Management Blog

User Generated

zrbj92

Business Finance

Description

Please locate a recent news article (no more than six months old please) that is relevant to the subjects/concepts introduced in Ch04(attached file) and prepare a short analysis/summary of the news article.Blog should consist of a link to the article you have found and your analysis as to why and how it is related to the topic introduced in that module (one paragraph with 150-200 words). Please do not use sources such as news paper columns, commentaries, blogs, case studies, white papers, research reports and the like as your chosen news articles. According to Merriam-Webster, news is a report of recent events.

Unformatted Attachment Preview

Chapter 4 Business-Level Strategy Business-Level Strategy (Defined) • An integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets. Customers: Their Relationship with Business-Level Strategies Who will be served? Key Issues in Business-level Strategy What needs will be satisfied? How will those needs be satisfied? From Pet Food to PetSmart What is the industry of PetSmart? What other firms are competing in this industry? What product or service does PetSmart offer? What market segments does PetSmart serve? What strengths does PetSmart have to pursue the current strategy? Customer Needs • Customer needs The desires, wants, or cravings that can be satisfied through product attributes  Customers choose a product based on: 1. The way the product is differentiated from other products of its type 2. The price of the product • Product differentiation Designing products to satisfy customers’ needs in ways that competing products cannot. Customer Groups and Market Segmentation • Market Segmentation The way customers can be grouped based on important differences in their needs or preferences • Main Approaches to Segmenting Markets 1. Ignore differences in customer segments – Make a product for the typical or average customer 2. Recognize differences between customer groups – Make products that meet the needs of all or most customer groups 3. Target specific segments – Choose to focus on and serve just one or two selected segments Identifying Customer Groups and Market Segments Three Approaches to Market Segmentation How: Determining Core Competencies Necessary to Satisfy Customer Needs • Firms must decide: – who to serve, what customer needs to meet, and how to use core competencies to implement value creating strategies that satisfy target customers’ needs. • Only firms with capacity to continuously improve, innovate and upgrade their competencies can expect to meet and/or exceed customer expectations across time. Purpose of Business-Level (BL) Strategies • Two types of competitive advantage firms must choose between – Cost (Are we LOWER than others?) – Uniqueness (Are we DIFFERENT? How?) • Two types of ‘competitive scope’ firms must choose between – Broad target – Narrow target • These combine to yield 5 different BL strategies – Generic = can be used in any organization competing in any industry Business Level Strategies Cost Leadership Strategy • 1. Cost Leadership (CL) – Competitive advantage: THE low-cost leader and operates with margins greater than competitors – Competitive scope: Broad – Integrated set of actions designed to produce or deliver goods or services with features that are acceptable to customers at the lowest cost, relative to competitors – No-frill, standardized goods – Continuously reduce costs of value chain activities • Inbound/outbound logistics account for significant cost Cost Leadership Strategy: Competitors • Due to cost leader’s advantageous position: – rivals hesitate to compete on basis of price. – lack of price competition leads to greater profits. Rivalry with Existing Competitors Threat of new entrants Rivalry among competing firms Threat of substitute products Bargaining power of suppliers Bargaining power of buyers Cost Leadership Strategy: Buyers • Can mitigate buyers’ power by: – driving prices far below competitors, causing them to exit, thus shifting power with buyers (customers) back to the firm. Bargaining Power of Buyers Threat of new entrants Rivalry among competing firms Threat of substitute products Bargaining power of suppliers Bargaining power of buyers Cost Leadership Strategy: Suppliers • Can mitigate suppliers’ power by: – being able to absorb cost increases due to low cost position. – being able to make very large purchases, reducing chance of supplier using power. Bargaining Power of Suppliers Threat of new entrants Rivalry among competing firms Threat of substitute products Bargaining power of suppliers Bargaining power of buyers Cost Leadership Strategy: New Entrants The Threat of Potential Entrants Threat of new entrants Rivalry among competing firms Threat of substitute products Bargaining power of suppliers Bargaining power of buyers • Can frighten off new entrants due to: – their need to enter on a large scale in order to be cost competitive. – the time it takes to move down the industry learning curve. Cost Leadership Strategy: Substitutes Product Substitutes Threat of new entrants Rivalry among competing firms Threat of substitute products Bargaining power of suppliers Bargaining power of buyers • Cost leader is well positioned to: – lower prices in order to maintain its value position. – make investments to add features unavailable in substitutes. – buy intellectual property and patents developed by potential substitutes. Cost Leadership Strategy (cont’d) • Competitive Risks – Processes used to produce and distribute good or service may become obsolete due to competitors’ innovations. – Too much focus on cost reductions may occur at expense of customers’ perceptions of differentiation. – Competitors, using their own core competencies, may successfully imitate the cost leader’s strategy. Differentiation Strategy • 2. Differentiation – Competitive advantage: Differentiation – Competitive scope: Broad – Integrated set of actions designed by a firm to produce or deliver