Strat Man Ch. 5

reverse positioning

a break in industry tendency to continuously augment products, characteristic of the product life cycle, by offering products with fewer product attributes and lower prices

breakaway positioning

a break in industry tendency to incrementally improve products along specific dimensions, characteristic of the product life cycle, by offering products that are still in the industry but that are perceived by customers as being different

mass customization

a firm's ability to manufacture unique products in small quantities at low cost

competitive parity

a firm's achievement of similarity, or being "on par," with competitors with respect to low cost, differentiation, or other strategic product characteristic.

consolidation strategy

a firm's acquiring or merging with other firms in an industry in order to enhance market power and gain valuable assets

focus strategy

a firm's generic strategy based on appeal to a narrow market segment within an industry

overall cost leadership

a firm's generic strategy based on appeal to the industrywide market using a competitive advantage based on low cost

differentiation strategy

a firm's generic strategy based on creating differences in the firm's product or service offering by creating something that is perceived industrywide as unique and valued by customers

business level strategy

a strategy designed for a firm or a division of a firm that competes within a single business

harvesting strategy

a strategy of wringing as much profit as possible out of a business in the short to medium term by reducing costs

turnaround strategy

a strategy that reverses a firm's decline in performance and returns it to growth and profitability

Generic Strategies

basic types of business level strategies based on breadth of target market (industrywide versus narrow market segment) and type of competitive advantage (low cost versus uniqueness)

A narrow market focus is to a differentiation-based strategy as a

broadly-defined target market is to a cost leadership strategy.

The most probable time to pursue a harvest strategy is in a situation of

decline in the market life cycle.

combination strategies

firms' integrations of various strategies to provide multiple types of value to customers

The emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low in the ______ stage of the industry life cycle.

introduction

In the _______ stage of the industry life cycle, there are numerous segments, competition is very intense, and the emphasis on process design is high.

maturity

Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy?

overall cost leadership

The total profits in an industry at all points along the industry's value chain is called the

profit pool.

Businesses without a competitive advantage are not likely to earn more than "normal" profits in the long run. Normal profits are

profits one would expect to earn on investments that have a similar level of risk.

Which of the following is false regarding how a differentiation strategy can help a firm to improve its competitive position vis à vis Porter's five forces?

supplier power is increased because suppliers will be able to charge higher prices for their inputs

experience curve

the decline in unit costs of production as cumulative output increases

introduction stage

the first stage of the industry life cycle, characterized by (1) new products that are not known to customers, (2) poorly defined market segments, (3) unspecified product features, (4) low sales growth, (5) rapid technological change, (6) operating losses, and (7) a need for financial support.

growth stage

the second stage of the product life cycle, characterized by (1) strong increases in sales; (2) growing competition; (3) developing brand recognition; and (4) a need for financing complementary value-chain activities such as marketing, sales, customer service, and research and development.

Industry Life Cycle

the stages of introduction, growth, maturity, and decline that typically occur over the life of an industry

maturity stage

the third stage of the product life cycle, characterized by (1) slowing demand growth, (2) saturated markets, (3) direct competition, (4) price competition, and (5) strategic emphasis on efficient operations.

profit pool

the total profits in an industry at all points along the industry's value chain

As markets mature

there is increasing emphasis on efficiency.