Chapter 5 Q1 The 5 Generic Competitive Strategies are, Low-Cost Provider: Offer products at the lowest price possible by underpricing

g rivals o C.A. is that firms are able to attract the highest number of buyers even if at a loss Best Cost Provider: Offer products to customers at the best price-best value possible and meeting their expectations o C.A. is that firms are able to attract the highest number of buyers through delivering products which they want at a good value for money they are paying. Focused Low-Cost Strategy: Offer products at a lower cost than rivals to a specific segment of the market o C.A. is that firms are able to target a specific segment of the market, basically the lowincome, by offering similar products that is offered by big companies however with lower quality and thereby lower price. Focused Differentiation: Offer customized products to a specific segment of the market depending on their preferences and/or taste o C.A. is that firms are able to target a specific segment, basically the high-income, by offering customized products that is unique in terms of its quality, features, and brand name ofcourse. Broad Differentiation: Offer products that is totally unique than what is already in the market. Ex Toyota vs. Chevrolet o C.A. is that firms are able to target the majority of the market by offering products and/or services that is not already offered by rivals in the market or in another case offering the best among all.

Q2 What does a company have to do to achieve a Low-Cost provider status? In order for a company to be able to achieve a low-cost provider status it is important to eliminate unnecessary steps or activities. Furthermore, 2 Major Avenues for Achieving Low-Cost Leadership, Perform the essential value chain activities more cost effectively than rivals Revamp the firms overall value chain in order to eliminate cost producing activities involved in the process

Q3 Under what circumstances is a broad differentiation strategy appealing?

Basically, Broad Differentiation Strategy is appealing when buyers are searching for products and/or services that is either unique in terms of its quality and features or when it is a totally new product which rivals see as difficult to compete against. Q4 In what market and competitive circumstances are focused low-cost and focused differentiation strategies attractive? A focused low cost is basically attractive in a niche segment market of low to middle income consumers. It is attractive mainly through 2 options. o Option 1 is to Underprice the competitors in order to gain the maximum number of price-sensitive consumers. o On the other hand, option 2 is to Maintain the present price while increasing market share and lowering cost in unnecessary activities. A focused differentiation is basically attractive in a niche segment market of middle to high income consumers. It is attractive mainly through o Increase its unit sales o Command a price premium o Gain buyer loyalty to its brand

Q5 Which one of the 5 generic strategies is the best for an industry as commodity? Explain. CHAPTER 2 Q1 Explain why a company needs a strategic vision? A firm would need a strategic vision in order to be aware where it is now, where it wants to go and how to get there. In addition, it is top managements views about the firms direction and future product-marketcustomer-technology focus. Helps the top management decide where they would like the firm to be in position in the future.

Q2 What is the difference between a Mission Statement and a Strategic Vision? Mission Statement clearly identifies a companys objectives and goals as well as it helps to communicate them from the top management to employees which is essential in order to save time on possible errors resulting from misunderstanding what is needed to be done. Strategic Vision helps a company to undergo its mission by answering questions such as where we are at present, where we want to go in the future and how to get there. Only through strategic vision a company will be able to carry out its tasks successfully into the right destination desired by the top management.

Q3 Identify and briefly discuss at least 3 obligations of Board of Directors in Corporate Governance, Strategy Making and Strategy Executing Process Chapter 3

Q1 Draw the 5 forces model of competition and briefly discuss the relevance of each of the 5 forces in determining the overall strength of competitive pressures a company faces.

