Chapter 6

o  Being responsive to customers

o  Innovating

o  Quality

o  Effectiveness

Few needs, many customers

Broad needs, few customers

Broad needs, many customers

o  A strategic position emerges from 3 sources

Few needs, many customers

Broad needs, few customers

Broad needs, many customers

o  Strategy requires trade-offs in competing

o  Strategy involves creating a “fit” among employees

Threat of new entrants

Power of suppliers

Power of buyers

Threat of substitutes

Cost-leadership –keep costs and prices low to target a wide market - walmart

Differentiation – offer a unique and superior product to target a wide market – Lexus, Rolex

Cost-Focus – low costs and prices to target a narrow market

Focused-differentiation – offer a unique and superior product to target a narrow market – rolls Royce, Ferrari, lambos

§  Growth – grand strategy that involves expansion – as in sales revenue, number of employees or number of customers served

§  Stability – grand strategy that involves little or no significant change

§  Defensive or Retrenchment strategy – a grand strategy that involves reduction in the firm’s efforts

§  monitoring the execution of strategy and making adjustments

Stay focused

o  Public prints and Advertising – press releases, newspaper, internet

o  Investor information – info about new products and services may also be available through reports filed with the SEC and corporate annual reports

o  Informational sources – salespeople, marketers, trade shows (cars)

the creation of alternative hypothetical but equally likely future conditions

Single-product strategy – a firm makes and sells only one product within its market

·        Reduce Risk

·        Management efficiencies – administration spread over several businesses

o  Stars – high growth rate, high market share

o  Cash cows – low growth rate, high market share

o  Question marks – high growth rate, low market share