BA 405 Exam #2 - Nicosia Ch. 5

cost focus strategy

a firm strives to create a cost advantage in its target market segment

mass customization

a firm's ability to manufacture unique products in small quantities at a low cost; an aspect of generic differentiation strategy with the rise of the Internet that that has changed how companies go to market, and has challenged some to the tried-and-true techniques of differentiation.

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 industry-wide 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 industry-wide as unique and valued by customers

competitive parity

a firms achievement of similarity, or being "on par" with competitors with respect to low cost, differentiation, or other strategic product characteristics.

business-level strategy

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

absolute cost, broad

A firm that strives for a low-cost advantage must attain an _______ ____ advantage relative to its rivals (often achieved by offering a no-frills product to a _____ target market using standardization to derive the greatest benefits from economies of scale and benefits.)

differentiation focus strategy

a firm seeking to differentiate in its target market

focus

_____ is used to select niches that are least vulnerable to substitutes or where competitors are weakest

focus

_____ requires that a firm either have a low -cost position with its strategic target, high differentiation, or both

competitive advantages

_________ ____________ are often short-lived due to rapid changes in technology, globalization, and actions by rivals from within & outside the industry

selective product & market pruning (turnaround strategy for market decline)

an example of this would be the discontinuation of product lines that are losing money or are marginally profitable in areas/markets that aren't generating a return

breakaway positioning

associates the product with a radically different category. maturity stage strategy.

generic strategies

basic types of business level strategies based on breadth of target market, and type of competitive advantage

asset & cost surgery (turnaround strategy for market decline)

firms try to cut administrative expenses and inventories, as well as speed up the collection of receivables

combination strategies

firms' integration of various (generic) strategies to provide multiple types of value to customers

differentiated attributes

high quality, brand identification, and reputation are all examples of ______ _______ when talking about combination strategies

piecemeal productivity improvements (turnaround strategy for market decline)

improving business processes by re-engineering them, benchmark specific activities against industry leaders, among other initiatives to lead to a significant overall gain

lower prices, lower cost

in a combination strategy of overall low cost and differentiation, the firm is able to provide value, namely _______ ______ to its customers since it has ______ _______ in value-creating activities

digital technologies

information that is in numerical form, which facilitates its storage, transmission, analysis, and manipulation. Have swept nearly every industry and are creating new cost efficiency and avenues for differentiation

exiting the market

involves dropping the product from a firm's portfolio entirely

harvesting strategy (decline stage)

involves obtaining as much profit as possible and requires that costs be reduced quickly

consolidation

involves one firm acquiring (at a reasonable price) the best surviving firms in an industry

sustainable

many experts agree that the net effect of the digital economy is FEWER rather than MORE opportunities for __________ advantage

competitive parity (overall cost leadership)

on the basis of differentiation, this factor of overall cost leadership permits a cost leader to translate cost advantages directly into higher profits than competitors, thus earning above-average returns

transaction costs

refers to all the various expenses associated with conducting business, including the costs of interaction with every part of a firm's value chain

maintaining strategy (decline stage)

refers to keeping a product going without significantly reducing marketing support, tech development, or other investments, in the hope that competitors will eventually exit the market

industry life-cycle

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

disintermediation

removing intermediaries in the sales funnel and effectively lowering transaction costs

turnaround strategies

strategies that reverse a firm's decline in performance and returns it to growth and profitability

reverse positioning

strips away "sacred" product attributes and replaces them with new ones. maturity stage strategy.

experience curve

the decline in unit costs of production as cumulative output increases. a way of looking at efficiency gains that come with experience. (created by Boston Consulting Group in 1968. )

introduction stage of the industry life cycle

the first stage of the industry life cycle, characterized by new products that are not known to customers, poorly defined market segments, unspecified product features, low sales growth, rapid technological change, operating losses, and a need for financial support

decline stage of the industry life cycle

the fourth stage of the industry life cycle characterized by falling sales and profits, increasing price competition, and industry consolidation. strategic options for the firms become dependent on the actions of rivals

growth stage of the industry life cycle

the second stage of the industry life cycle characterized by strong increases in sales, growing competition, development of brand recognition, and a need for financing complementary value-chain activities such as marketing, sales, customer service, research and development

maturity stage of the industry life cycle

the third stage of the industry life cycle characterized by slowing aggregated industry demand growth, saturated markets, direct competition, price competition, and strategic emphasis on efficient operations.

profit pool

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

extended value chain

the use of information technology to link a firm's value chain with the value chains of their customers and suppliers