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Questions and Answers
What is the risk for a company that remains indecisive in its strategy?
What is the risk for a company that remains indecisive in its strategy?
How do leadership by costs and pricing differ?
How do leadership by costs and pricing differ?
What can happen if a company chooses a low-cost strategy without maintaining product quality?
What can happen if a company chooses a low-cost strategy without maintaining product quality?
In what type of environments is cost leadership strategy less relevant?
In what type of environments is cost leadership strategy less relevant?
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Which strategy can lead to a winning approach for a company?
Which strategy can lead to a winning approach for a company?
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What defines a 'no frills' strategy?
What defines a 'no frills' strategy?
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What is the main characteristic of hybrid strategies?
What is the main characteristic of hybrid strategies?
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Which company exemplifies the 'no frills' approach?
Which company exemplifies the 'no frills' approach?
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What outcome is likely for strategies characterized by high prices combined with low value?
What outcome is likely for strategies characterized by high prices combined with low value?
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What is a potential issue with hybrid strategies?
What is a potential issue with hybrid strategies?
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What is a primary advantage of utilizing a focused strategy in selective markets?
What is a primary advantage of utilizing a focused strategy in selective markets?
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Which characteristic is NOT part of the factors influencing the success of focused strategies?
Which characteristic is NOT part of the factors influencing the success of focused strategies?
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What risk is associated with having a focused strategy?
What risk is associated with having a focused strategy?
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Michael Porter describes a firm as 'stuck in the middle' when it fails to choose between what strategies?
Michael Porter describes a firm as 'stuck in the middle' when it fails to choose between what strategies?
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Which of the following best describes a differentiation focus strategy?
Which of the following best describes a differentiation focus strategy?
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How can brand loyalty create advantages in selective markets?
How can brand loyalty create advantages in selective markets?
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Which of the following is a characteristic of a cost focus strategy?
Which of the following is a characteristic of a cost focus strategy?
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What can happen if the differentiation factor in a focused strategy disappears?
What can happen if the differentiation factor in a focused strategy disappears?
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What is the Experience Effect primarily about?
What is the Experience Effect primarily about?
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How can a company leverage its experience to gain market share?
How can a company leverage its experience to gain market share?
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What is a potential risk of a cost leadership strategy?
What is a potential risk of a cost leadership strategy?
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Which of the following best describes differentiation?
Which of the following best describes differentiation?
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Which factor is crucial for the success of a cost leadership strategy?
Which factor is crucial for the success of a cost leadership strategy?
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What does effective market segmentation allow an enterprise to do?
What does effective market segmentation allow an enterprise to do?
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What challenge might companies face with the experience effect over time?
What challenge might companies face with the experience effect over time?
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Which of the following is NOT a condition for effective differentiation?
Which of the following is NOT a condition for effective differentiation?
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How does experience relate to market share and competitive advantage?
How does experience relate to market share and competitive advantage?
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Why is product complexity considered a differentiation strategy?
Why is product complexity considered a differentiation strategy?
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What primarily defines a Strategic Business Unit (SBU)?
What primarily defines a Strategic Business Unit (SBU)?
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Which of the following factors is essential for achieving competitive advantage?
Which of the following factors is essential for achieving competitive advantage?
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Which strategy focuses on providing products or services at a lower cost than competitors?
Which strategy focuses on providing products or services at a lower cost than competitors?
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What are imitation barriers designed to do?
What are imitation barriers designed to do?
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What capability involves using comparisons to assess an organization's performance relative to others?
What capability involves using comparisons to assess an organization's performance relative to others?
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Which type of strategy is focused on a specific market segment while maintaining a lower cost?
Which type of strategy is focused on a specific market segment while maintaining a lower cost?
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What must a competitive advantage be to endure against market changes?
What must a competitive advantage be to endure against market changes?
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Which of the following is NOT a source of competitive advantage?
Which of the following is NOT a source of competitive advantage?
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What does the experience effect imply in the context of competitive strategy?
What does the experience effect imply in the context of competitive strategy?
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What is considered a key requirement for sustaining a competitive advantage?
What is considered a key requirement for sustaining a competitive advantage?
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Which of the following is a characteristic of competitive strategy at the business level?
Which of the following is a characteristic of competitive strategy at the business level?
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What do economies of scale help a firm achieve?
What do economies of scale help a firm achieve?
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Which element does NOT contribute to a firm's efficiency under competitive strategy?
Which element does NOT contribute to a firm's efficiency under competitive strategy?
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What is the objective of a business-level competitive strategy?
What is the objective of a business-level competitive strategy?
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Study Notes
Competitive Strategies
- Levels of strategy: Corporate strategy focuses on the overall organisation, business strategy on competition within a market, and operational strategy on managing resources and processes.
- Strategic Business Units (SBUs): Distinct domains of activity within a company, often called divisions or profit centres. Can be identified by market-based criteria (similar customers, channels, competitors) or capabilities-based criteria (similar strategic capabilities).
- Competitive Advantage: A firm's unique aspect that distinguishes it from others in a better position for competing and gaining superior performance. It must be related to a key success factor, substantial enough to make a difference, and sustainable.
- Sources of competitive advantage: External factors like detecting changes, responding quickly, and exploiting opportunities; Internal factors like efficiency (cost leadership), quality (differentiation), innovation (process or product), and capacity for customer satisfaction (both).
Competitive Strategies (cont'd)
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Competitive Advantage Concepts:
- Costs are lower than competitors for a similar product/service quality resulting in higher margins if prices are kept the same.
- Economical Scale = increased inputs resulting in increased outputs greater than proportionate to the increase
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Generic Competitive Strategies:
- Cost Leadership: Lower costs than competitors, often achieved through economies of scale, experience effects, or production capacity.
- Differentiation: Providing unique products or services to command a premium price.
- Cost Focus: Cost leadership specifically aimed at a particular market segment.
- Differentiation Focus: Offering unique products or services in a specific market segment.
Sustaining Competitive Advantage
- Imitation Barriers: Obstacles that prevent competitors from copying a firm's competitive advantages. This includes identification of competitive advantages, incentives, disincentives (for competitors), and resource acquisition by rivals.
Experience Effects
- Learning Effects: As more units produced, time to manufacture each unit decreases (lower costs).
- Experience Effects: Time to produce each unit decreases as total output increases, impacting operating costs (lower costs).
- Value Creation: Companies can reduce costs by producing more units, utilizing their unique advantages.
Differentiation Focus
- Differentiation: Making a product or service unique, leading to a superior value for customers.
- Differentiation Issues: A company needs to understand the needs of its selected group of customers. Knowing who your competitors are is also important
The Strategic Clock
- Generic Strategies: Focusing on low prices, differentiation, or a combination of both (e.g., hybrid strategies), with other possibilities in-between.
- Strategic Clock Positioning: Illustrates different business strategies and their outcomes concerning perceived value and price of offerings.
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Description
Explore the different levels of strategies that organizations employ, including corporate, business, and operational strategies. Understand the role of Strategic Business Units (SBUs) and the sources of competitive advantage that can lead to superior performance in the marketplace.