Substitute Products Competitive pressures coming from other markets trying to gain buyers preferences to their products. o Competitive pressures of substitutes are stronger when Readily available Attractively priced Buyers are able to compare it in terms of quality, features and performance Buyers are comfortable with substitutes Buyers have low cost in switching to substitutes o Competitive pressures of substitutes are weaker when Not readily available High priced relative to the performance they deliver Buyers have high cost in switching to substitutes Potential New Entrants Competitive pressures coming from threats of new entrants to an existing competitive market o Entry threats are stronger when Buyer demand growing rapidly New comers expect to earn attractive profits Existing members are unable to compete with new comers Entry barriers are low o Entry threats are weaker when Buyer demand growing slowly Existing members are able to compete with the new comers Entry barriers are high

Supplier Competitive pressures coming from supplier-seller collaboration and bargaining power o Supplier bargaining power is stronger when Needed inputs are short in supply There are few suppliers of a specific input Suppliers have inputs that can make the firms overall products better in terms of performance and quality o Supplier bargaining power is weaker when Needed inputs are widely available There are large number of suppliers of inputs Suppliers inputs are identical to one another Buyers Competitive pressures coming from seller-buyer collaboration and bargaining power o Buyers bargaining power is stronger when Buyer demand is weak Few buyers involved Buyers have the ability to postpone purchases when prices are not attractable enough Information about quality and quantity of products are available to buyers o Buyers bargaining power is weaker when Buyer demand is high Large numbers of buyers involved Buyers have little or no information about the quality and quantity available Rivals o Rivalry is stronger when Buyers demand growing slowly Buyers cost to switch brands are low Buyer demand falls off resulting in excess inventory o Rivalry is weaker when Buyer demands growing rapidly Buyers cost to switch brands are high

Q 2 Identify and discuss any 3 of the factors that influence bargaining strength and leverage of buyers. Few numbers of buyers o This means that a large industry would be having an excess of supplies given a few numbers of consumers. From economics we know that when supply increases prices decreases. This means that firms would want to choose a low-cost strategy in order to outcompete one another even if it is a loss transaction. Low demand of buyers

From economics we know that if demand is low price decreases. Thereby, an increased in competition within rivals since each one would want to prove itself positively against another

Buyers have enough information about a products quantity and quality o When consumers have information they can easily differentiate a firms offering versus another. Through comparison a buyer is able to choose what best reflects his or her preferences.

Q3 Identify and explain any 2 of the factors that influence the strength of competition from substitute products 1st: Whether substitutes are readily available and attractively priced. o If firms target is to attract the highest number of consumers to its beneficial side from rivals then it is responsible to make products widely available to buyers being offered in a price which buyers view as a best price and best value strategy and would not have a second thought of making a purchase instantly. nd 2 : Whether buyers are able to compare substitutes in terms of features, quality and performance. o In order to attract the desired number of consumers it is not necessary to broad differentiate a product as long as consumers are able to view a good reason of switching from one product to another.

Q4 Identify and describe 3 common barriers to entering an industry Strong brand preferences and high degrees of customer loyalty o When consumers already develop a preference to a specific product and/or service offered by a specific firm and thus developing loyalty and longterm relationship between consumer and seller. This results in difficult for new entrants to search, find and take a place of firms who already proved to be successful in the first place. High capital requirements o In general, as a new entrant it is widely known that achieving profits within the first 1 or 2 years is difficult. Also, given that high capital is required for investment in terms of assets and so we can conclude that new entrants will probably fail to cope up with medium to large competitors. The ability of existing rivals to attack fiercefully against new entrants o Existing rivals hate it when newcomers initiate a new threat to the industry they are operating in and thereby this could be one reason to unify them all against any newcomers

Q4 What is the analytical value of studying competitors and trying to predict what moves rivals will make next? Being aware which rivals are likely to enter new geographical areas

Being aware which rivals badly need to increase sales and market share Being aware when rivals are about to launch promotions and other marketing strategies Being aware which rivals have sufficient resources to expand product offering and enter new product segment

Q5 What are the industry key success factors? Why is it important for stratefy makers to have a clear understanding of an industrys key success factors? Key success factors are competitive factors which most affect industry members ability to prosper

It is important to have a clear understanding because of the common types of industry key success factors such as, Technology related KSF (Firms expertise in a particular technology or scientific research) Distribution related KSF (Strong network of wholesale distributors/dealers) Marketing related KSF (Well known and well respected brand name) Skills and ability related KSF (Talented workforce) Manufacturing related KSF (Scale economies) Other types of KSF (Good retailer locations)