Ch. 6: Differentiation, Cost Leadership, Blue Oceans
focused cost-leadership strategy
Same as the cost strategy except with a narrow focus on a niche market
focused differentiation strategy
Same as the differentiation strategy except with a narrow focus on a niche market
ambidextrous organization
an organization able to balance and harness different activities in trade-off situations
integration strategy
business-level strategy which successfully combines differentiation and cost-leadership activities
strategic trade-offs
choices between a cost or value position
cost-leadership cost drivers
cost of input factors, economies of scale, learning curve effects, experience curve effects
dis economies of scale
increases in cost per unit when output increases
minimum efficient scale (MES)
output range needed to bring down the cost per unit as much as possible, allowing a firm to stake out the lowest-cost position that is achievable through economies of scale
differentiation value drivers
product features, customer service, complements
value and cost drivers integration strategy
quality, economies of scope, customization, innovation, ARC
productivity frontier
relationship that captures the result of performing best practices at any given time, the function is concave to capture the trade-off between value creation and production cost
economies of scope
savings that come form producing two or more outputs at less cost than producing each output individually, despite using the same resources and technology
differentiation strategy
seeks to create higher value fro customers than the value that competitors create, by delivering products or services with unique features while keeping costs at the same or similar levels
cost-leadership strategy
seeks to create the same or similar value for customers, enabling the firm to offer lower prices to its customers
mass customization
the manufacture of a large variety of customized products or services at a relatively low per unit cost
scope of competition
whether to pursue a specific, narrow part of the market or go after the broader market
business-level strategy
The goal-directed actions managers take in their quest for competitive advantage when competing in a single product market