies to "out-focus" the focuser by serving a more narrowly defined market segment
2) Industry-wide comp's focusing on customer group's specialized needs
3) Reduced needs between the customers from a narrow and industry-wide markets segments.
3 examples of specific markets that Focus Strategy targets
1) Particular buyer group (i.e. youth vs seniors)
2) Different segment of product line
3)
Different geographic market (norther or southern italy using a foreign subsidiary)
Purpose of Integrated cost leadership/differentiation Strategy
To provide customers with relatively low-cost products that also have valued differentiated features
Primary risk of the Integrated strategy ("stuck in the middle")
firm might not produce products that offer sufficient value in terms of either low cost or differentiation.
Firms develop and use TQM systems to: (3) (RIC)
1) Increase customer satisfaction
2) Cut costs
3) Reduce time to introduce innovative products to the marketplace
Flexible Manufacturing Systems (FMS) Def.
Integrates human, physical, and information resources to create (relatively) differentiated products at (relatively) low costs.
Goal of FMS
Eliminate the low cost vs. product variety tradeoff
Example of an information network
Customer Relationship Management (CRM)
2 types of target markets
1) Broad Market: Use capabilities to create value to customers on an industry-wide basis
2) Narrow Market: Serve the needs of a narrow group of customers
earn above avg. returns in spite of strong competitive forces
Effective use of the cost leadership strategy allows a firm to...
When trying to find out the business level strategy, companies analyze what 2 types of potential competitive advantages?
1. Lower cost than rivals
2. or the ability to differentiate and command a premium price that exceeds the extra cost of doing so.
In terms of customers, when selecting a business level strategy the firm determines...(3)
1) WHO will be served
2) WHAT needs the target customers have that need to
satisfy
3) HOW to satisfy those needs
3 Dimensions of customer relations (RRA)
1) Reach
2) Richness
3) Affiliation
Reach Dimension
The firms access & connection to customers
Importance: adding customers...
Richness dimension
The depth/detail of the 2-way flow of information between firm and customers
Importance: to establish a competitive adv.
Affiliation Dimension
Concerned with facilitating useful interactions with customers
Importance: produces fewer complaints, enhancing satisfaction
...
...
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