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Questions and Answers
What does cost leadership aim to achieve?
What does cost leadership aim to achieve?
- Generate economic value by expanding into new markets
- Generate economic value by charging higher prices than competitors
- Generate economic value by offering a product that customers prefer over competitors’ product
- Generate economic value by having lower costs than competitors (correct)
What is the primary goal of product differentiation?
What is the primary goal of product differentiation?
- Generate economic value by reducing product quality
- Generate economic value by increasing advertising expenditure
- Generate economic value by having lower costs than competitors
- Generate economic value by offering a product that customers prefer over competitors’ product (correct)
How does cost leadership generate economic value?
How does cost leadership generate economic value?
- By increasing product prices above competitors' prices
- By having lower costs than competitors (correct)
- By investing heavily in research and development
- By offering a unique product that customers prefer over competitors’ product
What is the focus of business level strategy?
What is the focus of business level strategy?
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What does the VRIO framework assess?
What does the VRIO framework assess?
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What is the purpose of Porter's Generic Competitive Strategies?
What is the purpose of Porter's Generic Competitive Strategies?
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What does strategic segmentation involve in business level strategy?
What does strategic segmentation involve in business level strategy?
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What is the primary consideration in making business level choices according to the text?
What is the primary consideration in making business level choices according to the text?
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Study Notes
Cost Leadership
- Aims to achieve the lowest production and distribution costs in an industry
- Enables a firm to offer its products at the lowest prices in the marketplace
Product Differentiation
- Focuses on creating a product or service that is perceived as unique in the industry
- Enables charging a premium price for the differentiated product
Cost Leadership - Economic Value
- Generates economic value by maximizing profits through lower costs
- Allows firms to compete aggressively on price
Business Level Strategy
- Focuses on how a firm competes within a specific product market
- Considers how to create and sustain a competitive advantage through unique positioning
VRIO Framework
- Assesses the value, rarity, inimitability, and organization of resources and capabilities
- Helps identify potential sources of competitive advantage
Porter's Generic Competitive Strategies
- Provides a framework for developing business level strategy
- Offers two primary approaches: cost leadership and product differentiation
- Guides firms in choosing a competitive position within their industry
Strategic Segmentation
- Involves dividing a market into distinct customer groups
- Allows firms to tailor their products and services to specific segments
Business Level Choices
- The text emphasizes the central consideration in making business level choices:
- Competitive advantage: How to create and sustain a competitive advantage over rivals
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