Chapters 4, 6, 8 & 9
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| business–level strategy | A business–level strategy is an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets.
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| 1. cost leadership strategy | The cost leadership strategy is an integrated set of actions taken to produce goods or services with features that are acceptable to customers at the lowest cost, relative to that of competitors. (Kia has cheap chic cars, low price but don't look like it)
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| 2. differentiation strategy | The differentiation strategy is an integrated set of actions taken to produce goods or services (at an acceptable cost) that customers perceive as being different in ways that are important to them.
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| focus strategies | The focus strategy is an integrated set of actions taken to produce goods or services that serve the needs of a particular competitive segment. (focused cost leadership and differentiation)
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| 5. integrated cost leadership/differentiation strategy | The integrated cost leadership/differentiation strategy involves engaging in primary and support activities that allow a firm to simultaneously pursue low cost and differentiation. (Target, Payless)
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| market segmentation | is a process used to cluster people with similar needs into individual and identifiable groups.
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| total quality management (TQM) | is a managerial innovation that emphasizes an organization’ s total commitment to the customer and to continuous improvement of every process through the use of data–driven, problem–solving approaches based on empowerment of employee groups and teams.
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| corporate–level core competencies | are complex sets of resources and capabilities that link different businesses, primarily through managerial and technological knowledge, experience, and expertise.
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| corporate–level strategy | A corporate–level strategy specifies actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets.
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| economies of scope | are cost savings that the firm creates by successfully sharing some of its resources and capabilities or transferring one or more corporate–level core competencies that were developed in one of its businesses to another of its businesses.
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| financial economies | are cost savings realized through improved allocations of financial resources based on investments inside or outside the firm.
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| market power | exists when a firm is able to sell its products above the existing competitive level or to reduce the costs of its primary and support activities below the competitive level, or both.
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| multipoint competition | exists when two or more diversified firms simultaneously compete in the same product areas or geographical markets.
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| synergy | exists when the value created by business units working together exceeds the value that those same units create working independently.
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| vertical integration | exists when a company produces its own inputs (backward integration) or owns its own source of output distribution (forward integration). (CVS merges w/ Caramark, expanding from retail into health care also)
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| global strategy | an international strategy through which the firm offers standardized products across country markets, with competitive strategy being dictated by the home office.
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| greenfield venture | The establishment of a new wholly owned subsidiary is referred to as a greenfield venture.
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| International diversification | a strategy through which a firm expands the sales of its goods or services across the borders of global regions and countries into different geographic locations or markets.
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| international strategy | a strategy through which the firm sells its goods or services outside its domestic market.
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| multidomestic strategy | an international strategy in which strategic and operating decisions are decentralized to the strategic business unit in each country so as to allow that unit to tailor products to the local market.
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| transnational strategy | an international strategy through which the firm seeks to achieve both global efficiency and local responsiveness.
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| business-level cooperative strategy | A firm uses a this to grow and improve its performance in individual product markets.
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| Complementary strategic alliances | business-level alliances in which firms share some of their resources and capabilities in complementary ways to develop competitive advantages.
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| cooperative strategy | a strategy in which firms work together to achieve a shared objective.
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| corporate-level cooperative strategy | used to help it diversify in terms of products offered or markets served, or both.
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| cross-border strategic alliance | an international cooperative strategy in which firms with headquarters in different nations decide to combine some of their resources and capabilities to create a competitive advantage.
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| diversifying strategic alliance | a corporate-level cooperative strategy in which firms share some of their resources and capabilities to diversify into new product or market areas.
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| equity strategic alliance | an alliance in which two or more firms own different percentages of the company they have formed by combining some of their resources and capabilities to create a competitive advantage.
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| Franchising | Franchising is a corporate-level cooperative strategy in which a firm (the franchisor) uses a franchise as a contractual relationship to describe and control the sharing of its resources and capabilities with partners (the franchisees).
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| joint venture | a strategic alliance in which two or more firms create a legally independent company to share some of their resources and capabilities to develop a competitive advantage.
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| network cooperative strategy | a cooperative strategy wherein several firms agree to form multiple partnerships to achieve shared objectives.
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| nonequity strategic alliance | an alliance in which two or more firms develop a contractual-relationship to share some of their unique resources and capabilities to create a competitive advantage.
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| strategic alliance | a cooperative strategy in which firms combine some of their resources and capabilities to create a competitive advantage.
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| synergistic strategic alliance | a corporate-level cooperative strategy in which firms share some of their resources and capabilities to create economies of scope.
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| 3 Dimensions of Firm's Relationships w/ Customers | Reach, Richness and Affiliation
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| Reach | concerned with the firm's access and connection to customers, extending reach= adding customers
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| Richness | concerned with the depth and detail of the 2-way flow of info between the firm ad the customer. Could result in better online services to manage communication w/ customer
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| Affiliation | concerned w/ facilitating useful interactions w/ customers, viewing the world through the customer's eyes
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| Core Competencies | resources and capabilities that serve as a source of competitive advantage for the firm over its rivals
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| Purpose of Business-Level Strategy | to create differences btwn the firm's position and its competitors, decide if it intends to perform differently or to perform different activities
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| 2 Types of Competitive Advantages | 1. Having lower cost than rivals
2. differentiating to command premium price
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| 3. Focused Cost Leadership Strategy | the focus is low price, but the has differentiate features (IKEA)
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| 4. Focused Differentiation Strategy | basically a differentiation strategy but focuses on a narrow niche market; food trucks have focus on fancy gourmet materials and chefs but low cost and convenience
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| (FMS) Flexible Manufacturing Systems | increases the ability to stop making on product to start making another in record time,a llows firm to respond more effectively to changes in its customers' needs
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| horizontal integration | from one market segment to another, or industry to another, coke and pepsi begin producing bottled water
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| operational relatedness | created by sharing either a primary activity like delivery or support activity, requires strategic control over business units, risk: create links btwn outcomes
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| Corporate Relatedness | using complex sets of resources and capabilities to link different businesses through managerial and technological knowledge, experience and expertise
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| Low levels of Diversification | -SINGLE BUSINESS (more than 95% of revenue from single bizz)
-DOMINANT BUSINESS (btwn 70-95% revenue from single bizz)
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| Moderate to High Levels of Diversification | -RELATED CONSTRAINED (less than 70% rev from single bizz and all businesses share product, tech and distribution links)
-RELATED LINKED (less than 70% of revenue comes from the dominant business, only limited link in businesses)
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| Very High Levels of Diversification | -UNRELATED DIVERSIFICATION (less than 70% of revenue from dominant business with no common links between businesses)
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| Types of Entry: EXPORTING v. Licensing | exporting: high cost low control
licensing: low cost, low risk, little control, low returns
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| Type of Entry: STRATEGIC ALLIANCES | shared costs, resources, risks, problems integrating
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| Type of Entry: ACQUISITION | quick access to new market, high cost, complex negotiations, problems merging w/ domestic operations
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| Type of Entry: NEW SUBSIDIARY | complex, costly, time consuming, high risk, maximum control, potential above average returns
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| Liability of Foreignness | all additional costs a firm operating in a market overseas incurs that a local firm would not incur, strategic disadvantage
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| Slow-Cycle Markets | use strategic alliances to enter restricted markets or to establish franchises in new markets (only 2 major players in steel industry forming cooperative strategic alliances)
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| Fast-Cycle Markets | unstable unpredictable, complex and hypercompetitive, (Competitors
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| Standard-Cycle Markets | alliances are more likely to be made by partners with complementary resources and capabilities. airline alliances
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