Strategy, Business Models, and Competitive Advantage

Competing in the marketplace on the basis of a competitive advantage

enhances the company's prospects for winning in the marketplace and earning superior long-term profits relative to rivals.

strategy

explains why the company matters in the marketplace by specifying an approach to creating superior value for customers and determining how capabilities and resources will be utilized to deliver the desired value to customers.

A best-cost provider strategy

giving customers more value for the money by satisfying buyers' expectations on key quality/features/performance/service attributes, while beating their price expectations. This approach is a hybrid strategy that blends elements of low-cost provider and differentiation strategies;

realized strategy

is a combination deliberate planned elements and unplanned emergent elements. Some components of a company's deliberate strategy will fail in the marketplace and become abandoned strategy elements.

Deliberate Strategy

This part of management's action plan for running the company is its proactive

A frequently used and dependable strategic approach to setting a company apart from rivals and winning a competitive advantage includes _______________________

. developing expertise and resource strengths that give the company competitive capabilities that rivals can't easily imitate or trump with capabilities of their own. B. focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of serving the special needs and tastes of buyers comprising the niche. C. outcompeting rivals on the basis of such differentiating features as higher quality, wider product selection, added performance, better service, more attractive styling, technological superiority, or unusually good value for the money. CorrectD. All of these.

A low-cost provider strategy

Achieving a cost-based advantage over rivals. Walmart and Southwest Airlines have earned strong market positions because of the low-cost advantages they have achieved over their rivals.

Why Crafting and Executing Strategy Are Important Tasks

How well a company performs is directly attributable to the caliber of its strategy and the proficiency with which the strategy is executed.

The Three Tests of a Winning Strategy

How well does the strategy fit the company's situation? Is the strategy helping the company achieve a sustainable competitive advantage? Is the strategy producing good company performance?

Which of the following is not a condition that would lead managers to modify the company's strategy?

In response to employee demands for higher wages and better working conditions.

rarely works

Mimicking the strategies of successful industry rivals—with either copycat product offerings or efforts to stake out the same market position

Emergent Strategy

Novel strategic moves on the part of rival firms, unexpected shifts in customer preferences, fast-changing technological developments, and new market opportunities call for unplanned, reactive adjustments

Which of the following statements about strategies is correct?

Strategy is about competing differently from rivals and doing what competitors can't do. B. The strategic choices a company makes are seldom easy decisions and often involve difficult trade-offs. C. Every strategy needs a distinctive element that attracts customers and produces a competitive edge.

What is the reason that a company's strategy tends to be a "work in progress" and evolves over time?

The changing circumstances in the market and the competitive arena.

Which of the following is not one of the basic reasons that a company's strategy evolves over time?

The need on the part of company managers to make regular adjustments in the company's business model

The Road Ahead

What must managers do, and do well, to make a company a winner in the marketplace?The answer that emerges is that doing a good job of managing inherently requires good strategic thinking and good management of the strategy-making, strategy-executing process.

When can a company achieve sustainable competitive advantage?

Whenever an attractively large number of buyers develop a durable preference for its products or services over the offerings of competitors, despite the efforts of competitors to overcome or erode its advantage.

sustainable competitive advantage

allows a company to attract sufficiently large numbers of buyers who have a lasting preference for its products or services over those offered by rivals, despite the efforts of competitors to offset that appeal and overcome the company's advantage.

In evaluating proposed strategies, managers should _________

assess how well the proposed strategy passes the three tests of a winning strategy.

Abandoned Strategy Elements

components of a company's deliberate strategy that fail in the marketplace

A broad differentiation strategy

concentrating on a narrow buyer segment (or market niche) and outcompeting rivals by having lower costs than rivals and thus being able to serve niche members at a lower price. Private-label

A focused differentiation strategy

concentrating on a narrow buyer segment (or market niche) and outcompeting rivals by offering niche members customized attributes that meet their tastes and requirements better than rivals' products. Louis Vuitton and Rolex

business model

sets forth how its strategy and operating approaches will create value for customers, while at the same time generating ample revenues to cover costs and realizing a profit. The two elements of a company's business model are its (1) customer value proposition and (2) its profit formula.

A company's strategy __________________

tends to be a combination of both proactive and adaptive elements.

proactive moves

to improve the company's financial performance and secure a competitive edge

adaptive reactions

to unanticipated developments and fresh market conditions

A company's strategy is shaped by ___________________

unexpected moves of competitors, shifting buyer preferences, and new ideas for improving the strategy.