Question: a company's competitive strategy deal exclusively with
Answer: the specifics of management's game plan for competing successfully, specific efforts to position itself in the market-place, please customers, ward off competitive threats and achieve a particular kind of competitive advantage
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Question: chances that any two companies (even in the same industry) will employ competitive strategies that are exactly identical are
Answer: remote (not likely)
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Question: key factors that distinguish one strategy from another
Answer: -whether the company's market target is broad or narrow
-whether the company is pursuing a competitive advantage linked to lower costs of differentiation
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Question: low-cost provider
Answer: Striving to achieve lower overall costs than rivals on products that attract a broad spectrum of buyers.
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Question: broad differentiation
Answer: Differentiating the firm's product offering from rivals' with attributes that appeal to a broad spectrum of buyers
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Question: focused low-cost
Answer: Concentrating on a narrow price-sensitive buyer segment and on costs to offer a lower-priced product.
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Question: Focused Differentiation
Answer: Concentrating on a narrow buyer segment (or market niche) and outcompeting rivals by meeting specific tastes (customized attributes that meet their taste) and requirements of niche members (better than rivals' products)
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Question: best-cost provider
Answer: Giving customers more value for the money by offering upscale product attributes at a lower cost than rivals

hybrid strategy that blends elements from the other strategies in a unique and often effective way
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Question: Striving to achieve lower overall costs (low-cost provider) than rivals is especially potent competitive approach in the market with
Answer: many price-sensitive buyers
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Question: a company achieves low-cost leadership when
Answer: it becomes the industry's lowest-cost provider rather than just being one of perhaps several competitors with comparatively low costs.
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Question: low cost provider basis for competitive advantage is
Answer: lower overall costs than competitors
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Question: low cost leaders (are successful when)
Answer: they're who have the lowest industry costs, are exceptionally good at finding ways to drive costs out of their businesses and still provide a product or service that buyers find acceptable
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Question: low cost provider strategic objective
Answer: meaningfully lower costs than rivals but not necessarily the absolute lowest possible cost
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Question: striving for cost advantage over rivals (low-cost provider), company managers must incorporate features and services that buyers consider
Answer: essential

product offerings that are too frills-free can be viewed by consumers as offering little value regardless of its pricing
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Question: Company has two options for translating a low-cost advantage over rivals into attractive profit performance:
Answer: -Use the lower-cost edge to underprice competitors and attract price-sensitive buyers in great enough numbers to increase total profits (attack rivals with lower prices)
-Maintain the present price, be content with the present market share, and use the lower-cost edge to earn a higher profit margin on each unit sold, thereby raising the firm's total profits and overall return on investment
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Question: using the lower-cost advantage to underprice competitors can backfire if
Answer: rivals respond to retaliatory price cuts (in order to protect customer base and defend against lost sales)
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Question: rush to price cuts can often trigger
Answer: price wars that lowers profits of all price discounters
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Question: the bigger the risk that rivals will respond with matching price cuts
Answer: the more appealing it becomes to employ using a low-cost advantage to achieve higher profitability
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Question: a low-cost advantage over rivals can translate into
Answer: better profitability than rivals attain
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Question: effective low-cost approaches
Answer: -Pursue cost-savings that are difficult to imitate.
-Avoid reducing product quality to unacceptable levels.
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Question: competitive advantage of low-cost provider approaches
Answer: -greater total profits and increased market share gained from underpricing competitors
-larger profit margins when selling products at prices comparable to and competitive with rivals
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Question: risks of low cost provider strategy approaches
Answer: -low pricing does not attract enough new buyers
-rival's retaliatory price-cutting sets off price war
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Question: to achieve low-cost advantage
Answer: a firm's cumulative costs across its overall value chain must be lower than competitors cumulative costs
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Question: two major avenues to achieve a low-cost advantage
Answer: -perform value chain activities most cost effectively than rivals
-revamp the firms overall value chain to eliminate or bypass some cost-producing activities
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Question: for a company to do more cost-efficient job of managing its value chain than rivals' managers must
Answer: diligently search out cost-saving opportunities in every part of the value chain
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Question: for a cost-efficient management of value chain activities particular attention must be paid to a set of factors known as
Answer: cost divers
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Question: cost drivers
Answer: a factor that has a strong influence on a company's costs

can be asset based or activity based
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Question: securing a cost advantage
Answer: -Use lower-cost inputs and hold minimal assets
-Offer only "essential" product features or services
-Offer only limited product lines
-Use low-cost distribution channels
-Use the most economical delivery methods
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Question: Cost-cutting approaches that demonstrate an effective use of the cost drivers include:
Answer: -capturing all available economies of scale
-taking full advantage of experience and learning curve effects
-operating facilities at full (or near) full capacity
