Strategy_Formulation_Business_Strategy

Strategy_Formulation_Business_Strategy - Strategy...

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Strategy Formulation Business strategy
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focuses on improving the competitive position of a company’s or business unit’s product or services within the specific industry or market segment that the company or business unit serves. Business Strategy
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Competitive Cooperative Business Strategy
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Should we compete on the basis of low cost, or should we differentiate our products or services on some basis other than cost? Should we compete head to head with our major competitors for the biggest share of market, or should we focus on a niche ? Competitive Strategies
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A firm cannot be everything to everybody; it must choose what to do and what not to do. Michael Porter Competitive Strategies
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Competitive Advantage Lower Cost Differentiation Cost leadership Differentiation Cost Focus Differentiation Focus Competitive Scope Broad Target Narrow Target Michael Porter’s Generic Strategies (1985)
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Cost leadership strategy ––where the organization’s resources and attention are directed toward minimizing costs to operate more efficiently than the competition. Such firms exploit economies of scale, scope and learning (experience) effects and are obsessed with efficiency and cost control. Michael Porter’s Generic Strategies
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The cost leader is able to charge lower price for its products than its competitors and still make a satisfactory profit. Having a low cost position gives a company a defense against rivals: The cost leader has high market share which leads to high bargaining power relative to its suppliers. Its low price is a barrier to entry Michael Porter’s Generic Strategies
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––where the organization’s resources and attention are directed toward distinguishing its products from those of the competition. The specialty can be associated with design or brand image, technology, features, dealer network, or customer service. The resulting brand lowers customers’ sensitivity to price.
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This note was uploaded on 01/20/2012 for the course SM 402 taught by Professor Staff during the Fall '11 term at Ball State.

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Strategy_Formulation_Business_Strategy - Strategy...

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