Chapter 7

cost strategy

generic strategy aimed at mass markets in which a firm offers a combination of cost benefits that appeals to the customer

scope

geographic range covered by the market

degree of similarity

the extent to which a product or service is like another

corporate, loyal, local, passionate

types of customers

1. threat of potential entrants 2. bargaining power of buyers 3. bargaining power of suppliers 4. threat of substitutes 5. rivalry among industry competitors

Porter's five forces of industry competition

serving the underserved

supra strategy targeting markets forgotten by larger competitors

differentiation, cost, and focus

The 3 generic strategies. three widely applicable classic strategies for businesses of all types.

focus strategy

a generic strategy that targets a portion of the market, called a segment or niche

differentiation strategy

a type of generic strategy aimed at clarifying how one product is unlike another in a mass market

net profit

amount of money left after operating expenses are deducted

parallel competition

an imitative business that competes locally with others in the same industry

entry wedge

an opportunity that makes it possible for a new business to gain a foothold in a market

innovative strategy

an overall strategic approach in which the firm does something very different

market

business term for the population of customers for your product or service

benefits

characteristics of a product or service that the target custoer would consider worthwhile

supra strategies

classic benefit combinations which are designed to work when there are many small businesses in an industry, along with a few larger firms

1. what do you expect out of the business? 2. what is your product/service idea? 3. how innovative or imitative will you be? 4. who do you plan to sell to- everyone or targeted markets? 5. where do you plan to sell? locally, regionally, nationally, globally

five initial key decisions

gross profit

funds left over after deducting the COGS

magic number

post tax income the entrepreneur personally seeks form the buisiness

imitative strategy

strategic approach in which the entrepreneur does more or less what someone else is already doing

formula facilities

supra strategy in which a company uses a prepackaged business to offer a better or more consistent product or service

supersupport

supra strategy in which extensive after sales service is used

bare bones/no frills

supra strategy in which prices are kept super low by cutting back on decor, hours, or employees

single mindedness

supra strategy in which the company is exceptional at one product or service

comprehensiveness

supra strategy in which the company offers one-stop shopping with complete inventory, immediate delivery, knowledgable staff

elite

supra strategy in which the high class are served. high quality and high prices

craftsmanship

supra strategy in which the product is specialized

customization

supra strategy in which there are custom features or personal, high quality

cutting out the intermediary

supra strategy in which you elimiate the wholesalers and retailers... sell what you make yourself

tightly manage decentralization

supra strategy in which you open a related firm to one that you already know how to run efficiently