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
