1. Low-cost
- Capabilities for driving costs out of the value chain system.
Examples: large-scale automated plants, an efficiency-oriented culture, bargaining power
2. Borad differentiation
- Capabilities concerning quality, design, intangibles, and innovation Examples: marketing capabilities, R&D teams, technology
3. focused-low cost
- Capabilities to lower costs on niche goods Examples: Lower input costs for the
specific product desired by the niche, batch production capabilities
4. focused differentiation
- Capabilities to meet the highly specific needs of niche members
Examples: custom production, close customer relations.
5. best-cost
- Capabilities to simultaneously deliver lower cost and higher-quality or differentiated feature
Examples: TQM practices, mass customization
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Business Policy and Strategy - Vanguard University - Professor Irvine
Terms in this set (10)
A focused cost-leadership strategy can be especially attractive when the target market niche is small.
True
The most effective differentiation bases are those that are hard or expensive for rivals to duplicate.
True
A differentiation strategy can only be achieved with a large target market.
False
A cost leadership strategy can be especially effective when most buyers use the product in the same ways.
True
According to Porter, strategies allow organizations to gain competitive advantage from three different bases: cost leadership, differentiation, and decentralization.
False
Under which strategy would you offer products or services to a wide range of customers at the lowest price available on the market?
Cost Leadership
Under which condition would a cost leadership strategy be especially effective?
When the products of rival sellers are essentially identical and supplies are readily available from any of several eager sellers
Which "generic" strategy offers products or services to a niche group of customers at the lowest price available on the market?
Focused Cost Leadership
Under which condition would a differentiation strategy be especially effective?
When technological change is fast paced and competition revolves around rapidly evolving product features
Name a company that uses differentiation strategy
An example that uses differentiation strategy is Starbucks. The company tries to maximize their competitive advantage at all times. It is observed by the company in focusing on markets with its specialty coffee products. With the use of a broad differentiation, the company's value proposed in having high quality and uniqueness of products between food and beverage. In their food products, the company emphasizes in having baked goods that do not have high-fructose corn syrup. They try have the finest ingredients for their customers. While their competitors are focused to compete with low cost, Starbucks focuses in a warm and friendly atmosphere that consumers will enjoy.
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Verified questionsQUESTION
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QUESTION
Assume that an average firm in the office supply business has a 6% profit margin, a 40% total liabilities/assets ratio, a total assets turnover of 2 times, and a dividend payout ratio of 40%. Is it true that if such a firm is to have any sales growth (g>0), it will be forced to borrow or to sell common stock (that is, it will need some nonspontaneous external capital even if g is very small)? Explain.
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What is the present value of a security that will pay $29,000 in 20 years if securities of equal risk pay 5% annually?
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Refer to an online finance source such as Yahoo! Finance or Google Finance to look up the P/E ratios for Verizon Communications and Walmart. Which company has the higher P/E ratio? What factors could explain this?
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