-improving supply chain efficiency
-substituting lower-cost inputs wherever there is little or no sacrifice in product quality or performance
-using the firm's bargaining power vis-a-vis suppliers of others in the value chain systems to gain concessions
-using online systems and sophisticated software to achieve operating efficiencies
-improving process design and employing advanced production technology
-being alert to cost advantages of outsourcing or vertical integration
-motivating employees through incentives and company culture
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Question: dramatic cost advantage can often emerge from redesigning the company's value chain system in ways to
Answer: eliminate costly work steps and entirely bypass certain cost-producing value chain activities
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Question: value chain revamping can include
Answer: -selling directly to consumers and bypassing the activities and costs of distributors and dealers
-streamlining operations to eliminate low value-added or unnecessary work steps and activities
-reduce material handling and shipping costs by suppliers locate their plants or warehouses close to firm's own facilities
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Question: examples of companies that revamped their value chain to reduce cost s
Answer: Nucor Corporation
Southwest Airlines
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Question: success in achieving a low-cost edge over rivals comes from
Answer: out-managing rivals in finding ways to perform value chain activities faster, more accurately, and more cost-efficiently
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Question: key to being a successful low-cost provider
Answer: -spending aggressively on resources and capabilities that promise to drive costs out of the business
-carefully estimating the cost advantage of new technologies before investing in them
-constantly reviewing cost-saving resources to ensure they remain competitively superior
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Question: a low-cost provider strategy becomes increasingly appealing and competitively powerful when:

aka works best when
Answer: -price competition among rival sellers is vigorous
-identical products are available from many sellers
-there are few ways to differentiate industry products
-most buyers use the products in the same way
-buyers incur low costs in switching among sellers
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Question: pitfalls to avoid in pursuing a low-cost provider strategy
Answer: -Engaging in overly aggressive price cutting that does not result in unit sales gains large enough to recoup forgone profits
-Relying on a cost advantage that is not sustainable because rival firms can easily copy or overcome it
-Becoming too fixated on cost reduction such that the firm's offering is too features-poor to gain the interest of buyers
-Having a rival discover a new lower-cost value chain approach or develop a cost-saving technological breakthrough
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Question: a low-cost provider is in the best position to win the business of
Answer: price-sensitive buyers, set the floor on market prices, and still earn a profit
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Question: reducing price does not lead to higher total profits unless
Answer: the added gains in unit sales are large enough to offset the loss in revenues due to lower margin per unit sold
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Question: a low-cost provider's product offering must always contain enough attributes to
Answer: be attractive to prospective buyers - low price, by itself, is not always appealing to buyers
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Question: differentiation strategies are attractive whenever
Answer: buyers' needs and preference are too diverse to be fully satisfied by a standardized product offering
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Question: successful product differentiation requires
Answer: careful study to determine what attributes buyers will find appealing, valuable, and worth paying for
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Question: a broad differentiation strategy achieves its aim when
Answer: a wide range of buyers find the company's offering more appeal than that of rivals and worth a somewhat higher price
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Question: effective differentiation strategy approaches
Answer: -Carefully study buyer needs and behaviors, values, and willingness to pay for a unique product or service
-Incorporate features that both appeal to buyers and create a sustainably distinctive product offering
-Use higher prices to recoup differentiation costs
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Question: advantages of broad differentiation strategy
Answer: -command premium prices for the firms products
-increased unit sales due to attractive differentiation
-brand loyalty than bonds buyers to the differentiating features of the firm's products
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Question: differentiation
Answer: enhances profitability whenever a company's products can command a sufficiently higher price or produce sufficiently greater unit sales to more than cover the added cost of achieving the differentiation
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Question: differentiation fails when
Answer: buyers don't place much value on the brand's uniqueness and/or when a company's differentiation features are easily matched by rivals
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Question: the essence of a broad differentiation strategy is
Answer: to offer unique product attributes that a wide range of buyers find appealing and worth paying for
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Question: most systematic approach to broad differentiation strategy managers can take involves focusing on
Answer: the value drivers
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Question: uniqueness (value) driver
Answer: is a factor that can have a strong differentiating effect
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Question: a uniqueness (value) driver can
Answer: -have a strong differentiating effect
-be based on physical and functional attributes of the firm
-be the result of superior performance capabilities of the firm's human capital
-have an effect on more than one of the firm's value chain activities
-create a perception of value (brand loyalty) in buyers where there is little reason for it to exist
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Question: ways managers can enhance differentiation based on value drivers includes:
Answer: -Create product features and performance attributes that appeal to a wide range of buyers.
-Improve customer service or add extra services.
-Invest in production-related R&D activities.
-Strive for innovation and technological advances.
-Pursue continuous quality improvement.
-Increase marketing and brand-building activities.
-Seek out high-quality inputs.
-Emphasize human resource management activities that improve the skills, expertise, and knowledge of company personnel.
