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| a strategy designed for a firm or a division of a firm that competes within a sing business |
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| an analysis of business strategy into basic types based on breadth of target market (industry wide vs. narrow market segment) and type of competitive adv (low cost vs. uniqueness) |
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| a firms generic strategy based on appeal to the industry wide market using a competitive adv based on low cost |
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the decline in unit costs of production as cumulative output increases
• Business “learns” to lower costs as it gains experience with production processes |
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a firm’s achievement of similarity, or being “on par”, with respect to low cost, differentiation, or other strategic product characteristic
• On the basis of differentiation permits a cost leader to translate cost adv directly into higher profits than competitors |
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| Pitfalls of Overall Cost Leadership- |
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Definition
| Too much focus on 1 or a few value-chain activities, all rivals share a common input or raw material, the strategy is imitated too easily, a lack of parity of differentiation, erosion of cost adv when the pricing info available to customers increases |
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consists of creating differences in the firm’s product or service offering by creating something that is perceived industry wide as unique and valued by customers
• Prestige or brand image (BMW), Tech (Guitars), Innovation (iPods), Features, Customer service, Dealer network |
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| Pitfalls of Differentiation |
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| Uniqueness that is not valuable, too much differentiation, too high price premium, differentiation that is easily imitated, dilution of brand identification through product-line extension, perception of differentiation may vary btwn buys and seller |
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| firms’ integrations of various strategies to provide multiple types of value to customers |
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| a firm’s ability to manufacture unique products in small quantities at low cost |
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| the total profits in a industry at all points along the industry’s value chain (Depths vary within an indiv segment) |
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| Pitfalls of Integrated Overall Cost Leadership and Differentiation |
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| firms that fail to attain both strategies may end up with neither and become “stuck in the middle”, underestimating the challenges and expenses associated with coordinated value-creating activities in the extended value chain, miscalculating sources of revenue and profit pools in the firm’s industry’s |
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| info that is in numerical form, which facilitates its storage, transmission, analysis and manipulation. |
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| the process of bypassing buyer channel intermediaries such as wholesales, distributors, and retailers. |
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| strategy targets a narrow market segment with customized products and/or services |
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| the stages of introduction, growth, maturity, and decline that typically occur over the life of an industry |
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| 1st stage of the industry life cycle, characterized by (1) new products that are NOT known to customer (2) poorly defined market segments (3) unspecified product features (4) low sales growth (5) rapid tech change (6) operating losses (7) need for financial support |
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| 2nd stage, (1) strong increases in sales (2) growing competition (3) developing brand recognition (4) need for financing complementary value-chain activities: marketing, sales, customer service, R&D |
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| 3rd stage, (1) slowing demand growth (2) saturated markets (3) direct competition (4) price competition (5) strategic emphasis on efficient operation |
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| a break in industry tendency to continuously augment products characteristic of the product life cycle, by offering products with fewer product attributes and lower prices |
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| associates the product with a radically different category. Incrementally improve products along specific dimensions |
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| 4th stage, (1) falling sales and profits (2) increasing price competition (3) industry consolidation |
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| a strategy of wring as much profit as possible out of a business in the short to medium term by reducing costs |
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| a firm’s acquiring or merging with other firms in a industry in order to enhance market power and gain valuable assets |
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| a strategy that reverses a firm’s decline in performance and returns it to growth and profitability |
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