Strategic Management – Chapter 6

question

Most companies that pursue both a differentiated and low-cost strategic position end up...

answer

Stuck in the middle

question

details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market.

answer

Business-level strategy

question

Business level strategy concerns the broad question,

answer

How should we compete?

question

Strategic Position: Competitive Advantage is based on the difference between...

answer

Perceived value a firm is able to create for consumers, captured by how much consumers are willing to pay for a product or service, and the total cost the firm incurs to create that value.

question

The greater the economic value created (V - C), the greater

answer

A firm's potential for competitive advantage

question

Businesses can compete on

answer

Value or Cost

question

A firm's business-level strategy determines its

answer

Strategic Position - its strategic profile based on value creation and cost - in a specified product market.

question

To achieve a desired strategic position, managers must make

answer

Strategic tradeoffs

This is because higher value creation tends to require higher costs.

question

seeks to create higher value for customers than the value that competitors create, by delivering products or services with unique features while keeping costs at the same or similar levels, allowing the firm to charge higher prices to its customers.

answer

Differentiation Strategy

question

seeks to create the same or similar value for customers by delivering products or services at a lower cost than competitors, enabling the firm to offer lower prices to its customers.

answer

Cost-Leadership Strategy

question

When considering different business strategies, strategic leaders also must define the scope of competition

answer

whether to pursue a specific, narrow part of the market or go after the broader market.

question

Focused cost-leadership and Focused differentiation are essentially the same as the broad generic strategies except that...

answer

The competitive scope is narrower

question

A company that uses a differentiation strategy can achieve a competitive advantage as long as its economic value created (V - C) is

answer

Greater than its competitors

question

Types of Value Drivers that manager can use to improve its strategic position

answer

Product features - Adding unique product attributes allow firms to turn commodity products into differentiated products commanding a premium price. One of the reasons for R&D.

Customer service - Managers can increase the perceived value of their firms' product or service offerings by focusing on customer service.

Complements - Complements add value to a product or service when they are consumed in tandem.

question

The increase in value must be __________ than the increase in cost.

answer

greater

question

The cost leader attempts to

answer

optimize all of its value chain activities to achieve a low-cost position while still offering a product of acceptable value.

question

The most important cost drivers that strategic leaders can manipulate to keep their costs low are:

answer

Cost of input factors - Access to lower-cost input factors such as raw materials.

Economies of scale - When cost per unit decreases as output increases.

Learning-curve effects - With tie, we learn how to be more efficient which drives down costs.

Experience-curve effects
When you change underlying technology while holding cumulative output constant.

question

The success of each depends on context and relies on two factors:

answer

How well the strategy leverages the firm's internal strengths while mitigating its weaknesses.

How well it helps the firm exploit external opportunities while avoiding external threats.

question

Blue Ocean Strategy

answer

A business-level strategy that successfully combines differentiation and cost-leadership activities using value innovation to reconcile the inherent trade-offs in those two distinct strategic positions.

question

Blue oceans represent

answer

untapped market space, the creation of additional demand, and the resulting opportunities for high profitable growth.

question

Red oceans represent untapped market space of existing industries.

answer

In red oceans, the rivalry among existing firms is cut-throat because the market space is crowded and competition is a zero-sum game.

question

Successful value innovation requires that a firm's strategic moves

answer

lower its cost and also increase the perceived value to buyers.

question

To initiate a strategic move that allows a firm to open a new and uncontested market space, strategic leaders must answer four key questions when formulating a blue ocean strategy.

answer

Which of the factors that the industry takes for granted should be eliminated? (To lower costs)

Which of the factors should be reduced well below the industry's standards? (To lower costs)

Which of the factors should be raised well above the industry standard? (To increase perceived value)

Which factors should be created that the industry has never offered? (To increase perceived value)

question

One risk of seeking a blue ocean strategy is being

answer

"stuck in the middle". Achieving neither a clear differentiation or cost-leadership profile.

1 of 24

question

Most companies that pursue both a differentiated and low-cost strategic position end up...

answer

Stuck in the middle

question

details the goal-directed actions managers take in their quest for competitive advantage when competing in a single product market.

answer

Business-level strategy

question

Business level strategy concerns the broad question,

answer

How should we compete?

question

Strategic Position: Competitive Advantage is based on the difference between...

answer

Perceived value a firm is able to create for consumers, captured by how much consumers are willing to pay for a product or service, and the total cost the firm incurs to create that value.

question

The greater the economic value created (V - C), the greater

answer

A firm's potential for competitive advantage

question

Businesses can compete on

answer

Value or Cost

question

A firm's business-level strategy determines its

answer

Strategic Position - its strategic profile based on value creation and cost - in a specified product market.

question

To achieve a desired strategic position, managers must make

answer

Strategic tradeoffs

This is because higher value creation tends to require higher costs.

question

answer

Differentiation Strategy

question

seeks to create the same or similar value for customers by delivering products or services at a lower cost than competitors, enabling the firm to offer lower prices to its customers.

answer

Cost-Leadership Strategy

question

When considering different business strategies, strategic leaders also must define the scope of competition

answer

whether to pursue a specific, narrow part of the market or go after the broader market.

question

Focused cost-leadership and Focused differentiation are essentially the same as the broad generic strategies except that...

answer

The competitive scope is narrower

question

A company that uses a differentiation strategy can achieve a competitive advantage as long as its economic value created (V - C) is

answer

Greater than its competitors

question

Types of Value Drivers that manager can use to improve its strategic position

answer

question

The increase in value must be __________ than the increase in cost.

answer

greater

question

The cost leader attempts to

answer

optimize all of its value chain activities to achieve a low-cost position while still offering a product of acceptable value.

question

The most important cost drivers that strategic leaders can manipulate to keep their costs low are:

answer

question

The success of each depends on context and relies on two factors:

answer

How well the strategy leverages the firm's internal strengths while mitigating its weaknesses.

How well it helps the firm exploit external opportunities while avoiding external threats.

question

Blue Ocean Strategy

answer

question

Blue oceans represent

answer

untapped market space, the creation of additional demand, and the resulting opportunities for high profitable growth.

question

Red oceans represent untapped market space of existing industries.

answer

In red oceans, the rivalry among existing firms is cut-throat because the market space is crowded and competition is a zero-sum game.

question

Successful value innovation requires that a firm's strategic moves

answer

lower its cost and also increase the perceived value to buyers.

question

To initiate a strategic move that allows a firm to open a new and uncontested market space, strategic leaders must answer four key questions when formulating a blue ocean strategy.

answer

question

One risk of seeking a blue ocean strategy is being

answer

"stuck in the middle". Achieving neither a clear differentiation or cost-leadership profile.

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Strategic Management – Chapter 6

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