MGMT 449 - MIDTERM - CH 5

Card Set Information

Author:
acelaker
ID:
297624
Filename:
MGMT 449 - MIDTERM - CH 5
Updated:
2015-03-05 00:36:00
Tags:
MGMT 449 MIDTERM
Folders:

Description:
MGMT 449 - MIDTERM - CH 5
Show Answers:

Home > Flashcards > Print Preview

The flashcards below were created by user acelaker on FreezingBlue Flashcards. What would you like to do?


  1. Why Do Strategies Differ
    • Key factors that distinguish one strategy
    • from another
  2. FIVE GENERIC COMPETITIVE STRATEGIES
    Low-Cost Provider

    Broad Differentiation

    Focused Low-Cost

    Focused Differentiation

    Best-Cost Provider
  3. FIVE GENERIC COMPETITIVE STRATEGIES
    Low-Cost Provider
    • Striving to achieve lower overall costs than rivals on products that attract a broad
    • spectrum of buyers

    ♦Competitive Advantages and Risks:

    ●Greater total profits and increased market share gained from underpricing competitors.

    • ●Larger profit margins when selling products at prices comparable to and competitive
    • with rivals.

    ●Low pricing does not attract enough new buyers.

    Rival’s retaliatory price cutting set off a price war
  4. FIVE GENERIC COMPETITIVE STRATEGIES
    Broad Differentiation
    Differentiating the firm’s product offering from rivals’ with attributes that  appeal to a broad spectrum of buyers

    ♦Advantages of Differentiation:

    ●Premium prices for products

    ●Increased unit sales

    ●Brand loyalty
  5. FIVE GENERIC COMPETITIVE STRATEGIES
    Focused Low-Cost
    • Concentrating on a narrow price-sensitive buyer segment and on costs to offer a lower-priced
    • product.
  6. FIVE GENERIC COMPETITIVE STRATEGIES
    Focused Differentiation
    • Concentrating on a narrow buyer segment by meeting specific tastes and requirements of niche
    • members
  7. FIVE GENERIC COMPETITIVE STRATEGIES
    Best-Cost Provider
    • Giving customers more value for the money by offering upscale product attributes at a
    • lower cost than rivals
  8. When a Low-Cost Provider Strategy Works Best
    • ♦Price competition among rival
    • sellers is vigorous.

    • ♦Products are readily available
    • from many sellers.

    • ♦Industry products are not easily
    • differentiated.

    • ♦Most buyers use the product in
    • the same ways.

    • ♦Buyers incur low costs in
    • switching among sellers.

    • ♦Large buyers have the power to
    • bargain down prices.

    • New entrants can use introductory
    • low prices to attract buyers and build a customer base
  9. Pitfalls of a Low-Cost Provider Strategy
    • ♦Lowering selling prices results
    • in gains that are smaller than the increases in total costs, reducing profits
    • rather than raising them.

    • ♦Relying on a cost advantage that
    • is not sustainable because rivals can copy or otherwise overcome it.

    • ♦Becoming too fixated on cost
    • reduction such that the firm’s offering is too features-poor to generate
    • sufficient buyer appeal.
  10. Pitfalls of a Differentiation Strategy
    • ♦Relying on product attributes
    • easily copied by rivals.

    • ♦Introducing product attributes
    • that do not evoke an enthusiastic buyer response.

    • ♦Eroding profitability by
    • overspending on efforts to differentiate the firm’s product offering.

    • ♦Not opening up meaningful gaps in
    • quality, service, or performance features vis-à-vis the products of rivals.

    • ♦Adding frills and features such
    • that the product exceeds the needs and uses of most buyers.

    • ♦Charging too high a price
    • premium.
  11. When a Focused Low-Cost or Focused Differentiation Strategy Is Attractive
    • ♦The target market niche is big
    • enough to be profitable and offers good growth potential.

    • ♦Industry leaders do not see that
    • having a presence in the niche is crucial to their own success.

    • ♦It is costly or difficult for multisegment competitors to meet the needs of
    • target market niche buyers.

    • ♦The industry has many different
    • niches and segments.

    • ♦Rivals have little or no interest
    • in the target segment.

    • ♦The focuser has a reservoir of
    • buyer goodwill and long-term loyalty.
  12. The Risks of a Focused Low-Cost or
    Focused Differentiation Strategy
    • ♦Competitors will find ways to
    • match the focused firm’s capabilities in serving the target niche.

    • ♦The specialized preferences and
    • needs of niche members to shift over time toward the product attributes desired
    • by the majority of buyers.

    • ♦As attractiveness of the segment
    • increases, it draws in more competitors, intensifying rivalry and splintering
    • segment profits.
  13. A company's competitive strategy deals with
    deals exclusively with the specifics of management's game plan for competing successfully—its specific efforts to please customers, its offensive and defensive moves to counter the maneuvers of rivals, its responses to whatever market conditions prevail at the moment, its initiatives to strengthen its market position, and its approach to securing a competitive advantage vis-à-vis rivals.
  14. The five generic types of competitive strategies include
    low-cost leadership, broad differentiation, best-cost provider, focused low-cost, and focused differentiation.
  15. low-cost leader's basis for competitive advantage is
    meaningfully lower overall costs than competitors.
  16. A competitive strategy of striving to be the low-cost provider is particularly attractive when
    buyers are large, have significant power to bargain down prices, use the product in much the same ways, and incur low costs in switching their purchases from one seller to anothe
  17. A broad differentiation strategy
    can produce sustainable competitive advantage if the differentiating features possess strong buyer appeal and can't be copied or easily matched by rivals; plus is an attractive competitive approach whenever buyers' needs and preferences are too diverse to be satisfied by a product that is essentially identical from seller to seller.
  18. A strategy of being a best-cost provider
    combines a strategic emphasis on low cost with a strategic emphasis on more than minimally acceptable quality, service, features, and performance.
  19. Which of the following are distinguishing features of a best-cost provider strategy?
    A competitive advantage based on more value for the money
  20. What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is
    their concentrated attention on serving the needs of buyers in a narrow piece of the overall market.
  21. A focused differentiation strategy aims at securing competitive advantage by
    offering buyers in the target market niche a product which they perceive is uniquely well suited to their tastes and preferences.

What would you like to do?

Home > Flashcards > Print Preview