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MGMT 466 - Ch 4
Business-Level Strategy
22
Management
Undergraduate 4
09/22/2009

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Term
business-level strategy
Definition
__ is an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets. it indicates the choices the firm has made about how it intends to compete in individual product markets. must determine
Term
1. who will be served 2. what needs those target customers have that it'll satisfy 3. how those needs will be satisfied
Definition
3 things that must be determined when selecting a business-level strategy
Term
reach
Definition
the __ dimension of customer relationships is concerned with the firm's access and connection to customers (the number of customers that can be reached)
Term
richness
Definition
the __ dimension is concerned with the depth and detail of the twoway flow of information between the firm and the customer. broader and deeper information-based exchanges allow firms to better understand their customers and their needs. Also, customers can better understand the firm and how it can satisfy them.
Term
affiliation
Definition
the __ dimension is concerned with facilitating useful interactions with customers. a website assisting customers in finding and sorting information is an example of this.
Term
market segmentation
Definition
__ is the process that clusters people with similar needs into individual and identifiable groups. this answers the "who?" question of business level strategy. customer characteristics are often combined to segment markets into specific groups that have unique needs. demographic factors can also be used to segment markets into generations.
Term
determining which customer needs to satisfy (what?)
Definition
after the firm decides who it will serve, it must identify the targeted customer group's needs that its g&s can satisfy. customers want products that create value for them.
Term
determining core competencies necessary to satisfy customer needs (how?)
Definition
core competencies are resources and capabilities that serve as a source of competitive advantage for the firm over its rivals.
Term
to create differences between the firm's position and those of its competitors. to do this, it must decide whether it intends to perform activities differently or perform different activities.
Definition
what's the purpose of a business-level strategy?
Term
cost leadership strategy
Definition
the __ strategy is an integrated set of actions taken to produce g&s with features that are acceptable to customers at the lowest cost, relative to that of competitors. these firms often sell standardized g&s to the industry's most typical customers. reducing the costs of inbound/outbound logistics can help create value
Term
1. the processes used by the cost leader to produce/distribute its g&s could become obsolete because of competitors' innovations 2.too much focus by the cost leader on cost reductions may occur at the expense of trying to understand customers' perceptions of "competitive levels of differentiation." 3. using their own core competencies, competitors sometimes learn how to successfully imitate the cost leader's strategy
Definition
competitive risks of the cost leadership strategy
Term
differentiation strategy
Definition
the __ strategy is an integrated set of actions taken to produce goods or services (at an acceptable cost) that customers perceive as being different in ways that are important to them. firms using this strategy target customers for whom value is created by the manner in which the firm's products differ from those produced and marketed by competitors.
Term
1. customers might decide that the price differential is too large 2. a firm's means of differentiation may cease to provide value for which customers are willing to pay 3. experience can narrow customers' perceptions of the value of a product's differntiated features 4. counterfeiting
Definition
4 competitive risks of the differentiation strategy
Term
focus strategy
Definition
a __ strategy is when a a firm uses its core competencies to serve the needs of a particular industry segment or niche to the exclusion of others
Term
focused cost leadership strategy
Definition
the __ strategy applies low cost to a segment of the market (IKEA)
Term
focused differentiation strategy
Definition
the __ strategy is the same as differentiation except the firm focuses on a narrow industry segment
Term
same as others plus: 1. a competitor may be able to focus on a more narrowly defined competitive segment and "outfocus" the focuser 2. a company competing on an industry-wide basis may decide that the market segment served by the focus strategy firm is attractive and worthy of competitive pursuit 3. the needs of customers within a narrow competitive segment may become more similar to those of industry-wide customers over time
Definition
competitive risks of focused strategies
Term
integrated cost leadership/differentiation strategy
Definition
the __ strategy involves engaging in primary and support activities that allow a firm to simultaneously pursue low cost and differentiation.
Term
flexible manufacturing system (FMS)
Definition
a __ increases the flexibilities of human, physical, and information resources that the firm integrates to create relatively differentiated products at relatively low costs (integrated strategy). a computer controlled process used to produce a variety of products in moderate, flexible quantities with a minimum of manual intervention. firms using this can respond more quickly to changes in its customers' needs, while retaining low-cost advantages and consistent product quality
Term
information networks
Definition
__ links companies with their suppliers, distributors, and customers to provide another source of flexibility. they help the firm to satisfy customer expectations in terms of product quality and delivery speed. CRM is an example of this.
Term
total quality management (TQM) systems
Definition
__ is a managerial innovation that emphasizes an organization's total commitment ot the customer and to continuous improvement of every process through the use of data driven problemt solving approaches based on empowerment of employee groups and teams. 1. increase customer satisfaction 2. cut costs 3. reduce amount of time to introduce innovative products to the marketplace
Term
1. firms find it difficult to perform primary and support activities in ways that allow them to produce relatively inexpensive prdoucts with levels of differentiation that create value for the target customer (stuck in the middle)
Definition
competitive risk of integrated strategies
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