Competitive Strategies Overview
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Questions and Answers

What is the primary basis for a company's performance?

  • Profitability from all its business segments
  • The market share of the products
  • Employee satisfaction and retention
  • The difference between price and production cost (correct)

    • What typically happens when a company is 'stuck in the middle'?

  • It successfully reduces costs while increasing prices
  • It struggles to compete effectively and may exit the industry (correct)
  • It dominates the market with unique products
  • It achieves both cost leadership and product differentiation

    • Which of the following is true about achieving differentiation?

  • It usually involves incurring higher costs. (correct)
  • It allows charging lower prices than competitors.
  • It requires lower production costs.
  • It can be achieved without special resources.

    • What are external factors crucial for creating a competitive advantage?

    <p>Market dynamics and favorable competitive structure</p> Signup and view all the answers

    What is necessary for a business to maintain a competitive advantage?

    <p>Rapid adaptability and responsiveness to change</p> Signup and view all the answers

    Which characteristic of a perfectly competitive market hinders the ability to earn above-average sector returns?

    <p>Homogeneity of products</p> Signup and view all the answers

    Why is it difficult for a company to successfully achieve both cost leadership and product differentiation?

    <p>They typically involve opposite operational strategies.</p> Signup and view all the answers

    Which of the following is NOT an external factor for competitive advantage creation?

    <p>Product variety within a company</p> Signup and view all the answers

    What does the learning effect imply regarding the production of a product?

    <p>Production time decreases as more units are manufactured.</p> Signup and view all the answers

    Which of the following best describes the experience effect?

    <p>It reduces the unit cost of the overall value added as experience increases.</p> Signup and view all the answers

    What is an essential strategy for managing risks in emerging industries?

    <p>Cooperate with early adopters</p> Signup and view all the answers

    What are economies of scale?

    <p>Increases in total output that exceed the proportion of inputs used.</p> Signup and view all the answers

    What should be considered when shaping the structure of an emerging industry?

    <p>Effectiveness of marketing strategies</p> Signup and view all the answers

    Which factor does NOT contribute to advantages in cost for a company?

    <p>Reducing the workforce while increasing output.</p> Signup and view all the answers

    Why is early entry into an emerging market beneficial?

    <p>It increases customer loyalty</p> Signup and view all the answers

    How can redesigning products impact manufacturing costs?

    <p>It reduces costs through fewer components and cheaper materials.</p> Signup and view all the answers

    What is a potential outcome of improving labor specialization in a company?

    <p>Enhanced skill development among workers.</p> Signup and view all the answers

    What is a recommended approach for companies during market entry?

    <p>Develop strict financial policies to avoid debt</p> Signup and view all the answers

    What effect does cumulative production have on the total cost of a product?

    <p>It decreases the true total cost as production accumulates.</p> Signup and view all the answers

    What factor does NOT contribute to industry consolidation?

    <p>Consumer brand loyalty</p> Signup and view all the answers

    What is a strategy to improve competitive position in emerging industries?

    <p>Retaining current customers through differentiation</p> Signup and view all the answers

    What is a key requirement for a competitive advantage?

    <p>It must be related to a key success factor in the market.</p> Signup and view all the answers

    Which of the following is NOT a resource contributing to economies of scale?

    <p>Increased prices for raw materials.</p> Signup and view all the answers

    What should companies prioritize when responding to changes in the industry?

    <p>Flexibility to adapt quickly</p> Signup and view all the answers

    Which component of created value represents the part the company retains?

    <p>Profit margin</p> Signup and view all the answers

    What is a form of market positioning for companies in growing industries?

    <p>Positioning as the sole provider in one segment</p> Signup and view all the answers

    What is meant by 'added value for the customer'?

    <p>The difference between the value perceived by the customer and the price paid.</p> Signup and view all the answers

    What strategy involves taking offensive or defensive actions to overcome competition?

    <p>Competitive strategy</p> Signup and view all the answers

    Which of the following statements about low-cost competitive advantage is true?

    <p>It aims to reduce costs across all areas of the company.</p> Signup and view all the answers

    Which of the following describes the relationship between customer value perception and purchase decision?

    <p>If perceived value exceeds the price, customers are likely to purchase.</p> Signup and view all the answers

    Which of the following is NOT a characteristic of sustainable competitive advantages?

    <p>Changes with market trends</p> Signup and view all the answers

    What is a crucial strategy for companies in mature industries to obtain a competitive advantage?

    <p>Emphasizing cost leadership through efficiencies</p> Signup and view all the answers

    What should companies in a maturing market detect to avoid negative impacts on production costs?

