Professional Documents
Culture Documents
business level
strategy
2.
customer
needs
3.
customer
groups
WHO is to be satisfied
4.
distinctive
competencies
5.
market
segmentation
6.
main
approaches to
segmenting
markets
7.
generic
business level
strategies
-cost leadership
-focused cost leadership
-differentiation
-focused differentiation
8.
cost
leadership
9.
focused cost
leadership
10.
differentiation
11.
focused
differentiation
12.
advantages of
cost
leadership
include:
-protected from competitors
-less affected by incrased prices of inputs if
there are powerful suppliers
-less affected by a fall in price of outputs if
there are powerful buyers
-purchases in large quantities increase
bargaining power over suppliers
-ability to reduce price to compete with
substitutes
-low costs and prices are barrier to entry
13.
disadvantages
of cost
leadership
include:
-competitors may lower their cost structure
-competitors may imitate cost leader's
methods
-cost reductions may affect demand
14.
advantages of
differentiation
include:
-customers develop brand loyalty
-powerful suppliers not a problem because
company geared more toward price it can
charge than costs
-can pass price increases on to loyal
customers
-powerful buyers not a problem because
product distinct
-differentiation and brand loyalty are
barriers to entry
-threat of substitute products depend on
competitor's ability to meet customer needs
15.
disadvantages
of
differentiation
include:
-difficulty maintaining long term
distinctiveness in customer's eyes (quickly
imitate/patents and first-mover advantage
are limited in duration)
-difficulty maintaining premium price
16.
advantages of
focused
differentiation
include:
-focuser protected from rivals to extent can
provide a product/service they cannot
-focuser has power over buyers because
they cannot get same thing elsewhere
-threat of new entrants limited by customer
loyalty to focuser
-customer loyalty lessens threat from
substitutes
-focuser stays close to customers and
changing needs
17.
disadvantages of focused
differentiation
include:
-focuser at disadvantage to powerful suppliers because it buys in small volume
-because of low volume, focuser may have higher costs than low cost company
-focuser's niche may disappear because of technological change or changes in customer's tastes
-differentiators will compete for focuser's niche
18.
becoming a broad differentiator- companies that successfully differentiate their products while also
lowering their cost structure over time
19.
failures in competitive
positioning
due to companies:
-not working continuously to improve business model
-not performing strategic group analysis
-often failing to ID/respond to changing opportunities and threats in environment
-losing sight of the customer
20.
strategic groups
set of companies that pursue a similar business model and compete for the same group of customers