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Chapter 3 BB INB495
Course: G 1550, Spring 2012School: Youngstown
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Coursehero >> Ohio >> Youngstown >> G 1550Course Hero has millions of student submitted documents similar to the one
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Chapter3
TypesofStrategy
WhichFitsYour
Business?
FourBasicStrategies
Forprofitbusiness:goalistoidentifyandpursue
astrategythatwillgiveitaprofitableand
defensibleholdonasegmentofthemarket
Alsotoincreasetherangeofprofitability
Nonprofit:toprovideaserviceforsomereason
otherthanprofit
Fourstrategies:
Lowcostleadership
Differentiation
Customerrelationship
LowCostLeadershipStrategy
Deliversameproduct/serviceatalowerprice
Abletodosobykeepingcoststructuresmuch
lower
Delivercustomersexpectedlevelofvalueata
costthatassuresadequateprofitability
Customerswillingnesstopay
Addedvalueas
perceivedby
customers
Rangeofpricing
opportunities
Costofprovidinggood/service
MakingtheLowCostStrategy
Work
Continuousimprovementinoperatingefficiency
Encourageeveryleveltoimprove
12%percentimprovementsaddup
Exploitationoftheexperiencecurve
Peopledothesamejobmorequicklyandwith
fewererrors,themorefrequentlytheydothejob
Experiencecurve:Thecompanythatgetsontothe
curvesooner,canmaintainacostadvantage
Page34
MakingtheLowCostStrategy
Work
Anunbeatablesupplychain
Transferofgoodsandinformation
DellbuildsPCstoorder,eliminatesmiddleman
andfinishedgoodsinventory
Productredesign
Canbeamoredramaticoption
Black&Deckerconsumerpowertools
Competingwithlowcostcompetitors
Redesignedproductsandprocess
DifferentiationStrategy
Whatsetsaproductapartfromrivals?
Onlymattersiftargetcustomersvaluethe
difference
Iftheytrulyvaluewhatsetsyouaparttheywill:
1.
Selectyourofferingoverothers
2.
Payapremiumforwhatyouoffer
3.
Actonacombinationof1and2
Commodityproducts
.
Ifpriceandproductfeaturesaresame,
CustomerRelationshipStrategy
Visitasmall,independentlyownedshopvs.abig
box
Why?
Vendorknowsthecustomer
Likedoingbusinesswithafamiliarface
Valuethepersonalrelationship
Vendoriswillingtoexplain
Bigcompaniesareatadisadvantage,butitisnot
impossible
CustomerRelationshipStrategy
Companiesaddvalueintheseforms:
Simplifyingcustomerslivesorwork
Ongoingbenefits
Personalizedservice
Customizedsolutions
Personalcontact
Continuouslearning
Customerrelationshipmanagement(CRM)programs
Strategybasedonrelationshipscanproduce
NetworkEffectStrategy
Aphenomenoninwhichthevalueofaproduct
increasesasmoreproductsaresoldandthe
networkofusersincreases
Telephones,eBay,iPhone4FaceTime
Successdependsonabilitytobecomethe
dominantprovider
Winnertakeallstrategy
Summary
Whichstrategyorstrategyvariationisrightfor
you?
Evaluateyourmission,goals,andSWOT
Consultwithothersinyourorganization
Donttrytobeallthingstoallcustomers
Noclearframework
Anystrategicchoiceinvolvestradeoffs
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Rutgers - ECON - 406
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Rutgers - ECON - 395
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