Strategic Management Chp 5

16 terms by KWahlberg 

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BLS and Comp Positioning

BLS

The Plan of Action that managers adopt to use resources & distinct competencies to gain a competitive advantage

Market Segmentation

The way a company decides to group customers (based on important differences in needs/preferences)

Two Basic BLS

Cost Leadership: outperforming competitors by doing everything it can to lower the cost of production
Differentiation: Satisfy the Needs of a limited customer group/segment

These can be Focused (concentrated on specific geo area, type of customer, or segment of product line) or Broad

What are the Pros and Cons of Cost leadership?

Pros: Charge lower price, make same profit & withstand competition based on price
Cons: Easy to lose sight of changing customer taste, competition will try to beat you are your own game

What are the Pros and Cons of Differentiation?

Pros: customers develop brand loyalty & creates barrier to entry for competition
Cons: Difficult to maintain uniqueness in eye's of consumer & threat of substitutable goods

What are the Pros and Cons of being Focused?

Pros: Customer loyalty lessens threat of sub goods & gain power over buyers b/c they cannot get same product elsewhere
Cons: Suppliers hold power which makes firm vulnerable to change & vulnerable to attack so must defend niche constantly

In a fragmented/growing industry, what strategy should you adopt?

Focused... Why?

What strategy should be implemented in a Mature Industry?

Anything that will secure competitive advantage & industry profitability simultaneously.

Manage Rivalry (price leadership, Non-Price competitive Strategies) & Deter New Entries (differentiation, price cutting, etc)

What are the signs of a declining industry?

Competition is increasing and profit rates falling

Four Strategies for competing in a declining industry:

Divest, Niche, Harvest, Leadership

In a declining industry if there is high intensity competition, but low company strength (related to remaining pockets of demand), what strategy should be undertaken?

Divested (selling business)

In a declining industry if there is high intensity competition, and high company strength (related to remaining pockets of demand), what strategies should be undertaken?

Niche Strategy (focus on pocket demands that are declining more slowly)
or
Harvest Strategy (optimize cash flow for short period of time)

In a declining industry if there is low intensity competition, and low company strength (related to remaining pockets of demand), what strategies should be undertaken?

Harvest Strategy (optimize cash flow for short period of time)
or
Niche Strategy (focus on pocket demands that are declining more slowly)

n a declining industry if there is low intensity competition, but high company strength (related to remaining pockets of demand), what strategies should be undertaken?

Leadership strategy (becoming a dominate player in the industry)
Or
Niche Strategy (focus on pocket demands that are declining more slowly)

What four factors determine intensity of competition in a declining industry?

The Speed of the Decline, The height of the exit barriers, the level of fixed costs, and the "commodity nature" of the product

What strategy should be used when considering entering a new market (if industry is viable for new entry)

SWOT:
Strengths (how we can used them)
Weaknesses (how we can stop them)
Opportunities (how to exploit them)
Threats (how to defend against them)

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