Strategic Management Ch. 5
Terms in this set (20)
A focused low-cost strategy
involves a serving buyers in the target market niche at a lower cost and a lower price than rival competitors.
Which of the following is not one of the hazards of pursuing a differentiation strategy?
Trying to create strong brand loyalty rather than being content with weak brand loyalty (which usually means lower costs and higher profitability)
Easy-to-copy differentiating features
do not offer the promise of sustainable competitive advantage.
A low-cost provider's basis for competitive advantage is
meaningfully lower overall costs than competitors.
A competitive strategy of striving to be the low-cost provider is particularly attractive when
buyers are large and incur low costs in switching their purchases from one seller to another.
A company's competitive strategy deals with
deals exclusively with the specifics of management's game plan for securing a competitive advantage vis-à-vis rivals.
A company's biggest vulnerability in employing a best-cost provider strategy is
not having the needed efficiencies in managing value chain activities to add differentiating features without significantly increasing costs.
A focused differentiation strategy aims at securing competitive advantage by
offering carefully designed products or services to appeal to the unique preferences and needs of a narrow, well-defined group of buyers.
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.
The five generic types of competitive strategies include
low-cost provider, broad differentiation, focused low-cost, focused differentiation, and best-cost provider.
A broad differentiation strategy
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.
can produce sustainable competitive advantage if the differentiating features possess strong buyer appeal and can't be copied or easily matched by rivals.
Which of the following are distinguishing features of a best-cost provider strategy?
A competitive advantage based on more value for the money
The most appealing approaches to broad differentiation
involve features or attributes that have considerable buyer appeal and are hard or expensive for rivals to duplicate.
For a best-cost provider strategy to be successful, a company must have
a superior value chain configuration and unmatched efficiency in managing value chain activities.
Striving to be the industry's low-cost provider and achieving lower costs than rivals entails
eliminating or curbing nonessential activities.
doing a better job than rivals in performing essential activities.
Successful differentiation allows a firm to
gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features and bond with the company and its products).
command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features).
Which of the following is not a distinguishing feature of a low-cost provider strategy?
The strategic target is value-conscious buyers and sustaining the strategy depends on frequent advances in technology and occasional product innovations
Competitive strategies that provide distinctive industry positioning and competitive advantage involve
choosing between (1) a market target that is either broad or narrow, and (2) whether the company should pursue a competitive advantage linked to low costs or product differentiation.
In which one of the following market circumstances is a broad differentiation strategy generally not well-suited?
When most competitors are using eye-catching ads to set their product offerings apart and build a brand image that is differentiated
A firm pursuing a best-cost provider strategy
seeks to offer more value-adding features than the industry's low-cost providers and lower prices than those pursuing differentiation.