_1_CHAPTER_13

_1_CHAPTER_13 - CHAPTER 13 Strategy, Balanced Scorecard,...

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CHAPTER 13 Strategy, Balanced Scorecard, and Strategic Profitability Analysis
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Balanced Scorecard Helps management judge performance by measuring key performance measures KeyCorp uses: Customer attrition Customer satisfaction
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Strategy How a company achieves its objectives How it differentiates itself from its competitors Wal-Mart Low cost Suburban and rural stores Wide range of products
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Strategy In order to establish a strategy, a company must know its industry Five forces of industry analysis 1) Competitors 2) Potential Entrants into the Market 3) Equivalent Products 4) Bargaining power of customers 5) Bargaining power of input suppliers
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Competitors Must analyze price, delivery, quality If a company’s product is higher priced it must justify the higher price with better, quality, service, etc. I.e Purchasing a Dell computer instead of a different brand
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Potential Entrants into the Market Chipset is insulated because it is very capital-intensive to get into the industry Other companies must be wary because it is easy for competitors to enter the market HR Block opens up next to a CPA firm that does many tax returns
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Equivalent Products Similar to competitors Must make the product attractive to customers through price, design, etc.
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Bargaining Power of Customers Large customers will demand more Discounts, fast delivery, high quality Must negotiate with large customers or risk losing their business
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Bargaining Power of Input Suppliers Materials suppliers and laborers can demand higher prices These price increases drive up production costs
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Two Different Strategies Product Differentiation Cost Leadership
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Product Differentiation Offer products and services that are unique to its competitors Customers are willing to pay for this Creates brand loyalty i.e. A-B is always introducing new brands (Bud Light Lime, etc.) to keep customers interested
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Cost Leadership Products are similar to competitors Companies gain market share by offering a lower price Wal-Mart offers the same products as Target, Dierbergs, etc. but generally at lower prices
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Which Strategy is Best? Exhibit 13-1 Chipset rates extremely well with customers on price compared to Visilog Chipset rates well with customers on customer service and scalability compared to Visilog Visilog is much more specialized in the chip design Chipset chooses cost leadership
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Cost Leadership and Chipset If cost leadership is going to be obtained, Chipset must reduce costs so they can charge less for their product Quality improvement Reengineering
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Quality Improvement Train employees Work within parameters Identify and prevent defects
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_1_CHAPTER_13 - CHAPTER 13 Strategy, Balanced Scorecard,...

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