    <p>The point of stabilization in demand</p> Signup and view all the answers

    What is the ultimate goal of implementing competitive strategies?

    <p>To create a defensible position in the industry.</p> Signup and view all the answers

    Which strategy involves entering new industries for future growth?

    <p>Diversification</p> Signup and view all the answers

    In decline industries, what strategy aims at becoming the last remaining company?

    <p>Industry leadership</p> Signup and view all the answers

    What is an essential tactic for companies focusing on market segmentation in a mature industry?

    <p>Targeting niche segments with slow decline</p> Signup and view all the answers

    What does internationalization involve for companies seeking growth?

    <p>Expanding into new countries</p> Signup and view all the answers

    What is a key focus when implementing product differentiation in a mature industry?

    <p>Enhancing service and reputation</p> Signup and view all the answers

    What could help a company maintain a competitive edge within a niche market during industry decline?

    <p>Identifying and capitalizing on structural conditions</p> Signup and view all the answers

    How do focused competitors achieve a competitive advantage in market segments?

    <p>By creating products that meet specific customer needs.</p> Signup and view all the answers

    Which statement best describes the relationship between differentiation and competitive advantage?

    <p>Differentiation can increase costs which may decrease profit margins.</p> Signup and view all the answers

    What is the primary difference between cost and price as explained?

    <p>Cost is an internal variable, while price is focused on customer perception.</p> Signup and view all the answers

    What happens when a company with low costs chooses to maintain higher prices?

    <p>It potentially enhances their competitive capacity through reinvestment.</p> Signup and view all the answers

    What mistake do companies make when they equate leadership in costs with low prices?

    <p>They overlook that costs are an internal variable.</p> Signup and view all the answers

    According to the content, what is a common misconception regarding low-cost strategies?

    <p>They automatically lead to larger market shares.</p> Signup and view all the answers

    In what way can differentiation impact a company's pricing strategy?

    <p>It may allow for maintaining or increasing market share at stable prices.</p> Signup and view all the answers

    Why is understanding customer perception of cost important for a company?

    <p>Customer perception defines their willingness to pay a price.</p> Signup and view all the answers

    Study Notes

    Competitive Strategies

    • Competitive advantage: aspect of a company that distinguishes it from others, improving its performance in the market.
    • Requirements for competitive advantage:
      • Must be linked to a key success factor.
      • Must be substantial enough to make a difference.
      • Needs to be sustainable in response to market changes and competitor actions.
    • Value creation: difference between customer value for a product/service (maximum they'd pay) and the cost of obtaining it.
    • Components of value creation:
      • Margin: the portion of value created kept by the company.
      • Added value for the Customer: difference between perceived customer value and the price paid.
    • Evaluating customer added value: analysis of customer satisfaction and likelihood of purchase—a higher perceived customer value than cost will lead to higher sales.
    • Competitive advantages:
      • Low cost
      • Perceived uniqueness/differentiation

    Competitive Strategy

    • Definition: the way a company approaches competitors to gain an advantage.
    • Porter's framework: using offensive or defensive actions to create a defensible position in the market, addressing the five competitive forces, to generate a better return on investment.
    • Combining competitive advantages with market scope: creating competitive advantages in a specific market or industry segment.
    • Companies can pursue both cost leadership and differentiation simultaneously, but this rarely works well in the long run

    Competitive Framework

    • Factors external to a company that create competitive advantage: perfect market conditions (lack of differentiation and complete information) do not allow for substantial competitive advantage.
    • Factors internal to a company that create competitive advantage: effective resource management and execution of chosen strategies.

    Maintaining Competitive Advantage

    • Factors that determine if a competitive advantage is sustainable: barriers to imitation, industry dynamics.
    • Barriers to imitation related to achieving low-cost, unique product, or excellent service advantages:
      • Causal ambiguity (difficult to understand how it's done)
      • Protected knowledge
      • Accumulated experience
      • Unique resources and cultural values.
    • Risks to sustaining a competitive advantage:
      • Cost reductions: Obsessive cost reduction can negatively impact product quality.
      • Imitation: Competitors can imitate or develop comparable advantages.
      • Market changes: Emerging technologies or evolving customer preferences.

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    Estrategias Competitivas PDF

    Description

    This quiz explores the key concepts of competitive strategies, including competitive advantage, value creation, and customer satisfaction. Understand how companies distinguish themselves in the market and evaluate factors that contribute to a sustainable competitive advantage. Test your knowledge on the critical components that drive business success.

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