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Question: approaches that enhance differentiation through change in value chain system
Answer: -coordinating with channel allies to enhance customer value
-coordinating with supplier to better address customer's needs
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Question: Delivering Superior Value via a Broad Differentiation Strategy depends on
Answer: meeting customer needs in a unique way or creating new needs through activities such as innovation or persuasive advertising
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Question: broad differentiation objectives is to offer customers
Answer: something that rivals can't - in terms of level of satisfaction
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Question: four basic routes to achieve the broad differentiation aim
Answer: -incorporate product attributes and user features that lower the buyer's overall costs of using the firms products
-incorporate tangible features (ex. styling) that increase customer satisfaction with products
-incorporate intangible features (ex. buyer image) that enhance buyer satisfaction in noneconomic ways
-signal the value of the firm's product offerings to buyers (ex. price, packaging, placement, advertising)
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Question: typical signals of value include:
Answer: a high price (instances where high price implies high quality and performance), more appealing or fancier packaging that competing products, ad content that emphasizes a product's standout attributes, quality of brochures and sales presentations, and the luxurious and ambience of a seller's facilities (important for high-end retailers and offices or other facilities frequented by customers)
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Question: signal the value of company product offering make potential buyers aware of
Answer: professionalism, appearance, and personalities of seller's employees (or make potential buyers realize the company has prestigious buyers)
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Question: signaling value is importing when
Answer: -the nature of differentiation is based on intangible features and is therefore subjective or hard to quantify by the buyer
-buyers are making first-time purchases and are unsure what their experience will be with the product
-product or services repurchase by buyers is infrequent
-buyers are unsophisticated
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Question: regardless of the differentiation approach, the company must first have
Answer: capabilities in areas such as customer service, marketing, brand management, and technology that can create and support differentiation
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Question: what must be well matched to the requirement of the strategy with differentiation
Answer: resources, competencies, and value chain activities of all the company must be well matched to requirements of the strategy
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Question: the most successful differentiation approach are those that
Answer: are difficult for rivals to duplicate

route to a sustainable competitive advantage
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Question: differentiation can be based on
Answer: tangible or intangible attributes
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Question: easy-to-copy differentiation features
Answer: cannot produce a sustainable competitive advantage
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Question: any differentiation features that works well is
Answer: a magnet for imitators
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Question: what are fatal strategy mistakes with differentiation
Answer: over differentiating and over charging
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Question: differentiation that is difficult for rivals to duplicate or imitate includes
Answer: company reputation
long-standing relationships with buyers
a unique product or service image
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Question: differentiation that create a substantial switching costs that locks buyers includes
Answer: patent-protected product innovation
and
relationship based customer service
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Question: differentiation strategy tends to work best in market circumstances where
Answer: -buyers needs and uses of the product are diverse
-there are many ways to differentiate the product of service that have value to buyers
-few rivals are following similar differentiation approaches
-technological change is fast paced and competition revolves around rapidly evolving product features
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Question: pitfalls to avoid in pursuing a differentiation strategy
Answer: -Relying on product attributes easily copied by rivals
-Introducing product attributes that do not evoke an enthusiastic buyer response
-Eroding profitability by overspending on efforts to differentiate the firm's product offering
-Offering only trivial improvements in quality, service, or performance features vis-à-vis the products of rivals
-Over-differentiating the product quality, features, or service levels exceeds the needs of most buyers
-Charging too high a price premium
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Question: a low-cost provider strategy can defeat a differentiation strategy when
Answer: buyers are satisfied with a basic product and don't think "extra" attributes are worth a higher price
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Question: what sets focused strategies apart from low-cost and broad differentiation strategies is
Answer: focused strategies concentrate attention on a narrow piece of the total market
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Question: focused strategies can be in form of
Answer: -geographic segment (such as new England)
-customer segment (such as urban hipsters)
-product segment (such as a class of models or some version of the overall product type)
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Question: a focused low-cost strategy aims at securing a competitive advantage by
Answer: serving buyers in the target market niche at a lower cost and lower price than those of rivals
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Question: a focused low-cost strategy is attractive when
Answer: firm can lower costs significantly by limiting its customer base to a well-defined buyer segment
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Question: Avenues to achieve cost advantage over rivals also serving the target market niche are same as those of low-cost leadership which include
Answer: -Use cost drivers to perform value chain activities more efficiently than rivals
-Search for innovative ways to bypass nonessential value chain activities
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Question: difference between low-cost provider and focused low-cost strategy
Answer: size of buyer group to which a company is appealing
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Question: producers of private label good achieve low costs in
Answer: production development, marketing, distribution, and advertising by concentrating on making generic items imitative of name brand merchandise and selling directly to retail chains wanting a low priced store brand
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Question: a focused differentiation strategy involves offering
Answer: superior products or services tailored to the unique preferences and needs of a narrow, well-defined group of buyers
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Question: success of focused differentiation strategy depends on
Answer: -The existence of a buyer segment that is looking for special product attributes or seller capabilities
-A firms ability to create a product or service offering that stands apart from that of rivals competing in the same target market niche
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Question: a focused low cost or focused differentiation strategy is attractive when
Answer: -The target market niche is big enough to be profitable and offers good growth potential.
