Podcast
Questions and Answers
Which description best characterizes a business-level strategy?
Which description best characterizes a business-level strategy?
- Decisions about which industries a company should compete in.
- A company's approach to competing and gaining advantage in a specific industry or market. (correct)
- A plan for a company to expand into international markets.
- Strategies for managing a company's financial resources.
What is the primary goal of a low-cost strategy?
What is the primary goal of a low-cost strategy?
- Offering products or services that are perceived as unique and worth a premium price.
- Becoming the lowest-cost producer in the industry. (correct)
- Providing the highest quality products regardless of cost.
- Focusing on a narrow market segment with specialized needs.
A company pursuing a differentiation strategy aims to:
A company pursuing a differentiation strategy aims to:
- Minimize marketing and advertising expenses.
- Serve a broad market with standardized products.
- Offer unique products/services that customers are willing to pay a premium for. (correct)
- Offer products at the lowest possible price.
Which of the following is true of a focus strategy?
Which of the following is true of a focus strategy?
What is the core concept of 'value innovation'?
What is the core concept of 'value innovation'?
Which outcome is most closely associated with a blue ocean strategy?
Which outcome is most closely associated with a blue ocean strategy?
Abell's business definition framework is primarily concerned with defining a business based on:
Abell's business definition framework is primarily concerned with defining a business based on:
Which of the following is NOT a typical basis for market segmentation?
Which of the following is NOT a typical basis for market segmentation?
When choosing a business-level strategy, what should a company primarily consider?
When choosing a business-level strategy, what should a company primarily consider?
Corporate-level strategy primarily focuses on:
Corporate-level strategy primarily focuses on:
Horizontal integration is best described as:
Horizontal integration is best described as:
A manufacturer opening its own retail stores is an example of:
A manufacturer opening its own retail stores is an example of:
What is the primary advantage of vertical integration?
What is the primary advantage of vertical integration?
In the context of integration strategies, 'taper integration' refers to:
In the context of integration strategies, 'taper integration' refers to:
What is the main benefit of strategic outsourcing?
What is the main benefit of strategic outsourcing?
How can diversification increase company profitability?
How can diversification increase company profitability?
What is the key difference between 'transferring competencies' and 'leveraging competencies' in diversification?
What is the key difference between 'transferring competencies' and 'leveraging competencies' in diversification?
Which entry strategy for diversification involves purchasing an existing company?
Which entry strategy for diversification involves purchasing an existing company?
What does 'organizational architecture' refer to?
What does 'organizational architecture' refer to?
What is the focus of horizontal differentiation within an organization?
What is the focus of horizontal differentiation within an organization?
Flashcards
Business-Level Strategy
Business-Level Strategy
How a company chooses to compete in a specific industry or market to gain a competitive advantage.
Low-Cost Strategy
Low-Cost Strategy
Aiming to be the cheapest producer within the market, often through economies of scale.
Differentiation Strategy
Differentiation Strategy
Offering unique or superior products/services for which customers are willing to pay a premium.
Focus Strategy
Focus Strategy
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Value Innovation
Value Innovation
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Blue Ocean Strategy
Blue Ocean Strategy
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Market Segmentation
Market Segmentation
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Corporate-Level Strategy
Corporate-Level Strategy
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Horizontal Integration
Horizontal Integration
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Horizontal Integration
Horizontal Integration
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Forward Integration
Forward Integration
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Backward Integration
Backward Integration
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Vertical Integration
Vertical Integration
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Strategic Outsourcing
Strategic Outsourcing
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Diversification
Diversification
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Organization Architecture
Organization Architecture
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Horizontal Differentiation
Horizontal Differentiation
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Vertical Differentiation
Vertical Differentiation
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Strategic Control Systems
Strategic Control Systems
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Study Notes
Business-Level Strategies
- Business-level strategy involves a company's choices in how to compete within a specific industry or market to gain a competitive edge
- Generic business-level strategies include low-cost, differentiation, and focus
Generic Business-Level Strategies
- Low-cost strategy involves aiming to be the cheapest producer
- Differentiation strategy involves offering unique or superior products/services for which customers pay a premium
- Focus strategy involves targeting a specific niche, and can be either low-cost or differentiation within that niche
Value Innovation
- Value innovation creates new market space by simultaneously increasing customer value and lowering company costs
Blue Ocean Strategy
- Blue ocean strategy is a specific approach to value innovation
- The strategy creates uncontested market space, making competition irrelevant
- It can provide a long-term advantage because the innovator defines the new rules
Abell's Business Definition Criteria
- Applying Abell's framework helps decide the best business-level strategy
- Abell's framework involves defining the business by customer groups, customer needs, and technologies used
Market Segmentation
- Market segmentation divides a market into distinct groups of buyers with different needs, characteristics, or behaviors
- Market segmentation includes approaches like demographic, geographic, and psychographic
Corporate-Level Strategy
- Corporate-level strategy concerns the overall scope of the company and how it manages its various businesses
- Decisions at the corporate level support the company's competitive approach in individual markets
Corporate Growth
- Companies can grow by entering new markets, industries, or business areas
- Expansion options include related diversification and unrelated diversification
Horizontal Integration
- Horizontal integration acquires or merges with competitors
- Horizontal integration benefits include increased market share
- Horizontal integration drawbacks include antitrust issues
Types of Integration
- Horizontal integration involves competitors
- Forward integration involves moving closer to the end customer
- Backward integration involves moving closer to raw materials
Vertical Integration
- Vertical integration involves a company controlling multiple stages of the value chain
- Vertical integration benefits include reduced costs and increased control
- Vertial integration drawbacks include decreased flexibility
Value Chain Process
- Vertical value chain involves different stages
- Horizontal value chain involves the same stage
Strategic Outsourcing
- Outsourcing means contracting with external providers
- Outsourcing benefits include cost savings
- Outsourcing drawbacks include loss of control
Diversification
- Diversification occurs when companies enter new industries
- Diversification can potentially lead to higher profits
Diversification Profitability
- Ways in which diversification can increase profitability include economies of scope, market power, and financial economies
Competencies
- 'Transferring competencies' moves a specific skill
- 'Leveraging competencies' applies a general capability
Entry Strategies for Diversification
- Acquisitions occur when buying an existing company
- Internal ventures start a new business from scratch
- Joint ventures partner with another company
Restructuring
- Restructuring reorganizes a company, often involving selling off business units
- It is a way to exit markets or refocus the company
Organization Architecture
- Organization architecture combines organizational structure, control systems, and culture
- It is used to implement strategies
Organizational Design
- Organizational design requires strategic managers to select the right combination of organizational structure, control, and culture
- The three elements must work together effectively to support the chosen strategy
Effective Organizational Design
- Effective organizational design increases product differentiation
- Effective organizational design reduces cost structure
- Effective organizational design builds a competitive advantage
Horizontal and Vertical Differentiation
- Horizontal differentiation concerns how a company divides tasks and responsibilities across different functions or departments
- Vertical differentiation concerns the levels of hierarchy in an organization and reporting relatioships
Integration
- Integration mechanisms increase communication and coordination among functions and divisions
- Integration methods include teams, liaison roles, and information systems
Strategic Control Systems
- Strategic control systems monitor and evaluate the implementation of strategies
- Strategic control systems include financial controls and operational controls
Types of Strategic Change
- Types of strategic change concerns the kinds of changes companies face
- Types of strategic changes include adapting to new technologies and restructuring
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