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BADM 449 - Exam 2 Questions & Detailed Answers 2024
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BADM 449 - Exam 2 Questions & Detailed Answers 2024
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BADM 449 - Exam 2 Questions & DetailedAnswers 2024
Chapter 6: Business Strategy (Differentation, Cost Leadership, Blue Oceans) - ANS
Business Level Strategy - ANS Goal direct actions managers take in their quest for
competitive advantage when competing in a single product market
* HOW should we COMPETE?
(who, what, why, how)
Strategy Diamond (5) - ANS 1. Arena's: Where will we be active (and with how
much emphasis)
2. Vehicles: How will we get there?
3. Staging: What will be our speed and sequence of moves?
4. Differentiators: How will be WIN?
5. Economic Logic: How will RETURNS be obtained?
,Basic Principles of Strategy 1: Value Based Strategy - ANS
Generic Business Strategies - ANS BROAD Competitive Scope (market size)
1. Differentiation: create HIGH value for customers than competition by delivering
products with UNIQUE features, while keeping costs the same, and charging
HIGHER PRICES
2. Cost Leadership : create same or similar value for customers by delivering
products at lower cost than competition, thus charging LOWER PRICES to
customers
Focused Strategies:
NARROW Competitive Scope (serve a particular market segment)
3. Focused Differentiation
4. Focused Cost Leadership
Generic because they can be used by any organization, independent of industry!
Differentiation Strategy and it's Value Drivers
Goal of Differentiation?
,3 Value Drivers - ANS * Differentiation seeks to add unique features to increase
perceived VALUE of products so that competitors cannot easily match and
consumers want to pay more
--> Create consumer PREFERENCES for firm's products
Value Drivers (increase perceived value)
1. PRODUCT ATTRIBUTES: exploiting the actual product
- Product features (turn commodity into differentiated product)
- Product complexity: multiple functions on a watch
- Timing of introduction to market (being first)
- Location
2. CUSTOMER RELATIONSHIPS/ SERVICE: focus on customer service to increase
value
- Customization: creating a unique braclet for customer
- Consumer Marketing: creating brand loyalty to a soap through advertising
- Reputation: good customer service, give to community
3. COMPLEMENTS: Use complements to add value when product and complement
are consumed together (DVR)
* FIRM LINKAGES
, - Links among functions in firm: reuse a circuit board designed in one division in
other divisions
- Linkages with OTHER firms: sporting goods store sponsors race and in turn
receives free advertising
- Product Mix: furniture store begins to sell home gym equip, computes, lawn
mowers
Cost Leadership
3 Cost Drivers? - ANS Goal: reduce the firm's cost below competitors while offering
adequate value (focuses on decreasing costs in production)
Cost Drivers:
1. COST OF INPUT FACTORS: access to lower cost input factors (raw materials,
capital, labor, IT services)
2. ECONOMIES of SCALE: average total cost/unit decreases as you produce MORE
output
(spread out fixed cost, employ specialized equipment, take advantage of physical
properties)
3. LEARNING CURVE: The more we learn, the more efficiently we produce
something and it takes less and less time to produce same output (STEEPER curve
-- more learning)
- increased individual skills
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