-Industry leaders chose not to compete in the niche; focusers avoid competing against strong competitors.
-It is costly or difficult for multi-segment competitors to meet the specialized needs of niche buyers.
-The industry has many different niches and segments.
-Few if any rivals are attempting to specialize in the same target market segment
-Rivals have little or no entry interest in the target segment.
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Question: The risks of a focused low cost or focus differentiation strategy
Answer: -Competitors will find ways to match the focused firm's capabilities in serving the target niche.
-The specialized preferences and needs of niche members shift over time toward the product attributes desired by the majority of buyers.
-As attractiveness of the segment increases, it draws in more competitors, intensifying rivalry and splintering segment profits.
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Question: the best-cost provider strategy is a hybrid of
Answer: low-cost provider and differentiation strategies that am at providing more desirable attributes (quality, features, performance, service) while beating rivals on price
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Question: the best-cost provide strategy permits companies to aim
Answer: aim squarely at the sometime great mass of value-conscious buyers looking for a better product or service at an economical price
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Question: value-conscious buyers
Answer: shy away from both cheap low-end products and expensive high-end products, but are quite willing to pay a "fair" price for extra features and functionality they find appealing and useful
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Question: best-cost provider strategy is giving customers more value for their money by
Answer: by satisfying customers desires for appealing features and charging a lower price for these attributes compared to rivals will similar caliber products
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Question: to profitably employ the best-cost provider strategy a company must
Answer: have the capability to incorporate upscale attributes into its product offering at a lower cost than privates
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Question: the best-cost provider strategy can use its low-cost advantage to
Answer: underprice rivals whose products of services have similarly upscale attributes and it still earns attractive profits
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Question: Being a best-cost provider is different than being a low-cost provider because
Answer: the additional attractive attributes entail additional costs (which low cost providers can avoid by offering buyers a basic product with few frills)
-two strategies aim at a different market target
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Question: target market for best cost provider is
Answer: value-conscious buyers (buyers who are looking for appealing extras and functionality at a comparatively low price)
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Question: value-hunting buyers
Answer: as distinct price-conscious buyers looking for basic product at a bargain-basement price) often constitute as very sizable part of the overall market for a product or service
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Question: best-cost provider strategy works best when
Answer: -Product differentiation is the market norm.
-There are a large number of value-conscious buyers who prefer mid-range products.
-There is competitive space near the middle of the market for a competitor with either a medium-quality product at a below-average price or a high-quality product at an average or slightly higher price.
-Economic conditions have caused more buyers to become value-conscious.
-Works well in recessionary times
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Question: the risks of a best-cost provider strategy
Answer: Biggest vulnerability is employing a best-cost provider strategy is getting squeezed between the strategies of firms using low-cost and high-end differentiation
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Question: a company's competitive strategy should be well matched to its
Answer: internal situation and predicted on leveraging its collection of competitively valuable resources and capabilities
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Question: to succeed in a low-cost provider strategy (resource based)
Answer: -Company must have the resources and capabilities to keeps its costs below those of its competitors
-Means having the expertise to cost-effectively manage value chain activities better than rivals by leveraging the cost drivers more effectively, and/or having the innovative capability to bypass certain value chain activities being performed by rivals
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Question: to succeed in a differentiation strategy (resource based)
Answer: A company must have the resources and capabilities to leverage value drivers more effectively than rivals and incorporate attributes into its product offering that a broad range of buyers will find appealing
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Question: to succeed in a focus strategy (resource based)
Answer: Require the capability to do an outstanding job of satisfying the needs and expectations of niche buyers
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Question: to succeed in a best-cost provider strategy (resource based)
Answer: Requires the resources and capabilities to incorporate upscale product or service attributes at lower cost than rivals
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Question: for all four generic strategies, success in sustaining the competitive edge depends on
Answer: having resources and capabilities that rivals have trouble duplicating and for which there are no good substitutes
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Question: A firm's competitive strategy is most likely to succeed if it is predicated on
Answer: leveraging a competitively valuable collection of resources and capabilities that match the strategy.
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Question: the cost drivers listed are
Answer: Incentive systems and culture; economies of scale; learning and experience; capacity utilization; supply chain efficiencies; input costs; production technology and design; communication systems and information technology; bargaining power; and outsourcing or vertical integration.
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Question: the value drivers listed are
Answer: : quality control processes; product features and performance; customer services; production R&D; technology and innovation; input quality; employee skill, training, experience; and sales and marketing
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