The strategy that drives the company.

1. Differentiation - Offering a unique product

2. Cost Leadership - To lower costs to lowest level of in the industry

3. Focussed Differentiation - (ex. Rolls Royce/Lamborghini)

4. Focussed Cost Leadership - (ex. Ikea)

5. Intagreated diff and cost leadership - (Most difficult - Ex Target)

 List and describe the corporate-level strategies

1. Single Business Strategy - 95% of all revenues or sales come from operations in on industry

2. Dominant Businesses Strategy - At least 70% of revenues come from operations in one industry.

3. Related Strategy - At least 30% of revenues come from operations in one industry AND All divisions or industry presence must share 

4. Related linked strategy -  At least 30% of revenues come from operations in one industry and some divisions MAY share product technologies, distribution linkages

5. Unrelated strategy -Divisions don't share linkage 

 How does the differentiation strategy reduce the power of the five forces?

                                              i.     Threat of new entrants

1.    Create brand loyalty

                                            ii.     Power over suppliers

1.    Suppliers have more power for unique products

a.    Pass costs on to customer

b.     Acquire the supplier to lower the cost of

                                          iii.     Power over the buyer

1.    By satisfying unique needs the company has power over the buyer

a.    Problem is that likes change

                                           iv.     Substitutes:

1.    Not many because they cannot satisfy the customer

                                             v.     Rivalry

1.    Patents, trademarks, and copyrights

a.    Protects the company

 How does the cost leadership strategy reduce the power of the five forces?

                                              i.     Threat of new entrants

1.    Economy of scales (Sell/buy in high qualities)

                                            ii.     Power over suppliers

1.    Buy in bulk (Buying powers)

2.    Reduce the power of buyer

                                          iii.     Power over buyers

1.    Offer low prices

                                           iv.     Substitute

1.    Limited/few in existence

                                             v.     Rivalry

1.    Predatory pricing to reduce rivals

THINK WAL-MART!!

How does the focus strategy reduce the power of the five forces?

Same as the Differentiation strategy. 

What are the risks associated with each business-level strategy?

Differentiation and Focused Differentiation

                                               i.     Counterfeiting/knock offs

                                              ii.     Market too small

Cost Leadership and Focused Cost Leadership i. i. Process can be imitated and  

                         difficult to patent

                    ii. Value chain advantages can be copied

What are the reasons for going overseas?

a.     To expand when domestic markets have become saturated

b.     To take advantage of cost savings

c.      To follow competitors in oligopolistic industries

What risks do businesses encounter as they go overseas?

1.     Political risks

2.     Economic risk

3.     Foreign Exchange Risk

4.     Managerial Risk

5.     Cultural Risk

6.     Religion

1.     Exporting

2.     Licensing

3.     Franchise

4.     Joint Venture

5.     Wholly-owned Subsidiary

What are the business-level strategies at the international level?

1.     Global Strategy

2.     Multi domestic strategy

Draw and describe Porter’s model of national competitive advantage.

Describe the use of the BCG matrix and how John Seeger changed the interpretation of the model.

1.     Make sure the star is not a supernova (Star that has already blown up but It still creates the illusion of life)

2.     Invest in the cow

3.     Feed the dog steroids (creates a barrier to entry)

What are the reasons for engaging in acquisitions?

1.     To build market power (Reduce the impact of the 5 forces)

2.     To overcome barriers to entry

3.     Enter the foreign market

4.     To diversify

5.     To acquire new product development skills

What are the problems associated with acquisitions?

1.     Integrations difficulties

2.     Experience diseconomy of scale

3.     Did not do an efficient & acquire due diligence (overvaluation)

4.     Incur too much debt

5.     Dis-Synergy

6.     Too much of a short term emphasis

What are the characteristics of successful acquisitions?

1.     Buy a company with a similar culture (corporate culture analysis) Management styles, financial and control analysis systems.

2.     To use a financial sweeteners (stock & cash)

3.     Do your due diligence (do not over value)

4.     Pursue friendly acquisitions

5.     Acquire firms with complementary resources

1.    Downsizing- cut the labor force cut human capital (41% of downsizing are successful)

2.    Down scoping- cut unprofitable product lines/products/services/divisions (looking at profitability of each product, each product line & personnel)

3.    Leverage buyout- take a company private (to hide management mistakes)

a.     MBO- management buyout

b.    EBO- Employees buyout

c.     LBO- Leverage buyout: a third party that takes the company private (Pretty woman: sell parts of company) Equity firms.

List the business-level cooperative strategies.

1.     Complementary alliance – to compliment each others resources

2.     Competition response strategy

3.     Uncertainty response strategy

4.     Competition reducing strategy

List and describe the corporate-level cooperative strategies.

1.     Synergistic alliance (Comcast & Verizon) (1+1=3 or more)

2.     Diversifying alliance (Moving beyond regular industry – into another industry)

3.     Franchising agreement (2 sides)

What are advantages of franchises?

                                               i.     Franchiser gets

1.     Fast expansion

2.     Royalty fees

                                             ii.     Franchisee gets

1.     Brand name

2.     Proven business model