05 BUS 444 Chap 5

Weakest 5 23 pitfallsoffocusstrategies erosion of

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Unformatted text preview: er cost leadership or differentiation, or both Used to select niches that are least vulnerable to substitutes or where competitors are weakest 5-23 Pitfalls of Focus Strategies • Erosion of cost advantages within the narrow segment • Focused products and services still subject to competition from new entrants and from imitation • Focusers can become too focused to satisfy buyer needs 5-24 Three Combination Approaches • Automated and flexible manufacturing systems • Exploiting the profit pool concept for competitive advantage • Coordinating the “extended” value chain by way of information technology 5-25 U.S. Automobile Industry’s Profit Pool 5-26 Combination Strategies: Improving Competitive Position • Combination strategies High entry barriers Bargaining power over suppliers Reduces power of buyers (fewer competitors) Value position reduces threat from substitute products Reduces the possibility of head-to-head rivalry 5-27 Pitfalls of Combination Strategies • Firms that fail to attain both strategies may end up with neither and become “stuck in the middle” • Miscalculating sources of revenue and profit pools in the firm’s industry 5-28 Internet‐Enabled Low Cost Leader Strategies • Online bidding and • Online...
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