Chapter Five - Chapter Five Strategy and Competitive...

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Chapter Five Strategy and Competitive Advantage Competitive Strategy and Competitive Advantage 1. Whenever a company has an edge over rivals in attracting customers and defending against competitive forces, it has __________. 2. To succeed in building a competitive advantage, a company’s strategy must aim a. Internally at performing value chain activities differently than rivals and building resources and capabilities that they cannot readily match; b. Externally at providing buyers with what they perceive as superior value – a good product at a lower price or a better product that is worth paying more for. 3. A competitive advantage enables a company to Better cope with competitive forces; Enjoy an edge over rivals in attracting customers; Enhance its profitability. 4. Which of the following is not an integral part of a company’s overall competitive strategy? a. Internal initiatives to perform value chain activities in a manner that will deliver superior value to customers. b. Actions to shift resources around and build competencies and capabilities that will strengthen the enterprise’s long-term competitive position. c. Efforts to respond to prevailing and expected market conditions. d. Efforts to unite all of the functional and operating missions, objectives and strategies. e. Its offensive and defensive moves to counter the maneuvering of rivals. Generic Strategies 5. Which of the following is not one the basic types of competitive strategy? a. Striving to be the low-cost leader b. Focused differentiation c. A dominant firm leadership strategy d. Focused low-cost e. A best-cost provider strategy 6. The generic types of competitive strategies include Low-cost leadership Broad differentiation Focus or niche There are also combinations: Focused low-cost Focused differentiation Low-cost Provider Strategy 7. A strategy of striving to be the overall low-cost provider is likely to produce the best results when buyers
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have low switching costs in changing from seller to seller; are large and have significant bargaining power; are strongly inclined to shop for the best price; need and use the product in the same ways and price sensitive have common user requirements 8. When users are pretty much satisfied with a standard product and do not see extra product attributes as worth paying extra money to obtain, a low-cost provider strategy can defeat a differentiate strategy. 9. The basic approaches to achieving a cost advantage include: Volume (Economies of scale) ; Vertical integration; Outsourcing; No frills: Creating altogether new, low-cost value chain systems or revamping the existing value chain to bypass some cost-producing activities that produce little value added insofar as customers are concerned; Location (Wal-Mart); 10. How do you make the money: Sell at lower price and exploit the market; Sell at same price but margins are greater 11. Normally, low-cost providers Have cost-conscious corporate cultures featuring broad employee participation in cost-control
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This note was uploaded on 02/23/2012 for the course MGMT 6359 taught by Professor Wang during the Fall '11 term at University of Houston-Victoria.

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Chapter Five - Chapter Five Strategy and Competitive...

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