goods or services at an acceptable cost that customers perceive as being different in ways that are important to them – Target customers perceive product value – Customized products – differentiating on as many features as possible Differentiation Strategy: Competitors Rivalry with Existing Competitors Threat of new entrants Rivalry among competing firms Threat of substitute products Bargaining power of suppliers Bargaining power of buyers • Defends against competitors because customer’s brand loyalty to differentiated product offsets price competition. Differentiation Strategy: Buyers Bargaining Power of Buyers Threat of new entrants Rivalry among competing firms Threat of substitute products Bargaining power of suppliers Bargaining power of buyers • Can mitigate buyers’ power because well differentiated products reduce customer sensitivity to price increases. Differentiation Strategy: Suppliers Bargaining Power of Suppliers Threat of new entrants Rivalry among competing firms Threat of substitute products Bargaining power of suppliers Bargaining power of buyers • Can mitigate suppliers’ power by: – absorbing price increases due to higher margins. – passing along higher supplier prices because buyers are loyal to a differentiated brand. Differentiation Strategy: New Entrants The Threat of Potential Entrants Threat of new entrants Rivalry among competing firms Threat of substitute products Bargaining power of suppliers Bargaining power of buyers • Can defend against new entrants because: – new products must surpass proven products. – new products must be at least equal to performance of proven products, but offered at lower prices. Differentiation Strategy: Substitutes Product Substitutes Threat of new entrants Rivalry among competing firms Threat of substitute products Bargaining power of suppliers Bargaining power of buyers • Well-positioned relative to substitutes because: – brand loyalty to a differentiated product tends to reduce customers’ testing of new products or switching brands. Competitive Risks of Differentiation • The price differential between the differentiator’s product and the cost leader’s product becomes too large. • Differentiation ceases to provide value for which customers are willing to pay. • Experience narrows customers’ perceptions of the value of differentiated features. • Counterfeit goods replicate the differentiated features of the firm’s products. Focus Strategies • An integrated set of actions taken to produce goods or services that serve the needs of a particular competitive segment. – Particular buyer group—youths or senior citizens – Different segment of a product line—professional craftsmen versus do-it-yourselfers – Different geographic markets—east coast versus west coast Focus Strategies (cont’d) • Types of focused strategies – Focused cost leadership strategy – Focused differentiation strategy • To implement a focus strategy, firms must be able to: – complete various primary and support activities in a competitively superior manner, in order to develop and sustain a competitive advantage and earn aboveaverage returns. A Look at Whole Foods Market • What opportunities or trends in the external environment is Whole Foods trying to capitalize on? • What customer need is the firm trying to satisfy? Is the need consistent with low price or differentiation? • What market segment is the firm serving? • What strengths or core competencies does the firm have to serve the customer needs? • What generic strategy is used by the firm? Integrated Cost Leadership/ Differentiation Strategy • A firm that successfully uses an integrated cost leadership/differentiation strategy should be in a better position to: – adapt quickly to environmental changes. – learn new skills and technologies more quickly. – effectively leverage its core competencies while competing against its rivals. Integrated Cost Leadership/ Differentiation Strategy (cont’d) • Commitment to strategic flexibility is necessary for implementation of integrated cost leadership/ differentiation strategy. – Flexible manufacturing systems (FMS) – Information networks (CRM) – Total quality management (TQM) systems • Competitive Risks of Integrated Strategies – Although becoming more popular the RISK is getting ‘stuck in the middle’ – Cost structure is not low enough for attractive pricing of products and products not sufficiently differentiated to create value for target customer – therefore, fail to successfully implement either low cost or differentiation strategy – Result: Don’t earn above-average returns
Purchase answer to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Thank you for working with me

Running Head: STRATEGIC MANAGEMENT

Strategic Management
Name
Institution

1

STRATEGIC MANAGEMENT

2
Strategic Management

Strategic management refers to the implementation and formulation of an organizations
goals and objectives, based on the organization's assessment of internal and external
environments and resources. On strategic level managers coordinate and integrate a set of actions
and commitments to gain a competitive advantage to exploiting core competencies in specific
brands and product markets. This paper will incorporate a news article, its summary, and
relevance to strategic management power point provided. The article, "Modern Design, No
Retail Markup: Furniture Maker Article Forecasts $200 Million in 2018 Sales" is categorized
both as an entrepreneurial article and a strategic management article. This is because; Baig and
his co-founders are entrepreneurs who used strategic management concepts to make their
entrepreneurial business a success. They concentrated their efforts on their furniture products
that are the quality of their furniture and the uniqueness of their furniture, their target consumer
that is the needs and motivation of their consumers and the products' markets.
The news article features a Vancouver bas...


Anonymous
Great! Studypool always delivers quality work.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags