Midterm #2 - Bus 189 Dr. Mark Fruin 11/3/2009 Midterm #2 2....

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Bus 189 Dr. Mark Fruin 11/3/2009 Midterm #2 2. Market concentration is a strategy used in the growth phase. In this strategy a company decides to focus on one area of their business as to gain a competitive advantage and to decrease the need for capital investment. Differentiation is another appropriate strategy for the growth phase. Differentiation takes a large amount of capital to invest in and therefore is attainable on a large scale by only those companies who have the resources to properly differentiate. Apple is a good example of this with their iPod as they have Price cutting is an appropriate strategy for the mature phase of the ILC. Price cutting can only be realized as you reach economies of scale. As an example, if I wanted to open my own grocery store I could not compete with the likes of Safeway and Wal-Mart who have reached economies of scale. These companies can cut prices down and still make a profit. I however cannot. The most recent example of this would be Amazon and Wal-Mart in their price war over books. Wal-Mart is trying to be the leader in book selling and to do so they are offering extremely low prices forcing Amazon to also lower their prices to compete. The local bookstore in their embryonic stage could never compete with these 2 giants in the mature phase. A hold-and-maintain strategy is useful in the mature industry. In this strategy companies spend large amounts of capital to develop their distinctive competencies to ensure they remain the market leader. 3.
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Midterm #2 - Bus 189 Dr. Mark Fruin 11/3/2009 Midterm #2 2....

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