Which of the following are risks of a focused low cost or focused differentiation strategy?

Chapter 5: Strategy and Competitive Advantage

1. "Sustainable competitive advantage" (see p. 134, sentence in italics)

 
1. What is meant by "sustainable competitive advantage." Provide a rationale for it.

 
2. What are some ways a firm could achieve and then keep "sustainable competitive advantage?" Explain fully.

1. The focus of this chapter is on:

 
1. The basic types of Competitive Strategies that a firm might follow

 
2. Offensive strategic moves that can be taken in order to gain competitive advantage

 
3. Defensive strategic moves that can be taken in order to try to defend advantage once gained

 
4. Vertical Integration (forward and backward) as a means of gaining competitive advantage

 
5. Timing of strategic moves in order to gain or defend competitive advantage.

 
2. Placed in the context of the Strategic Management Process (or "model" -- see Fig 1-1, p. 4), the topics in this chapter apply to the third task, STRATEGY.

 

Vison/Mission ---->Objectives --------->Crafting a STRATEGY

What competitive strategy do we follow?

What offensive moves should we make?

What defensive moves should we make?

Should we undertake vertical integration? If so, what kind?

Timing.... What should we do first? What should we do second? Etc.

1. Competitive Strategies

 
1. What is the difference between
1. Business strategy (Review p. 43)
2. Competitive strategy
3. Functional area strategy (Review p. 43)

 
2. What are the five competitive strategies that a firm could seek to follow?

1. Low-cost (of production) Leadership strategy
2. Broad Differentiation strategy
3. Best-cost Provider strategy
4. "Focused" or "Market niche" strategy
1. based on Lower cost
2. based on Differentiation

 
1. Distinguish between these. (You probably need to know Table 5-1, p. 137 from "top to bottom"!! It distinguishes between the five) When studying this table, pay particular attention to the variation of the five strategies across the following dimesions:

 
1. The strategic target of each of the five
2. The basis of attaining competitive advantage of each of them
3. The impact of the respective strategy on the firm's product line
4. The production (manufacturing) emphasis of the respective strategy
5. The marketing emphasis
6. The prerequisites for sustaining (competitive advantage) using the strategy

 
2. Low cost Provider Strategies

 
1. (p. 138, 2nd para.) The book says that there are two ways to drive one's costs "lower than competitors' cumulative costs." What are they? Understand and be able to explain pp. 138-43 in-depth.

 
1. Hint tor 1st way: go back and look at Fig 4.1, p. 116 in order to understand what the authors mean by the first way...
2. Hint for 2nd way: go back and look at Fig. 4.2, p. 118 to better understand what they mean by the second way...

 
2. Pp. 138-42. Look at the section entitled, "Controlling the Cost Drivers" and the nine cost driver presented there. Explain three or four of these....

 
3. Pp. 142-43. Look at the section entitled, "Revamping the Makeup of the Value Chain. Explain what is meant by this, and how it can be done.

 
4. How can a "low cost" company position be used as an offensive tool by a company?

 
5. How can a "low cost" company position be used as a defensive tool by a company?

 
6. Can you think of some actual companies that seem to be using this strategy?

 
7. What are some risks of this competitive strategy? (See p. 146-47)

 
3. Broad Differentiation Strategies

 
1. Explain what it is, and how might it be achieved. (See pp. 147-48)

 
2. What is/are the difference(s) in and the significance of:

 
1. Real value
2. Perceived value
3. Signal of value

 
3. How might a differentiation strategy affect a company's low cost strategy?

 
4. (P. 152) What are the major pitfalls of a differentiation strategy, in your opinion?

 
4. Best-Cost Provider (i.e., "more-value-for-the-money") strategy

 
1. Explain this strategy. How is it achieved?

 
2. Give examples of companies that seem to be following this strategy

 
5. "Focused" or "Market niche" strategy

 
1. based on Lower cost
2. based on Differentiation

 
3. (See p. 155) When would a "focus" or "market niche" strategy be attractive? Explain.

 
4. What the dangers or shortcomings of following one? Explain.

1. Vertical Integration

 
1. Give some examples of both forward and backward vertical integration. Use a manufacturing firm and then one other service organization of some type.

 
1. What are the advantages of vertical integration in each of your examples? Explain each in depth.

 
2. What are the disadvantages of vertical integration in each of your examples? Explain each in depth.

 
2. Cooperative Strategies

 
1. Why are alliances and collaborations undertaken?

1. "Offensive" strategies

 
1. Summarize and give an overview of the 6 offensive strategies presented on p. 163. (Do not spend laborious time working on the details of these points. Understand them generally, be able to summarize, but spend most of your time on items 4 and 5 above.)

 
2. How do you know who to try to attack? (P. 167-68)? Summarize a few significant criteria for this issue.

1. Defensive Strategies

1. Provide an overview summary of defensive strategies, and how they can be used to protect competitive advantage, once it has been gained.

 
2. Choose 3 or 4 attractive options from those presented on p. 168-69 and explore in some depth.

What are the major risks associated with a differentiation strategy?

What are the risks associated with cost leadership differentiation and focus strategies?

What are the pitfalls of low

When a focused low